Refinance or let them foreclose?

[jameyp43]

What is the name of your state?What is the name of your state? Texas

We have just been socked with a back-escrow bill that we cannot afford to pay. The original escrow was determined from undeveloped property. We were told that the mortgage payments would go up apprx. $200 per month in a year when the taxes were reassessed. Fine. Well, we got the new tax bill, and our payments never went up. We called the mort. co. and they said, "Oh, it's all fine. It'll be taken out of your escrow." Well, the escrow did not collect the extra money we needed, and when the next reassessment came around, we were liable for the next year's shortage and the last. $500 a month added to the payment. We can't do it.

I understand this is VERY common. We cannot sell, because properties in our subdivision are taking 6-9 months to sell. There are 18 homes for sale, 9 are foreclosures, 14 are empty already. Doesn't sound good to me. We were not intending to stay in this house long, but can't wait the time it takes to sell. We could refinance, but that sticks us here another 2 years, and what of the back taxes?

Should we let them foreclose after finding another house? What would we be liable for besides the difference in the selling price and what is owed? I am willing to take the chance that we cannot get the foreclosure removed from our credit report. Are we still liable for the taxes? I need some guidance here. We DO want to move.

Q: Should we let them foreclose after finding another house?

A: I would never let a house of mine be foreclosed on, but that is entirely your decision.


Q: What would we be liable for besides the difference in the selling price and what is owed?

A: If your state's foreclosure laws allow for a deficiency judgment, one will be entered against you. If, for example, the loan was $100K and the land got sold for $10K, then there will be a judgment against you for that amount.


Q: I am willing to take the chance that we cannot get the foreclosure removed from our credit report. Are we still liable for the taxes?

A: Taxes are generally not wiped out by a foreclosure. (I am assuming you mean real property taxes) so you would be liable for the taxes up to the time you were kicked out of the house.


Please understand that I do not know the first thing about foreclosure laws in your state. I have just given you general answers.

[jameyp43]

I appreciate your answers. We have discovered that we have other options such as a Short Sale or Deed-in-Lieu that we can take a look at too. However, sales in our area are badbadbad right now. Bad time to sell, good time to buy.