Foreclosure in Laveen>Question Details

KNseller, Both Buyer and Seller in Laveen, AZ

My small 1200 sq. ft. new house in Laveen, AZ has dropped in value from $192k when we purchased 12 months ago

Asked by KNseller, Laveen, AZ Sat Feb 16, 2008

to $129k as of today. The area is getting worse, HOA is allowing foot tall weeds to grow in 1/2 the yards, and it is normal for cars to be parked on the sidewalks (completely blocking them) and some times even parked IN front yards. Our credit scores are in the 720 ranges and we want to know if foreclosing is an option to get out of this trashy neighborhood. Will foreclosing cost us money? We are not financially hurting. I have heard foreclosing hurts credit for 7 years. True? We would like to purchase another home in 5 years. Would that be possible?

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Answers

13
Don`t forsclose. Fight.
Join your HOA. It is amazing how much power an HOA has. Under proper leadership, your HOA can make a big difference.

192K down to 129K in the last 12 months. 31%? That is a very hard hit. Are you sure?

1200 Sq ft house. thats pretty small.

You have got to be close to bottom.

IF you want to get out, how much is your monthly payment?
How much can you rent it for?
How old is the home?
Don`t just walk away!
1 vote Thank Flag Link Sat Feb 16, 2008
Mr.P, Other/Just Looking in Arizona
MVP'08
Contact your HOA and complain. It's there responsibiltiy to take care of the common areas and enforce the CC&R's. Find out what's going on. Get the community together and take care of your neighborhood. I would never recommend a homeowner allow their property to be foreclosed. I would contact your lender IMMEDIATELY and see if you qualify for a loan modification, which should not affect your credit score if you continue making your payments. In some of the areas where prices have dropped substantially, the buyers are buying. I have a client that gave me a list of 10 properties on Monday in Laveen that they wanted to see and by Saturday, when we wanted to look at them, 4 were under contract. 1 of the properties that the buyer toured on Saturday, loved and was at the top of their list was already under contract by Wednesday. If you can hang in there, I believe we're close to the bottom if not already there. Some of these properties are also getting bid up for various reasons. Read my blog about the statistics on the price range of your home. If you would like some info on your neighborhood, please shoot me an email. I am happy to help you. That is what I'm here to do. :)

Stephanie Weiss
stephanieweissmoves@gmail.com
0 votes Thank Flag Link Thu Apr 9, 2009
This does not sound correct. The township appraised value is for property tax calculation purpose, not the market value.

In general, housing price is very hard to drop 20% due to the fact, the mortgage banker is the boss. e.g. if you pay $192k with 20% down, that 80% mortgage would be hard wall, if you willing to sell and left go your 20% down, bank will NOT.

If there is ever such opportunity, you should buy your neighbors' condo and rent them out, but I doubt.
0 votes Thank Flag Link Thu Mar 6, 2008
If anybody had any doubts that able homeowners would be willing to foreclose on purpose, here is your proof.

KNessler: if you decide to proceed w/ a foreclosure, this is what will happen with your credit score:

- first 30 day late, drop by 20-30,
- first 60 day late, addtl drop by 60-75 pts,
- first 90 day late, addtl drop by 75-100 pts,
- foreclosure, addtl drop by 100-150.

Your score will be in the 400 range at the end. If you and your spouse are both on the mortgage, both your scores will be in that range. All of the above will stay on your credit for 7 years, but the first 2 years will be brutal.

Somebody should advise you on the recourse laws in your state, before you decide to go into foreclosure. Depending on state laws and your personal circumstances (purchase money loan, refi loan, first mtg only, first and second), there might be some implications on your financial situation.

Who was your realtor when you bought the place? Sounds like he/she miscalculated on 3 criteria when helping to choose your house:

1. location,
2. location,
3. location.
0 votes Thank Flag Link Thu Mar 6, 2008
I agree 100% with all of Patricks statements, you really dont want to just walk away. Work with the association first. You mentioned that people would rather pay the fees. The fees should cover the expense to have landscapers come and do the work for them if they are not doing it themselfs. Though you also may have to get that changed in the covenants. Fight the problems attend the meetings. If people start to clean up the neighborhood, prices will most likely start to recover sooner then later. Thumbs up to Patrick...great advice. Besides you may be helping other neighbors by keeping their values at the same time.

If you have to move consider renting or in the worst case do a short sale if you really have to. Forclosure should be a last resort.
0 votes Thank Flag Link Wed Mar 5, 2008
KNseller - I wouldn't recommend foreclosing on your home. Although it's a popular remedy it's not the best. Imagine not being able to get a good interest rate on anything for years and years and years. If you go to buy a car you'll be paying tons of money in interest, you won't be able to get a credit card with a decent rate for years either and in 5 years you may be able to buy a home but your payment will be outrageous based on the interest. All of these things could end up costing you hundreds of dollars more per month e.g. $100 extra for car, $50 extra for CC, $200 extra for a home. Keep your good credit and you'll be happy you did in the future. A bill recently passed so if I'm not mistaken, other than the future interest rate hikes you're sure to get, foreclosing won't cost you money.

As far as your neighborhood goes, that's very unfortunate it seems like you've tried to do many things that usually fix the problem - last step could be to join the association.

You have a great credit score and have worked hard to get it where it's at. I wouldn't throw it away.

There is good news, a plan that may make it so you can refinance your home and only pay on what it's currently valued at. If you sell your home in the future, you'll need to pay the bank back but in the meantime they will "forgive" some of you current mortgage. We wrote about it in our blog - source below
0 votes Thank Flag Link Wed Mar 5, 2008
Another option might be a registering a complaint from the local govt...many municipalities have laws which restrict weed growth because of the potential fire hazard. A foreclosure wont cost anything up front, but you will destroy your credit for several years and it will cost you tens of 1000's of dollars in excess interest, fees over the long run...and you will likely wind up renting in a trashy neighborhood because of the squeeze of excess interest....watch your car payment sky rocket, all utilities companies will want a deposit, insurance co's will charge you more, and you will get turned down for the rental you would like to rent. If you lose your job, some employers may pass you over after a review of your credit report. Yep, even employers and insurance co's look at your credit now. Unbiased opinion...suck it up and stay where you are. Volunteer at your HOA...even better, instead of helping your HOA paper the neighborhood with nastygrams, help a neighbor that can't clean their weeds easily. Remember also that, typically your tax valuation is only about 80% of your actual value....so maybe your not as bad off as you think, value wise. Suck it up and stay put, foreclosure is not a solution to buying an item that wasn't all you thought it would be.
0 votes Thank Flag Link Sat Feb 16, 2008
Oh by the way, your assessed value is to high, I would appeal.

Here`s how http://www.sboe.state.az.us/howto.php

Good Luck
0 votes Thank Flag Link Sat Feb 16, 2008
Mr.P, Other/Just Looking in Arizona
MVP'08
The Assessor`s office? They Valued the land and structure at $129,700 for tax purposes.

That is not the Market Value of your home.

If you email me your address, I would be glad to do a Comparative analysis of the neighborhood.

Warning, it might not be much better.

As for the HOA, they work for you, get on the board. Triple the fines.
Money is a great motivator
0 votes Thank Flag Link Sat Feb 16, 2008
Mr.P, Other/Just Looking in Arizona
MVP'08
Hi KN, two things come to my mind - first - the city tax assessment has nothing to do with the market value of your home. In some cities, they happen to be close, in others they are too high, most often - and probably in your case - they are too low. Don't jump ship until you talk to a Realtor or appraiser who can tell you what your home would sell for in the market today.

Second, Patrick had very specific and good advise. He did not say "complain" to your HOA - he suggested you join it. In a leadership position on an HOA you can make a difference in the community you live in. It would mean sacrificing a little time, but compare the 6 to 18 months it would take to turn your neighborhood around compared to 5 to 7 years of living under that cloud of foreclosure. Walking away is easy, it is usually true, however, that the easy thing is not the right thing to do. Best wishes no matter what you decide, Stacey
0 votes Thank Flag Link Sat Feb 16, 2008
By the way, we have already complained to the HOA multiple times and their response is always "people would rather pay the fines instead of pulling the weeds". Seems pretty ridiculous and pointless to even have the HOA if they are going to be worthless.
0 votes Thank Flag Link Sat Feb 16, 2008
Got the letter from the Assessor's Office today, 2/16/08, which states they have "valued the property at $129,700". So, yes, I am sure, and yes, I do realize it is a small house - I live in it! The house is 12 months old. Payments plus HOA is $1300/mo but is an ARM so will increase in 4 years. There are very cheap rentals in the area so we could possible get $1000/mo for it. Home is spotless with tons of upgrades so I worry about having disrespectful renters in the house, not really an option for us.
0 votes Thank Flag Link Sat Feb 16, 2008
I'm with Patrick. Foreclosing is cutting off your nose to spite your face. HOA needs to start enforcing its own rules. Foreclosing won't cost you money in theory but your credit's going to take a huge unneeded hit.
0 votes Thank Flag Link Sat Feb 16, 2008
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