Stopping payment on mortgage for investment property with negative cashflow

Good afternoon,

I declared bankruptcy (Chapter 7) in 2007 and did not realize that the loans with Homecomings Financial for my investment property in South Carolina have been discharged as well. Now that I am ready to attend repairing my credit, my question is this:

I have continued making payments on that property to HF on a regular basis and have even liquidated some of my IRA money to do so. The property is cash-flow negative. What are my rights here? Could I simply no longer make the payments? What options exist?

Thank you!

My phone number is …

Regarding the LEGAL RIGHTS you need to talk to your bankruptcy ATTORNEY. 

There are many issues to consider:

  • The market value of the property.There’s negative cashflow, is that after tax and how much?
  • If the loan was discharged and there’s no chance of a deficiency judgment, you need to analyze the FINANCIAL impact and the CREDIT impact.
  • Obviously it would be better to sell the property and get a check at closing.
  • If that’s not an option and you just stop making payments, you could inform Homecomings that the loan was discharged and that they can have the property.
  • Or you could do nothing and continue to accept the RENT after you stop making payments.  Many investment property owners pocket the rent after they default on the mortgages and I don’t know the South Carolina law. Talk to your attorney.  I applaud anyone who stiffs a bank like Homecomings, but they might have legal options against you and I’d NOT spend any of the rents for a while.
    CREDIT:  Homecomings will probably report NEW derogs.  If you’re lucky, they’ll fix it after disputing with the CRAs.  One could argue that you’re keeping income from the property to be able to pay a lawyer to get the credit reporting corrected. ANYTHING could happen.  Obviously NEW derogs will destroy the scores.
  • Additionally, you’re turning a positive tradeline into a NEGATIVE tradeline even if reported correctly as discharged in 2007 and how it will effect your FICO scores depends on THE OTHER ACCOUNTS on your credit.

I hope that helps the many people in similar situations.  Unfortunately, I don’t have an oracle and I NEVER EVER give telephone advice.  I’m a professional, not a con artist.

Lastly, why would I work free of charge for you? 

I’ve worked tens of thousands of hours on litigating, publishing my research and litigation and trying to get the regulators to enforce the laws and urging legislators to make sensible laws. If they had NOT ignored my 2003 federal complaint and my many submissions, we’d have NO credit crisis today.

I worked literally 120 hrs/week for years and did all I could to help everybody, but I will not work free of charge for individuals. 

Please read  Lenders agree: FICO scores do NOT predict defaults

Christine

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