Getting out of dead end financial situation

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wyam

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I’m wondering about the ethics of this busines deal: I own a mobile home & owe much more than we could ever sell it for. We have been wanting a house for a few years, one reason is to have a basement in case of bad weather.
I have been given advice from brokers & mobile home dealers like this: since our mobile home mortgage company is no longer in the business of mobile homes, they should either accept a much lower payoff if the house sells, or we would just stop making payments & let them reposess the mobile home.
Since the only other option is to wait up to 10 years to hopefully pay down the mobile home to where it might sell, is there any ethical considerations to possibly just letting the mobile home get repossed? I figure we will be accepting the consequences of bad credit for a few years.
Would this just be a regretful business deal to get out of a dead end situation, or could it be sinful?
 
I think a big part of the answer is if the person who sold you the mobile home with financing was honest and revealed the whole deal.

For example, there have been numerous cases in the business press about unethical refinancings of mobile homes, where the true costs were not disclosed to the buyer.

After examining your conscience, then I would suggest two possibilities. One, if they were ethical and properly disclosed the deal, then I think you are ethically committed to the deal. In that case, you could pay the home off according to contract, or you could sell the home at a loss, make up the difference, and pay off the loan early. You can assess your financial options with the mindset that you are going to meet your committments.

If they were unethical, I believe you do not have the same ethical obligations to meet your obligations. In that case, you could consider suing them, you could declare bankruptcy, or you could talk with them about a workout.

Be very careful of going to one of those consumer credit agencies. Often, they will negotiate the bank to cut the amount due. That then hits your credit record as a charge off. If you are going to have a charge off, you might as well have a bankruptcy. Also, some consumer credit agencies charge a lot of fees. They say they are “non-profit”, but it is more like a wolf in sheep’s clothing.
 
Getting it repoed would look very bad on your credit report. Not as bad as bankruptcy but almost. I would not stop making payments. I would sell it for what ever you can get for it and use that money for a down payment for a house. If the mobile home gets repoed, it will be harder to get your house you desire. Banks and lenders will be more reluctant to lend you money for the house when they see that on your credit report.
 
I don’t know if it would be possible in your situation, but could you rent out the mobile home and still get a mortgage on a home? If you have decent credit it might work. Even if you could rent it out until you’ve paid it down enough to sell it and break even, you might be better off. In the mean time you can be living in the house that you want.
 
Thanks for the advice.
We are going to look at some houses tonight & probably go through with whatever it takes to get rid of the mobile home.
Selling the mobile home wouldn’t get us any money for a down payment - we could maybe get 1/2 of what we owe.
There’s no way we could own a home and pay on the mobile home.
We’re not allowed to rent it out in our park.
I’ve had two mobile home brokers tell me that our mortgage comapny isn’t even in the mobile home business, so they will probably take whatever they can get & write off the rest.
Repo would be a last resort, but the only other option would be to wait another 7 or so years & hope to pay it down enough by then.
Pray for me while I go through this.
Thanks
waym
 
Also, I was wondering if the stain of sin is reduced in the matter since our credit (in the event of repo - last option) would be negativly effected & threfore I would be accepting the consequences for that action.
any other thoughts would be appreciated.
 
Repo doesn’t always get you released from your obligation to pay. If you owe more than the mobile home is worth, you may find yourself billed for the difference. It happens that way with cars. Check that out carefully.

Betsy
 
Wyam, a few thoughts:
  1. Are you or your spouse participants in 401(k) plans where you work? If so, you might be able to take hardship distributions to purchase a home (you probably would need to have a contract on a house to get the $). Once you have the $, you could perhaps use it to pay down the mortage on the MH. Warning: you would pay additional income taxes if you did this.
  2. Could you accelerate your mortgate payments on the MH and pay extra principal each month? You could possibly pay off your mortgage much more quickly this way.
  3. Could you move the MH to another park, where you could rent it?
Just some additional angles, hope this helps. Peace and blessings.
 
I suggest you say a prayer to Our Lady of Good Remedy. Mother Angelica enlisted Her intercession in times of financial struggles. I prayed to Her two weeks ago and continue to receive surprising blessings in our financial situation. I cannot explain them any other way. Hope this helps!
 
You asked about the **morality **of your situation, and so I will respond with my thoughts on that.

You are **not **in a situation where you cannot pay on your mobile home through no fault of your own. You are not unemployed, stricken with illness, or otherwise incapacitated.

They way you describe it, you simply don’t want to live in your mobile home anymore and want a house. (Your description that you want to move into a house to have a basement is, to me, rationalizing the desire to get out of your deal.)

So, in the pursuit of this house you are willing to stick the creditor who lent you money in good faith (or the company who now owns that obligatory note) in order to get what you want but do not need.

So, yes, I would say that what you plan to do is morally reprehensible and probably grave matter.

You signed a contract and made a promise regarding repaying money lent to you. Now you want to renig on the deal because you no longer like your deal. The fact that the mobile home is not worth what you paid for it is nobody’s fault. That is the risk all property owners take. But, just because it has lost value does not mean you are not responsible for the promise you made and the obligation you undertook.

Walking away would be gravely wrong. It is **stealing **money from those who you owe, it is breaking a contract without reason other than you “want” a house and no longer “want” your mobile home.

Personally, I think trying to cheat the mortgage company in the way you propose shows poor character on your part.

You should stand by your obligation and do the right thing, not try to take the easy way out.
 
1ke said:
You asked about the **morality **of your situation, and so I will respond with my thoughts on that.

You are **not **in a situation where you cannot pay on your mobile home through no fault of your own. You are not unemployed, stricken with illness, or otherwise incapacitated.

They way you describe it, you simply don’t want to live in your mobile home anymore and want a house. (Your description that you want to move into a house to have a basement is, to me, rationalizing the desire to get out of your deal.)

So, in the pursuit of this house you are willing to stick the creditor who lent you money in good faith (or the company who now owns that obligatory note) in order to get what you want but do not need.

So, yes, I would say that what you plan to do is morally reprehensible and probably grave matter.

You signed a contract and made a promise regarding repaying money lent to you. Now you want to renig on the deal because you no longer like your deal. The fact that the mobile home is not worth what you paid for it is nobody’s fault. That is the risk all property owners take. But, just because it has lost value does not mean you are not responsible for the promise you made and the obligation you undertook.

Walking away would be gravely wrong. It is **stealing **money from those who you owe, it is breaking a contract without reason other than you “want” a house and no longer “want” your mobile home.

Personally, I think trying to cheat the mortgage company in the way you propose shows poor character on your part.

You should stand by your obligation and do the right thing, not try to take the easy way out.
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I agree with this.

Kathy
 
Sorry, I have to agree with Ike also. I will tell you bad credit &/or BK is more difficult on ones soul than you might realize.
 
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