Posted on: 12th Jun, 2010 09:30 am
hi,
what we are trying to accomplish is work with our lender (pnc mortage) to get our loan on one of our rental properties located in florida to have either of the following:
1. rate change (lower the interest rate from 7%) and make the loan to 30 yr fixed instead of a 5 yr fixed arm we currently have and due to change in 2012, or
2. modify the loan based on the current market value (if possible). the property value has substantially gone down to 60% from the original acquired value. if we can modify the loan, this can lower our mortgage and make it more affordable. in addition, the property tax in florida and insurance (casualty and flood) are too high that is becoming a burden for us landlords. even with the 20% down payment that we put in, the property is still underwater by 40%. please note that this is still the original loan that was moved from a construction loan and has never been refinanced.
our problem is, the existing lender does not want to work with us in our loan since they say that our income is enough to support the mortgage and that we are not in hardship. however, i tried to explain that if the loan does not get converted to 30 yr fixed that we may be in trouble when the arm recasts in 2012 and the interest rate goes up (with the economic conditions nowadays, amounting vacancies and repairs on our other rental properties will eventually catch up on us). we cannot refinance since we have not found any lenders willing to refi if you have more than 4 properties. it's disappointing that these lenders do not want to work with you while you are still afloat. it’s frustrating that they would rather have us default on our loan than work with us now.
my question is, should i just go ahead and default on this loan even though we can still afford to pay so they will accommodate our request? what should we do? what if they are adamant and would not work with us after defaulting on the loan?
i would greatly appreciate any inputs from you.
thanks
what we are trying to accomplish is work with our lender (pnc mortage) to get our loan on one of our rental properties located in florida to have either of the following:
1. rate change (lower the interest rate from 7%) and make the loan to 30 yr fixed instead of a 5 yr fixed arm we currently have and due to change in 2012, or
2. modify the loan based on the current market value (if possible). the property value has substantially gone down to 60% from the original acquired value. if we can modify the loan, this can lower our mortgage and make it more affordable. in addition, the property tax in florida and insurance (casualty and flood) are too high that is becoming a burden for us landlords. even with the 20% down payment that we put in, the property is still underwater by 40%. please note that this is still the original loan that was moved from a construction loan and has never been refinanced.
our problem is, the existing lender does not want to work with us in our loan since they say that our income is enough to support the mortgage and that we are not in hardship. however, i tried to explain that if the loan does not get converted to 30 yr fixed that we may be in trouble when the arm recasts in 2012 and the interest rate goes up (with the economic conditions nowadays, amounting vacancies and repairs on our other rental properties will eventually catch up on us). we cannot refinance since we have not found any lenders willing to refi if you have more than 4 properties. it's disappointing that these lenders do not want to work with you while you are still afloat. it’s frustrating that they would rather have us default on our loan than work with us now.
my question is, should i just go ahead and default on this loan even though we can still afford to pay so they will accommodate our request? what should we do? what if they are adamant and would not work with us after defaulting on the loan?
i would greatly appreciate any inputs from you.
thanks
Welcome eimson,
I must say that you are in a tough spot. The lenders won't be ready to give you a refinance as you've 4 properties. Moreover, you won't get a modification as you're still current on your mortgage payments. I don't think it would be a good option to default on your mortgage payments as you won't be able to prove any hardship to your lender.
I must say that you are in a tough spot. The lenders won't be ready to give you a refinance as you've 4 properties. Moreover, you won't get a modification as you're still current on your mortgage payments. I don't think it would be a good option to default on your mortgage payments as you won't be able to prove any hardship to your lender.
Thanks for your reply Adonis. Any other inputs will be appreciated.
Nobody that works in the mortgage industry will tell you to stop paying your mortgage. Unfortunately, it's the only way to get lenders to listen to you. I do agree with the above about owning multiple properties. That is a tough spot for you because there is no hardship.
I'd definitely talk with a lawyer to see what your liabilities are here.
I tried working with lenders but they didn't want to talk to me until I was 3 months late. Since you are still underwater by a bunch, if you miss enough payments for foreclosure, I'll be my bottom dollar the lender will work with you on modifying your loan. That's when they finally tried to work with me. Just be careful because they are greedy and if there is opportunity to put a judgement on you for the remainder of the loan it can cause problems.
Can't believe I'm saying talk to a lawyer because I had 3 lawyers tell me 3 different things. I do wish you the best though.
GL,
-B
I'd definitely talk with a lawyer to see what your liabilities are here.
I tried working with lenders but they didn't want to talk to me until I was 3 months late. Since you are still underwater by a bunch, if you miss enough payments for foreclosure, I'll be my bottom dollar the lender will work with you on modifying your loan. That's when they finally tried to work with me. Just be careful because they are greedy and if there is opportunity to put a judgement on you for the remainder of the loan it can cause problems.
Can't believe I'm saying talk to a lawyer because I had 3 lawyers tell me 3 different things. I do wish you the best though.
GL,
-B
Thanks Brent for your input.