Mar 10, 2008 8:08 pm US/Eastern
Website To Help You Walk Away From Your Home
MIAMI (CBS4) ―
Record home foreclosures in Florida and across the country are prompting some people to walk away, even before a bank steps in to take their home, and they're getting help from an unlikely source.
CBS4's Your Money Reporter Al Sunshine investigated why it might not be a good thing for you.
This is something we have never seen in this country before, a website called YouWalkAway.com, that says it can help you do just that, and at the same time is creating a bit of controversy.
Lori Nicholson is packing up, abandoning the house she and her children have lived in for more than two decades.
"23 years this year, my son I actually brought him home from the hospital in this house," said Nicholson. "It's tough, it's very tough to leave."
Six years ago Nicholson took out a second mortgage on the house to pay for a divorce. With declining home values, she owes more in mortgages than the house is worth, it's called being "upside down" in your mortgage.
"Even if you continue the payments by the time you want to sell the house, the market turns around, you're not going to get any money out of it," explained Nicolson. "That's basically what they told me."
With the downturn in the housing market, many homeowners find themselves like Nicholson, who is basically stuck with a bad loan. Even if they are able to make her monthly payments, there's little incentive to. So they are walking away, leaving the bank holding the bag.
"A home ownership has always been something that borrowers would do absolutely everything they could to avoid foreclosures and retain their homes," said Paul Leonard of youwalkaway.com
Not anymore. There's a website to help people save their home: YouWalkAway.Com
"They just see writing on the wall as far as their investment going down the tubes and they want to bail out as soon as they can before they lose any more money," said Helbert.
One financial research firm predicts that if home prices drop an additional 10 percent, 20 million families will owe more than the value of their homes.
"I can't say when people decide to walk away, it might be an epiphany in the middle of the night that they
decide they're not comfortable with the 5 thousand a month payment anymore since their property is worth 2 or 3 hundred thousandless than they owe on it," explained Helbert.
For Nicholson, the decision to walk away came when the bank wouldn't help her figure out a way to stay in her house.
"I just don't know what else to do," explained Nicholson. "I'm tired of fighting the bank, I'm tired of fighting a situation. I cried for days and days and days, because I'm thinking this house is coming to an end and now I'm seeing it."
Before signing up or paying for any so-called foreclosure assistance counseling plans, make sure to double check the "fine print." Make sure you also double check all the costs and get in writing exactly what the company will be doing.
Also remember to double check with a financial advisor if possible, to see what impact a walk-away will have on your credit rating.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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