Ramifications of just "Walking Away"

[Maryanne]

We have a 1996 Dutch DW (1456sqft) that we owe about $40k on. If we were to sell this in our park we would have to take a 15-20K loss on it. They aren't selling...

What would happen if we just walked away from it? Does anyone know what the ramifications are to our credit report and what the repo process is?

How do we get out of this thing with as little baggage as possible?

We can't move the house...we have tried and it is too cost-prohibitive in this area. Land is too expensive and not worth putting a mobile on. By the time we would be done with home/basement/garage/porch/driveway...we would have about a $200k piece of property...and no one in their right mind is going to pay $200k for a mobile home.

Any help out there?? We are desperate to get out! We make about 100k in salary per year and are stuck in a mobile home because it won't sell!

Thanks all.

[jgn]

If you were to "walk away" from the home the lending institution will consider you in default, place that on your credit rating and that is never a good thing. The lending institution will sell the home, most likely at a loss, and come after you to pay the amount of the loss plus all fees they incured. You would be much better off trying to sell the home even at a personal loss or you could rent it or carry a note for someone who does not have the funds to put down on their own home.
Except in a few areas of the country, parks are not a good idea because land appreciates but structures seldom do and that is true with site built or MH. The home will probably sell at some price and it will be painfull but letting the house "go back" will be more painfull or a longer period.

[Mac]

Take your loss and learn your lesson (don't buy a MH in a park). You have decent enough income to recover from it. If you walk away, it will severely impact your ability to buy a home in the future, since you will have proven yourself a poor credit risk. The interest rates you will be offered will be much higher than someone with good credit.

[Bill Fry]

If the lendor repos it they will sell it for what they can get.Any difference plus fees applied by the lendor will again be your responablity.Yout credit report will show a repo(basically its ruined) and the lendor will report to the IRS the amount you defaulted on.Since this is considered income you are required to pay full tax on it(federal and state)Yopu can't walk away on the IRS without declaring bankruptcy.
I'd work out something other then walking away.

[rmurray]

Many things will happen..the lender will sell the home to the highest bidder at a loss..you will be responsible to pay the unpaid amount..If you do not pay the lender can take a judgement..in some state that means they have as claim on all of your assets..including future income..IN my state the lender would be able to garnishee wages and attach bank accounts..All of this will be in your credit files.lowering any credit scores you have..making future credit much more expensive..If your scores go down many of your current credit cards will raise three rates on your cards..Credit scores effect many things you buy..homeowners insurance rates might be higher in the future..Auto insurance considers score when deciding which rates to offer..Furure mortgages probably will cost more..You might find that rentals might not be available in the future..Worse problem could be if the lender decides to write your loss off to lower their taxes..IN that case the IRS assumes the loss as income foryou..The lender will file a 1099 for the amount and send it to you last known address in the park..Since you are gone you will not get it..Then years from now you might get as bill from the IRS for the unpaid taxes..penelaties for under reporting your income..and interest..The tax obligation can easily be as large as the loss..If you can figure how to pay the loss and sell..you should..

[Maryanne]

Thanks all. I kind of figured that....

Is there a good way to find out what the mobile homes in our area are actually selling for? (Northville, MI)

I called a local Little Valley dealer and he said they hadn't sold a pre-owned in our park in a couple years and that if I wanted to sell our quickley I would probably have to list it at $20-25k. We owe $40K on it.

Do any of you really think we would have to take that huge of a loss? This is all very discouraging.

[Maryanne]

Thanks all. I kind of figured that....

Is there a good way to find out what the mobile homes in our area are actually selling for? (Northville, MI)

I called a local Little Valley dealer and he said they hadn't sold a pre-owned in our park in a couple years and that if I wanted to sell our quickley I would probably have to list it at $20-25k. We owe $40K on it.

Do any of you really think we would have to take that huge of a loss? This is all very discouraging.

[jgn]

You can always try to sell it for what you owe but you said they weren't selling so I doubt you would be able to do that. You can also consider a lease with an option but than you are a landlord or you could pay it off and sell it under contract. If you need to sell it outright it will hurt and a 10-15000 loss may be what you have to take. Another option is turn it into rental property for a year or so and you may be able to take the loss as a tax deduction, still hurts but not as much. I would check with an accountant about that last suggestion but I have known people who have done this.

[judi8282000]

we have bought a trailer in a free and clear tax sale, allthe tax office gave us was was reciept. no title. when we tried to go through the tilte office they told us we needed more proof of ownership. we cannot get any thing at all from the county.
we live in pa. and bought the trailer in Luzerne cty.does any body have any suggestion?

[rmurray]

You might need an attorney who specializes in title law...It would be worth the expense..There must be a system for this process..Remember if you buy on a tax sale..you might be liable for any liens already on this home..Such as the original bank loans..second loans..any unpaid rent in the park..mechanics liens if any...This home might not be as "free and clear" as you say..