New Financial Plan: Walk Away from Your Mortgage

I am torn. I don’t know whether I should post this link or hope it dwindles into obscurity (unlikely). The website says it all:

You Walk Away promises to help homeowners walk away from their current mortgage with no debt, no strings, and says ballsy things like this:

You will immediately know the exact amount of days you have to live in your house payment free. We stay on top of your walk away plan and keep you up to date with weekly progress emails. We also will notify you if the lender is taking longer than expected subsequently giving you more time in your home payment free.

My italics. I know we talk a lot about how many mortgages never should have been made in the first place, but that does not mean that walking away and gleefully living “payment free” is the solution. The responsible solution is to refinance, negotiate a lower rate or a deed in lieu of foreclosure, or sell the house. If none of those things work, then the bank may foreclose if it wishes, but the consumer will feel the effects on their credit report and possibly through residual collections. Foreclosure ain’t pretty, folks, no matter what this website would like you to think.

You Walk Away also says “You will be enrolled in our affiliate credit repair plan. They have removed thousands of foreclosures from their clients [sic] credit reports.” Maybe this is true, but I cannot think of a legal way that the “affiliate credit repair plan” could be doing this.

I would love to see the magic letter they send to the lender to stop them from harassing borrowers. (I would also love to take a red pen to their website.)

Edit: Michael Shedlock of Mish’s Global Economic Trend Analysis called up You Walk Away to find out more:

I spoke with John Maddux a “senior advocate” with You Walk Away (YWA) about the business. As one might expect it is booming. For $995 one receives a half hour of legal counsel where individual strategies are mapped out and all the laws pertaining to recourse vs. non-recourse loans as well as judicial procedures are explained to the customer. YWA also files the necessary legal papers to stop mortgage companies from calling and informs you immediately of how many days you will be able to stay in the house for free. Should the lender take longer to process the documents, YWA will keep you informed of any extra time.

With the amount of money at stake, the fee seems reasonable for the services provided.

Maddux informed me that YWA is currently operating in the state of California only, but Nevada and Florida will soon be coming online. Eventually they expect to be nationwide.

(FYI, $995/half hour is probably the highest hourly rate in the world.)

  • Maxwell Hayes

    I will agree that YWA and Walk Away Plan are predatory in that they know they probably will not be able to provide what they promise. If the Hope For Homeowners, a federally designed plan has failed so miserably…I dont see how these “Walk Away” companies feel they can do any better. I was optimistic in the beginning but as the time went on, and they didnt follow through on their plan, I became very worried and knew I had just wasted another $700.00, money I could really have used elsewhere!
    Run….dont “Walk Away” from these oportunistic monsters….

  • http://caveatemptorblog.com/find-consumer-bankruptcy-attorney/ Sam Glover

    @Linda: Start with their local or state bar association. A real estate lawyer should be able to give your son and his wife some guidance and/or a referral to a lawyer who is focusing on foreclosure relief, which is what they need.

  • Linda

    Hi, I’m writing regarding my 24 year old son and daughter in law.
    They bought a condo at the worst possible time 2007, in Benecia, Ca.
    The condo’s going rate is currently half of what they paid. They are probably 4 or 5 payments late at this time due to terminal illness.

    My daughter in law is a cancer survivor, with one leg, one lung due to Osteosarcoma. In August 2008 another rapidily growing Sarcoma took half her organs and digestive tract. The condo wasn’t a priority during her illness and basically the kids have walked away to seek care and family support.

    What type of Attorney should these kids see, as they don’t have the energy to invest in creative refinancing, and renting the property isn’t an option.
    All they are trying to do is spend what little time they have left together in some sort of normalcy, peace or happiness.
    Please, I would appreciate if you could give me a direction for them.
    Thank you kindly,
    Linda C

  • michael

    you can go and talk to lawyers about chapter 13, or 7 etc. free of charge, (they all offer free consultations) after 6 or 8 , some will be crap, some will be really informative you can learn more than 6 months of dribble you read on the web.

  • Sean

    Seems to me that youwalkaway would a great set-up for someone in the foreclosure buying business! Or is that too cynical of me..?

  • Sam Glover

    We do not give out advice in public. Please seek out a consumer lawyer in your state. If you do not know where to find one, the lawyer referral database at naca.net is a good place to find a consumer lawyer.

  • Colleen

    Hi,
    I am sort of like J above…. But with another problem. I am on work comp and it is about to end. I have been unable to work for since 05. I’m fighting with social security which is going to take a long time. Much longer that it is going to take to get kicked out of our home! I don’t have an exact end date of my pay, but I know it will be soon. To add to that, my mother needed a place to live, my step father passed in 05. So she gave us some money to put down on a mobile home that she put on a lot in Az. we had bought for retirement. We financed the rest of the mobile for her. Well, she passed away in March, and now we have that payment and the house we live in here in Ca. and we won’t be able to maintain both for long. I do have a fed disabiltiy retirement that I can collect when work comp ends, but it’s less than half what I get now.
    The house we live in in Cali has lost so much value that there is no way we can be re-financed. Walking away from this house and going to the other one in Az. seems like the only choice here. I don’t know where to turn to find out ecactly what we need to do to walk away or what else we can do for fear of doing the wrong thing. Any advise?

  • kirk

    Why walk away. You will find that the most frustrating conversations you will have with your lender are when you are struggling to do the right thing and let them know you are about to face financial times.
    The people you talk to are the collection dept. and they have a duty to collect. They don’t want to hear sad stories, their job is to get you to pay.
    When you can’t pay and you miss a couple payments, usually about 3, you will be able to get to the Loss Mitigation or Home Retention department. This is where they can do things.
    Don’t give up hope, or your home over stress. Work with them.
    I’ve been in the business of buying foreclosures for 10 years and I’ve seen a bunch of just amazing work outs. You should definitely try, and keep trying to work it out until the day they kick you out! It’s your home, fight for it.

  • http://caveatemptorblog.com/find-consumer-bankruptcy-attorney/ Sam Glover

    Who is judging anyone but the consumer predators at YouWalkAway.com? Yes, some consumers have gotten themselves into a situation where walking away is pretty much the only option. But you could get at least four hours of time from an attorney for what YouWalkAway.com charges for a half hour.

    Your naivete and bad judgment got you into this mess (with plenty of encouragement from Ameriquest). Don’t turn to another consumer predator now.

  • J in a bad place

    The value of my house is now 80k to 100k less than what I owe.
    I put down 30k on the house and have an arm that has already reset once. The rate adjusts every 6 months and the lender is unwilling to work with me. Heck they won’t even talk to me because I make my payments on time. They claim that I must be behind on payments to be ‘prioritized’ by the ‘home retention’ department.

    I tried explaining that I was trying to be proactive, and work with them before things get too bad to be workable, but they don’t want to hear it.

    I am now unable to contribute anything to my savings, because my mortgage alone is half of my monthly income. When my rate resets again in 2 months, I will have to start taking money out of my savings account in order to pay the bills.

    We were 25 when we bought this house and honestly, I think that Ameriquest took advantage of our age and naivety, they told us numerous things that just aren’t true.

    When we refinance 2 years ago, they valued the house at over 600k bu using some computer program, we took 40k out to add an addition; they told us this was a very smart thing to do as it was going to add more value to the home and that we would be ‘swimming in equity’ when it came time for our rate to reset, so we would be able to negotiate a much better rate at that time.

    Well, when it came time for our rate to reset the value of our home had fallen (even with the additional room AND an added half bath), so no one will refinance us for a fixed rate.

    The neighborhood is bad too, not the place I want to spend raising my newborn in.

    Seems to me the only option I have is to walk away because when I try to work something out with the lender they don’t want to listen to reason…

    So with a minimum of an $80,000.00 disparity between mortgage and home value, and the complete resistance of the servicer to even discuss options, there aren’t many other options besides walking away.

    It’s always easy to judge when you don’t really understand the reality.

  • Doug P

    As housing director for a rural non-profit, I do preliminary underwriting for USDA Direct loans. While it is true that a foreclosure is not directly as bad as a bankruptcy it still puts a tremendous hit on our underwriting. We absolutely cannot approve an application within 36 months of a discharged bankruptcy and while there is no specific regulation concerning a foreclusure, the fact that the applicant has been willing to walk away from a previous mortgage makes me as leery or even more so than a bankruptcy. If an applicant comes in with a clean history after the bankruptcy they often receive a good response as most of them have learned from the previous experience (We do get some that have managed to run up large debts or car payments again but not that many) but foreclosure and repossessions often do not show the same willingness to clean up their credit and so they are looked at much harder.