Can I walk away from my home?

I am disabled and can no longer afford to pay my mortgage. I have been without work for 3 years and have exhausted every nickel, including my retirement savings. The loan servicer refuses all of my attempts to resolve my “upside-down” mortgage problems. I have tried to get a loan modification and a short sale but they just keep playing games. I fear my only recourse is to walk away. What are the odds that I can do so without serious repercussions?

Asked on November 29, 2011 under Real Estate Law, Tennessee


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If you walk away from a home that you own, you potentially face what is known as a "deficiency" judgment. A "deficiency" is created if your home sells at a foreclosure auction for less than what you still owed on the mortgage (plus fees/costs). Additionally, a foreclosure will severely affect your credit score.

One option is to try and rent out the home for close to what your mortgage is. Another option might be something known as a "deed in lieu of foreclosure". That means that you would turn over the house to the lender before they start foreclosure proceedings. If you get them to agree to this (possibly doubtful since they've not been very helpful to date), insist that in exchange for giving them the deed they waive any deficiency judgement against you. Many lenders are reluctant in today's economy to voluntarily take back a house but it's still worth a try.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.