What are the ramifications of walking away from a ARM loan?

After talking with a financial advisor, I've come to the conclusion that walking away from a owned condo in SoCal may be financially beneficial. Can I be sued? How long will my credit be ruined? (I'm not planning on buying again anytime soon and have two cars paid off so I wont need a loan soon). What kind of lawyer should I discuss this matter with?

What are the ramifications of walking away from a ARM loan?
you will be foreclosed upon, and probably get a deficiency balance judgment against you. It is better to sell the home for the balance owed, than to walk away.
Reply:Not only will they forclose on you, possibly sue you for the loss, there is a tax burden you will have to consider. I beleive that you can be taxed on the difference between what you owe as a payoff plus all fees/costs incurred by the mortgage company to sell your condo and the actual price the condo sells for. As an example, if you still owe 500K, and the mortgage companies fees for selling the property add another 50k, if the property sells for 400k you will owe taxes on the 150k "profit" you made on the sale.
Reply:If refinancing at the current 5.5% is not an option then you have to realize that a foreclosure is going to effect you for at least 7 to 10 years. In the future, if you want to own then you will have to either pay cash, assume a loan which is rare these days and limits your choices or do owner financing which is dangerous if the owner doesn't pay.





You won't be sued.
Reply:The fees keep adding up along with the interest - it goes into foreclosure and is auctioned off - most likely sold for less than the loan plus those added fees - then the loan company pursues you for that difference. It stays on your credit report till it is cleared - on Realtor friend said 7 years like a bankruptcy. Some people planning to do this will buy another house first because they will not be able to qualify for such a long time after. Won't the loan company renegotiate? They are supposed to try to work their own problems out - so give that a try.
Reply:The immediate ramification is foreclosure and a torpedoed credit record. You may find it difficult to rent, obtain consumer credit or even get employment. Have you tried to restructure the loan with your lender?