Can Foreclosure Be A Good Idea?
I met with some friends yesterday who bought an investment property last year when the market was hot (middle of 2005). Now that the market has cooled the home is worth $40K-$50K less then what they bought it for. They are thinking of re-financing the home into the wife’s name and letting it go into foreclosure as apposed to trying to sell the home and lose all that money. They figure if they can refi it in her name it will only damage her credit and the husbands credit wont get hurt. They asked me for advice because I have a couple rental properties but I had no idea what to say to that.
Have they tried other options? This sounds kinda drastic. I assume the current payments are too high. Can they negotiate with the bank for a lower payment? Or find an investor that would be willing to purchase the property but for less than the existing loan amount through a short sale. Try to emphasize to the bank that the market has slowed and this is a better solution that foreclosing and holding an over valued property. My point is they need to get on the phone and talk to people (lender) who can make some decisions.