Section 8 Housing popping up all over the place(thinking about walking away) (Phoenix: sales, foreclosures)

[Bondurant]

I'm very sorry to hear that your neighborhood is slipping away. I hope you will be able to come up with a solution that will benefit your family. Keep in mind though that this is how entire sections of cities are lost; people give up and go. But I understand things can be hard. At times like this I wish I could afford a home so I can help keep a neighborhood from slipping away. God, I hope Phoenix proper does not end up like Detroit.

[Zippyman]

Originally Posted by Bondurant

God, I hope Phoenix proper does not end up like Detroit.

I gotta say - as someone who was born in Michigan, and someone who has actually spent quite a bit of time in the city of Detroit (not the suburbs) - that this is really misplaced. There are areas of Phoenix that are more dangerous than Detroit.

Detroit proper (not the suburbs) is so far gone, and has been, for so long - that it's almost recovering. Large swaths of town have burned in the yearly fires, so many people have left - due to lack of jobs, and the reputation is so completely terrifying - that actually driving down many of the streets is almost a let-down. Many city blocks have only a few houses left on them.

You can walk down the street without getting robbed, because even the criminals have left.

You can park your car in front of one of the fried-chicken-shacks, enjoy a meal, and it'll probably still be there when you return (unless it's on 20's!).

$100k will buy you a golf-course mansion with 4,000 square feet of living-space, and a guest house, with a three-car garage - in pretty decent condition.

If they fixed the property-tax situation (the taxes on that $100k house are about $8k/year!) , and I had work available - I'd have to seriously consider moving there - at least for the summers...

[roosevelt]

Originally Posted by Zippyman

I gotta say - as someone who was born in Michigan, and someone who has actually spent quite a bit of time in the city of Detroit (not the suburbs) - that this is really misplaced. There are areas of Phoenix that are more dangerous than Detroit.

Detroit proper (not the suburbs) is so far gone, and has been, for so long - that it's almost recovering. Large swaths of town have burned in the yearly fires, so many people have left - due to lack of jobs, and the reputation is so completely terrifying - that actually driving down many of the streets is almost a let-down. Many city blocks have only a few houses left on them.

You can walk down the street without getting robbed, because even the criminals have left.

You can park your car in front of one of the fried-chicken-shacks, enjoy a meal, and it'll probably still be there when you return (unless it's on 20's!).

$100k will buy you a golf-course mansion with 4,000 square feet of living-space, and a guest house, with a three-car garage - in pretty decent condition.

If they fixed the property-tax situation (the taxes on that $100k house are about $8k/year!) , and I had work available - I'd have to seriously consider moving there - at least for the summers...

In Phoenix, that would be about 8 times less. Now in California, back in 1975, I looked at a house for $85,000 and the taxes were $25,000!

[EnicAZ]

I'd have to disagree. For most people, the best financial decision is to walk away. The quicker they do it, the faster they can get back on their feet. The longer they wait, the longer we drag out the housing crisis and the longer they are stuck in the same position. Getting the tax bill for a short sale is an unpleasant surprise.

[Bondurant]

Originally Posted by Zippyman

I gotta say - as someone who was born in Michigan, and someone who has actually spent quite a bit of time in the city of Detroit (not the suburbs) - that this is really misplaced. There are areas of Phoenix that are more dangerous than Detroit.

Detroit proper (not the suburbs) is so far gone, and has been, for so long - that it's almost recovering. Large swaths of town have burned in the yearly fires, so many people have left - due to lack of jobs, and the reputation is so completely terrifying - that actually driving down many of the streets is almost a let-down. Many city blocks have only a few houses left on them.

You can walk down the street without getting robbed, because even the criminals have left.

You can park your car in front of one of the fried-chicken-shacks, enjoy a meal, and it'll probably still be there when you return (unless it's on 20's!).

$100k will buy you a golf-course mansion with 4,000 square feet of living-space, and a guest house, with a three-car garage - in pretty decent condition.

If they fixed the property-tax situation (the taxes on that $100k house are about $8k/year!) , and I had work available - I'd have to seriously consider moving there - at least for the summers...

I'm from Michigan as well. My dad's side is from Detroit. I brought it up because I've chatted with many folks here that sound like they're from Detroit; always talking about how the old neighborhood "was".

[Captain Bill]

Originally Posted by EnicAZ

I'd have to disagree. For most people, the best financial decision is to walk away. The quicker they do it, the faster they can get back on their feet. The longer they wait, the longer we drag out the housing crisis and the longer they are stuck in the same position. Getting the tax bill for a short sale is an unpleasant surprise.

EnicAZ, the mortgage relief tax bill is still in effect until then end of 2012. So people doing a short sale at this time won't have to pay tax on the forgiven debt.

The foreclosure stays on one's credit record for 7 years, and if they have a security clearance they can lose their job.

A foreclosure will hit the FICO score by 150 points or more.

A short sale doesn't get recorded on the credit record. The ding on the FICO is for the missed payments, so it doesn't ding the score as much.

So if you look closely at it, a short sale may be much better than the foreclosure.

However, since everyone's circumstances are different, it's a good idea for one to consult with an attorney and their tax adviser before making the decision.

[EnicAZ]

Captain,

You must not have run across this in the field yet. People who do short sales are getting bills for the difference, which is something not applicable by the mortgage tax relief bill. Cathorine Reagor from the Arizona Republic actually did a story on it a few days ago.

[rjrcm]

Originally Posted by EnicAZ
...Getting the tax bill for a short sale is an unpleasant surprise.

Originally Posted by EnicAZ

Captain,

You must not have run across this in the field yet. People who do short sales are getting bills for the difference, which is something not applicable by the mortgage tax relief bill. Cathorine Reagor from the Arizona Republic actually did a story on it a few days ago.

Your previous post focused on the tax hit, which Captain Bill responded to. Lien holders coming after unforgiven deficiency amounts is a different issue. Sellers should consult with legal and tax professionals to determine their possible liabilities in a short sale. A good, experienced short sale agent may be able to negotiate a good outcome.

[Ponderosa]

Originally Posted by rjrcm

Your previous post focused on the tax hit, which Captain Bill responded to. Lien holders coming after unforgiven deficiency amounts is a different issue. Sellers should consult with legal and tax professionals to determine their possible liabilities in a short sale. A good, experienced short sale agent may be able to negotiate a good outcome.

Good advice and it needs to be emphasized. While AZ law often protects debtors in foreclosure it does not apply to short sales. The deficiency has to be negotiated away.

Also, Cpt Bill is understating the credit impacts of a short sale versus a foreclosure.

Fair Isaac released a report that says credit scores are affected about the same, whether a seller does a short sale or foreclosure. Fair Issac says the average points lost on a FICO score are as follows:

* 30 days late: 40 to 110 points
* 90 days late: 70 to 135 points
* Foreclosure, short sale or deed-in-lieu: 85 to 160
* Bankruptcy: 130 to 240
(I'm taking this from other web sites comments on short sales)

Folks considering short sales should do a little research before thinking the credit penalty is little more than a slap on the financial wrist.

[PhoenixAirConcerns]

The section 8 spread has been happening in my neighborhood too. I think it has a lot to do with the joblessness throughout the Phoenix area.