Handing back keys on a US property?

T

totom

Guest
I bought an investment property in the US last year, its now in serious negative equity and am unable to give it away! The mortage repayments are crippling with no rental income on it to cover mortgage repayments. I'm now at the stage of reluctantly considering handing back the keys to the US bank.

Has anyone any experience of this and does anyone know what the consequences could be for an Irish buyer?

Thanks in advance for any advice
 
A deed in lieu of foreclosure, offer this to the bank , saves them all the legal costs of foreclosure, you loose any equity you had in the property, will screw up your credit though.
 
Sorry you find yourself in this situation.
My american friend did this with a house she bought in Dallas during a property bubble. She just posted the keys to the bank..circa 1992.

As far as I remember she was unable to secure ANY credit for 7 years...no credit card, loans, car purchase etc etc. As far as I know her slate was wiped clean after the 7 years and she is ok again...has bought property...and sold it and bought it..

She did have a credit care from her then boyfriends (now hubbys) account though.

I don't see any major ramifications if you contact them and advise them of the problem.
 
Thanks for the advice, I wondered if it would affect my credit rating here in Ireland or would it only affect it if I lived in America? (I don't know if the banks in America liaise with the banks here)
 
if anything credit ratings will become more onerous, banks and now governments will have to make it more difficult for people to default, if they dont the whole financial system risks collapse,
 
The question Totom asked has not been dealt with. I dont know the answer however if someone on the forum knows the answer I would also be intrerested
 
Sorry can't answer the question thorough any experience but I can't see why the US lender would take a different approach to any other lender including following the borrower for all he is worth (if the mortgage agreement permits). We are living in a globalised world - US law firms will all have relationships with lawyers in Ireland.

I'd prefer to rephrase the question and ask why wouldn't the lender come after borrowers for the difference between the loan and the realised value of the property irrespective of where the borrower is from?
 
putsch said:
I'd prefer to rephrase the question and ask why wouldn't the lender come after borrowers for the difference between the loan and the realised value of the property irrespective of where the borrower is from?
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Because each US state's property laws are different and cannot be generalized or compared to the UK or Ireland?

Many mortgages in the US are "non recourse." So on disposal after foreclosure, the original lender is no longer liable for any shortfall. see http://en.wikipedia.org/wiki/Nonrecourse_debt & [broken link removed] Anti-Deficiency and non-recourse may not be applicable to an investment property, so there's no short cut to a proper check with a lawyer from that state.

 
The answer still hasn't been given and I would be interested in it. I am of the belief that if someone defaults in a country outside of Ireland it will not affect their credit rating in Ireland today. However in the future I believe this will all have to change as people with foreign investments will just walk away from the mortgage and property.
Anyone able to clarify the original question?
 
KFB123 said:
The answer still hasn't been given and I would be interested in it. I am of the belief that if someone defaults in a country outside of Ireland it will not affect their credit rating in Ireland today. However in the future I believe this will all have to change as people with foreign investments will just walk away from the mortgage and property.
Anyone able to clarify the original question?
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Firstly, if it is a non-recourse mortgage then there is never going to be a bad debt (even in the US.)

Secondly, companies generally check against (multiple) credit reference agencies. There are many different ones. You should contact these agencies for a definitive answer on how they calculate your credit history and resulting score. For example [broken link removed]

I see no reason why these credit reference agencies are restricted to holding information only obtained from Irish companies and about Irish mortgages. In the opposite direction the data protection act might protect you from US agencies (European companies cannot generally send personal data to the US as it does not have the same safeguards, although there are exceptions.) I would guess these guys have already got their act sorted regarding cross-border distribution of data and queries.

See http://en.wikipedia.org/wiki/Credit_bureaus
Quote: "In the United Kingdom, the three credit reference agencies are Experian, Equifax and Callcredit, which works closely with its US partner, TransUnion."
​
 
It seems thousands of people are exiting dubai. They leave their (bank owned) cars in the car park with the keys in the ignition, maxed out creidt cards in the glovebox.

Probably a lot of them are walking away from impaired property investments as the market continues to dive.

None of them seem to be too worried about creditors following them to India or wherever they go. The cost of tracking them down and seeking repayment in most cases will not be worth the effort.

That is why banks are unhappily restarting their asset values and trying to start afresh with taxpayers money.

So in answer to your question, will the bank come after you? The answer is: If they believe they can get more money from you without a big investment from their side, then they might be tempted. So if they have a list of all of your assets and it exceeds the amount you owe them, they might be tempted.
 
Martin77 said:
Firstly, if it is a non-recourse mortgage then there is never going to be a bad debt (even in the US.)

Secondly, companies check against credit reference agencies. There are many different ones. You should contact these agencies for a definitive answer on how they calculate your credit history and resulting score. For example [broken link removed]

I see no reason why these credit reference agencies are restricted to holding information only obtained from Irish companies and about Irish mortgages. In the opposite direction the data protection act might protect you from US agencies (European companies cannot generally send personal data to the US as it does not have the same safeguards, although there are exceptions.) I would guess these guys have already got their act sorted regarding cross-border distribution of data.

See http://en.wikipedia.org/wiki/Credit_bureaus


Quote: "In the United Kingdom, the three credit reference agencies are Experian, Equifax and Callcredit, which works closely with its US partner, TransUnion."​
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The ICB only give information to the banks that contribute so doubt they share it with any non contributors abroad.

All those credit agencies in the UK are for commercial customers only.
 
Luckycharm said:
All those credit agencies in the UK are for commercial customers only.
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You should be able to get a credit history for yourself of all of the personal data they hold on you on request from each company under the provisions of the data protection act. They may or may not make it easy to get the data, but they do have to provide it (for a nominal fee of a couple of quid) Look for "statutory credit report by post."

 You could also try or http://www.experian.co.uk/ http://www.callcredit.co.uk/ http://www.equifax.co.uk/ [broken link removed] etc. But I am sure you can google as well as me for credit reference agency. If the US mortgage account is mentioned you should be able to work out the effect for yourself as the companies generally also publish their scoring mechanism.

More info on the UK law can be found at http://www.direct.gov.uk/en/Governmentcitizensandrights/Yourrightsandresponsibilities/DG_10031451

For Ireland see [broken link removed]

What this will never tell you is how a (potential) lender will use your score to approve or deny a loan in the future..... only the individual lenders can decide that at the time of the application. But at least you would know if they know of the link to the US.
 
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