Wondering If You Should Keep Making Your House Payment?

Posted on November 19 By Justin McHood

As I have traveled throughout the country over the last year, I have noticed that people in different places have different attitudes about foreclosure. Jimmy Buffet's song Changes in Latitudes, Changes in Attitudes could fit nicely into this scenario - people in Miami, Florida seem to generally feel different about foreclosure than those people living in Fairfax County, VA.

Or in the West, people in California, Nevada or Arizona might feel different about foreclosure than those living in Washington or Colorado.

Recently in Phoenix, Arizona a homeowner wondered aloud (and blogged about it) "what exactly is keeping you in your current mortgage?"

The above person might qualify for the Obama 125% refinance plan, but at best that might only make their payment $1300/mo. Not to mention that the banks are not just making the refinances happen. They refuse to live up to their side of the bailout. If instead a plan was in place to force lenders to readjust principle balances (not interest rates) to a point where the home owner was not completely underwater then perhaps the home owner might full well consider staying in their home. At this point, I think someone in the above situation has NO SENSIBLE reason to stay in the home. They have far more to gain crushing their credit and walking away. Taking the positive cash flow and investing in their future. If the bank were in the home owners situation they would certainly walk away. It’s a business decision. Sounds cold, but the current bailout isn’t helping much of anyone. If we are going to throw money at the problem at least lets be pragmatic about it.

One of the primary items that I recommend being aware of is the anti-deficiency laws in your particular state. Translation: whether or not the lender can go after you personally for any "shortfall" if your house does indeed go to short sale or foreclosure. Each state has different laws, so before you make whatever decision you are going to make (or be forced to make due to economic hardship) be sure you have done your research regarding this issue.

Because no matter where you live, one of the worst things that you can do is to make an uneducated decision and be surprised by the outcome.

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