Here’s the question in total:

“My husband and I purchased a lot in West Virginia in 2005. It was an investment in a new development. Long story short, the developer took the money and didn’t do anything. We paid $70000.00 for the lot. We put 10% down and $63000.00 is in a balloon loan that is due at the end of this year. We along with about 30 other buyers are in litigation with the bank, developer, county, and marketing firm. Many people have just stopped payment on their loans, but I don’t want to ruin our credit. My score is 764. We would refinance but of course the bank does not want to talk to us. The loan officer that made the loan gave people loans knowing the lots were not even approved for sewer. We won’t be able to refinance elsewhere, because the lots are worth nothing. Our lawyer can not advise us. We would have to take a loan against retirement, credit, or equity to pay the $63000.00. What would you advise?”

I here your plight and actually wrote an article on this exact problem with new development real estate investments called, “Kirkway Estates Exemplifies Dangers In Buying New Homes - Ghost Towns”

Given your specific circumstances…it seems as if your options are limited. I certainly would not throw good money after bad. Leave your retirement, existing credit lines, and equity in your home for yourself moving forward.

If I were you I’d default on the loan after discussing the option with an experienced real estate attorney to make sure the developer and/or mortgagee didn’t have any claims on my other assets. As long as the only recourse on the mortgage is to foreclose, without a deficiency judgment possibility…I’d default and let foreclosure happen.

Once again…anyone considering allowing their mortgage to fall into foreclosure MUST get experience legal advice.

Good Luck!

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