Posted on: 07th Mar, 2008 08:58 pm
my situation is 1) husband doesnt have a job, 2) our loan was already sub-prime (8.5%) and interest only payments are $3400. with my income the most i can afford each month (right now) is $1700 (husband is out of picture so no help there) as far as refinancing, they told me i would owe pre-payment penalty of $18000 (6 months interest, and adding that to the loan (currently $400,000) puts it at $418k thus, jumbo loan, more interest. is there creative financing out there that would allow me to have a payment of $1700 for up to 5 years? or so? and god willing, equity will build up and i can possibly get into a normal loan? the lender totally had me - i am usually not so naive, but he showed me the wording in the contract that said we could refinance after 12 months with no penalty but of course i call the lender (countrynarrow) and they said nope nope nope, there is a 3 year prepayment penalty... pitiful! so anyway, back to the question . is there any type of loan that could help me keep my house? i really do want to stay here for another 10 years but obviously, not with the payments where they're at. my credit score is within the 'good' range, not any late payments on my mortgage, or my credit cards etc. i looked on the calculator to see amount of loan my salary qualifies for and its not the $400k i need.. are there 40, 50 year loans? or loans that have a fixed payment for x amount of years, and then ?? or should i just hang it up? i havent been late on my mortage yet, but today is the 7th so i only have 8 more days to figure out what to do) thank you all again for the support, i am so very glad i came upon this site, it was just what i needed. and reading other posts, the community, lenders etc. are awesome. thank you
You are in a tough spot. Obviously walking away will kill your credit. One option maybe to call the lender. If they think there is a chance of default they may work with you. Maybe you could get a couple of room mates? Is the husbands name on the loan? What is the value of the home? Is it worth $418k, and how much equity do you have? If you are in a high cost of living area you may be able to get a fha loan of some sort. Good luck...
Welcome jeff,
I agree with you. Walking away from this situation will kill wanderlinghs's credit like anything..but do you think he'll be able to get FHA financing in high cost areas?
Well, some more community members have been posting at the previous thread started by Wanderlinghs at http://www.mortgagefit.com/behind-payment/payoffloan-foreclose.html .
I agree with you. Walking away from this situation will kill wanderlinghs's credit like anything..but do you think he'll be able to get FHA financing in high cost areas?
Well, some more community members have been posting at the previous thread started by Wanderlinghs at http://www.mortgagefit.com/behind-payment/payoffloan-foreclose.html .
I was in a similar situation, and facing foreclosure. This was with Wells Fargo and they 'said' they would do a short-sale, do payment arrangements, etc but their idea of a payment arrangement was to add on what I was behind to the current payment. [Logic fails me there]
If I had to do it again, I would start preparing the lender in advance that you cannot make the payment, and may default. Ask to speak to their loss mitigation dept, or something similar, NOT just the regular customer service line. Ask to speak to a supervisor first thing. Someone who has authority to make decisions. Explain the situation and your possible intentions. I have read that if you are proactive on the front side, lenders are much more agreeable to working with you, especially now with the state of the housing market, etc.
Wishing you the best,
brenda
[Link removed as per forum rules. Thanks.]
If I had to do it again, I would start preparing the lender in advance that you cannot make the payment, and may default. Ask to speak to their loss mitigation dept, or something similar, NOT just the regular customer service line. Ask to speak to a supervisor first thing. Someone who has authority to make decisions. Explain the situation and your possible intentions. I have read that if you are proactive on the front side, lenders are much more agreeable to working with you, especially now with the state of the housing market, etc.
Wishing you the best,
brenda
[Link removed as per forum rules. Thanks.]
Hi cowlovinmom,
Welcome to the forum.
BTW why don't you introduce yourself to the community at http://www.mortgagefit.com/introduce-yourself.html
Best of luck,
Larry
Welcome to the forum.
BTW why don't you introduce yourself to the community at http://www.mortgagefit.com/introduce-yourself.html
Best of luck,
Larry
if you live in a jurisdiction that has a long redemption period, you can legally remain in your home without making payments until the redemption period expires. in michigan, that's usually about six months. during this time, you can save some money on rent, so you have a little nest egg to finance your move.
the reason walking away usually works is that in many cases, your home is the only collateral securing your loan. the mortgage you signed when you took out the loan gives the bank the right to take possession of the home in the event that you fail to make the agreed-upon payments.
in some jurisdictions and with some lenders, simply abandoning the home could be a risky move, however. if you signed a promissory note in addition to the mortgage, and if you live in a jurisdiction that allows for deficiency judgments, you are responsible for repaying any debt that remains after the bank takes possession of your property and sells it. so, for example, if you owe $250,000 and you walk out on the home, the bank may foreclose, sell the home at auction for $120,000, and then file a law suit against you to collect the remaining $130,000.
a much better way to walk away without having the bank chasing after you to collect the deficiency is to negotiate with the bank to accept a deed in lieu of foreclosure. with this arrangement, you hand over the deed to the property and the keys and usually agree not to trash the house. in exchange, the bank forgives your debt.
if you are able to negotiate with the bank to accept a deed in lieu of foreclosure, be sure you get the agreement in writing – a signed letter from the bank's representative stating that you are free and clear of the debt. it's a good idea to have your own attorney look everything over before you sign any agreement. you want to make absolutely sure that the bank has no legal right to try to collect on the unpaid debt.
you may want to explore other options before simply walking away, but if you've already done that, and your back is against the wall, walking away is a whole lot better than getting forcibly evicted
the reason walking away usually works is that in many cases, your home is the only collateral securing your loan. the mortgage you signed when you took out the loan gives the bank the right to take possession of the home in the event that you fail to make the agreed-upon payments.
in some jurisdictions and with some lenders, simply abandoning the home could be a risky move, however. if you signed a promissory note in addition to the mortgage, and if you live in a jurisdiction that allows for deficiency judgments, you are responsible for repaying any debt that remains after the bank takes possession of your property and sells it. so, for example, if you owe $250,000 and you walk out on the home, the bank may foreclose, sell the home at auction for $120,000, and then file a law suit against you to collect the remaining $130,000.
a much better way to walk away without having the bank chasing after you to collect the deficiency is to negotiate with the bank to accept a deed in lieu of foreclosure. with this arrangement, you hand over the deed to the property and the keys and usually agree not to trash the house. in exchange, the bank forgives your debt.
if you are able to negotiate with the bank to accept a deed in lieu of foreclosure, be sure you get the agreement in writing – a signed letter from the bank's representative stating that you are free and clear of the debt. it's a good idea to have your own attorney look everything over before you sign any agreement. you want to make absolutely sure that the bank has no legal right to try to collect on the unpaid debt.
you may want to explore other options before simply walking away, but if you've already done that, and your back is against the wall, walking away is a whole lot better than getting forcibly evicted
Yes I agree with you Imdcorp. Deed-in-lieu is definitely a good option but not many lenders agree to do it because they can't collect the deficiency. However, do you think Chapter 13 could help the OP pay off his debts? I feel it might work for this guy.
Yep, I do believe Chapter 13 would be helpful in this situation.
I am going through a similar situation as cowlovinmom with the same lender. Purchased a property in Florida in 2004, put it up for sale in Sept '06 and only received ONE offer in Sept 07. Stopped making mortgage payments in June 2007, couldn't handle 3 mortgages (I am in CA). Never made late payments until June 07, tried to alert lender ASAP to "work" with them in good faith. Not very helpful at all and very slow to respond. Working with a RE Agent and 3rd party company and have been going through a short sale process with that ONE potential buyer since Sept 07... Seven months later, I am told that the lenders say the PMI company will not approve the short sale without signing a promissory note of $24K, billing to start this July. If I don't sign, will foreclose (no choice for DIL??). I DO NOT HAVE AN EXTRA $400/month to pay, can barely pay the home I'm in (late every month). Talked to several attorneys in CA and FL -- I'm confused and pressed for time. Signing the note may be a waiver or may compromise my anti-deficiency protection (if applicable? Is there protection in the state of FL?) Also, if I end up having to file bankruptcy, it would be considered defaulting on the loan and they could arguably object - thus severely limiting my options! Potential buyer is hanging by a thread - could lose in the next 48 hours.
More details:
Difference between loan amount and short sale purchase price is $103K.
Is the note of $24K 1/4 of this amount? If so, is that the only amount I have to worry about? Or do I still have to deal with the $103K balance? Will I be still be 1099'd? If I can't pay, will I be sued? What if I can't pay anything? My credit is screwed no matter what. HELP!
More details:
Difference between loan amount and short sale purchase price is $103K.
Is the note of $24K 1/4 of this amount? If so, is that the only amount I have to worry about? Or do I still have to deal with the $103K balance? Will I be still be 1099'd? If I can't pay, will I be sued? What if I can't pay anything? My credit is screwed no matter what. HELP!
Welcome SoDrained,
If you short sell the property then the lender may ask you for the deficiency judgment if the PMI company does not pay the due amount. But if the the forgives you the debt then you will need not to pay the tax because of Tax Break for Mortgage Debt Forgiveness
Let me know if you have any further quires.
If you short sell the property then the lender may ask you for the deficiency judgment if the PMI company does not pay the due amount. But if the the forgives you the debt then you will need not to pay the tax because of Tax Break for Mortgage Debt Forgiveness
Let me know if you have any further quires.
walking away from homes is way too easy for people. i understand the frustration and the "how will i ever make it" attitudes that pervade the atmosphere in these situations, but i honestly don't understand the idea that walking away and leaving the home makes sense.
our parents, their parents and their parents didn't raise us to be that way. they weren't that way. how does one justify simply walking away from a problem? in past times, homes lost value; income got short; creditors didn't pay attention; yet people persevered through the hard times and most made it through.
losing equity may be a long-term issue and it may not. gaining equity in the recent past was much accelerated over previous times, and pretty much unreasonably so. are we so certain that the loss of equity in our homes will last forever and that it simply isn't worth the struggle to try to maintain these homes and wait out the market?
it's a sad commentary on the morays of this society we live in. yet we wonder why other countries look at us in disdain.
our parents, their parents and their parents didn't raise us to be that way. they weren't that way. how does one justify simply walking away from a problem? in past times, homes lost value; income got short; creditors didn't pay attention; yet people persevered through the hard times and most made it through.
losing equity may be a long-term issue and it may not. gaining equity in the recent past was much accelerated over previous times, and pretty much unreasonably so. are we so certain that the loss of equity in our homes will last forever and that it simply isn't worth the struggle to try to maintain these homes and wait out the market?
it's a sad commentary on the morays of this society we live in. yet we wonder why other countries look at us in disdain.
