Q: I owe $200,000 on 1 bedroom condo now worth about $85,000. Loan was modified to lower my monthly payment, but must be paid at sale. I'm retired & would like to move to Oregon - shall I walk away & let it foreclose?
A: There can be pros and cons to walking away from your mortgage and you should understand them fully before you consider doing this. In general, you shouldn't walk away unless you want to ruin your credit further. Rather, you should talk to your mortgage lender about a short-sale or deed-in-lieu transaction. In a short sale, the lender will agree to sell the home for less than the amount of the mortgage; generally, you'll remain in the property while it is on the market. An alternate method to walking away would be to inquire about a deed-in-lieu transaction, where you volunteer the title of the property to the lender so they don't have to go through the expensive foreclosure process to legally obtain the title. Both methods can have benefits and drawbacks, and you should have a lawyer to advise you and help you negotiate any contracts so as to minimize any damage to your credit and promote the best outcome for you.
