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Can my friend walk away from his home loan?
I know someone who bought a house in Georgia years ago (maybe 9 years ago now?) and who later joined the Army. He was restationed several years ago and has been trying desperately to sell his home for enough to pay off the remainder of the loan. The problem is, the area has already had tons of foreclosures (so house prices are way down) and the school district is awful. He is now forced to rent it out, since his mortgage requires that he have the home insured, and the insurance requires the house be occupied. The last tenants he had caused thousands of dollars worth of damage, but he had to fix it up and rent it out again because of the insurance.
I think if he could walk away from the loan it would be the best option for him, since it's putting a huge financial strain on him and he never anticipates living in it again. Is there a way he could legally get out of his mortgage without totally trashing his credit score?
2 Answers
- Anonymous1 decade agoFavorite Answer
If he walks away, then it will destroy his credit score, and he wouldn't be able to get any kind of loan anywhere for at least 3 years. A bigger problem may be that the bank could come after him for the difference between what he owes and what the bank ends up selling the house for, plus legal fees and court costs. That's called a deficiency judgment.
