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My wife of 4 months is in quite a financial wreck. She has 3 mortgages. An 80/20 on the house we are currently living in with a very high interest rate, and a 30 year fixed from a house that she was living in with her friend. Friend agreed to pay her off a year ago (never going to happen) and is now 60 days late on the payments with my wife’s name still on the loan. With a 2100 monthly payment (not including ins./taxes) on the 235k house we are living in now, we are barely making it with our combined income. We can make the payment, but she falls behind on other payments like her credit card and unexpected things throughout the month.
The lenders won’t do anything for us until we are delinquent and she (we) still have a full year on a pre-payment penalty. My FICO score is around 730 and I am not tied to any of this. What do we do? Stop making the payments and let her credit take a hit? I honestly feel like we would be better off. I could get a loan at a much better interest rate on another house and we would be living a much more comfortable situation, financially.

What should we do about the other house her friend is likely to lose? It’s on the market but not selling. She has a letter notarized stating that her friend would pay her XXX amount as a payoff with in a year, but can not come up with the money. My wife has left her name on the house not knowing the market would fall like it has, and incase she could not pay her.
Need some advice, please!!! Its just unbelievable the mess we are in with the decent money we make. It should be soooooo much easier than this.
Thanks

miller_st · Joined: 17 Jan 2007 Posts: 918 168.95 Dollars($)

Hi Taylor,

The situation does seem very difficult to come out of.

Did you look at refinance options that are available and what rate offers that are possible if you apply for it?

As she has a notarized letter that her friend would pay her the money, you should go to court for its implementation. This fund would be helpful for you in continuing the mortgage on the present house and other payments.

Miller

livinginnky · Posted: Sat Sep 15, 2007 4:58 pm Post subject:

You didn't mention anything about the 3rd home.

Consider refinancing everything with your credit and income. As you are married now depending on where you live you may be liable anyway regardless of when she bought them. And ultimately you are anyway just not legally.

With your scores and a good income you should be able to get low fixed rates on everything.

Unfortunately your bank doesn't care what type of external agreements that you have. She took a mortgage and they expect it to be paid for.
Does her friend have the money to pay it off? Or was she just hoping to come across $200k.

Also note and this is important. Her friend is going to lose nothing unless both their names are on the mortgage. At which point they are both going to lose equally. If she can't make the payments have her deed the house to you and refinance it in your name. Otherwise your wife will be foreclosed on as well.

ezmortgageloanz · Posted: Sat Sep 15, 2007 7:37 pm Post subject:

Does sound like a sticky situation---you need to get the "monkey off your back" before you can refinance (You need to deal with the friend/2nd house that isn't performing first).

Questions about 3rd Mortgage/2nd House:

a. What type of mortgage is on the property---is it an ARM?
If so, investigate assumability and have friend assume the mortgage/responsibility/headache.
b. What is the house currently worth---what is the balance of the mortgage? If there is significant equity, offer seller financing to make your offer more attractive (example, you have a 100K mortgage on a property valued at 150K---offer to sell the property at 150K with a 50K seller second). This will allow you to get from under the 3rd mortgage, allow more people to qualify for the purchase and allows you to maintain your asking price. SPECIAL NOTE: The number 1 reason why properties don't sell is because they are priced incorrectly---make sure that your asking price is realistic based upon your local market.

Once you get the 800 lb gorilla off your back, you can consider refinancing your primary residence and reduce your monthly payments/interest rates.

Another option (or last resort) is to hire an attorney and stick it to your wife's friend...

Good luck...

Regards,

Scott Miller

liaoyu03 · Joined: 09 Sep 2007 Posts: 166 4.48 Dollars($)

I am really sorry to read about the financial troubles your wife, and you are in. Sometimes life serves us with un-deserved havock, when you try to help friends out. Here we have a saying: "You can not get feathers off a naked chicken", and in this case, the signed paper of the friend of your wife about the payments for the house is worthless. You are probably right about maybe the best option being for you to get a loan and pay the mortgage this way. her friend should vacate the house however, so thatyou could place it for rent to reliable payers, and while waiting for it to sell. As if and when it won't be easily changed into a better score later on.

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Taylor,

Even I feel like Livinginnky that if you are able to make the payments for that house in which your wife's friend is there, you can refinance by taking a new loan in your name. As your credit score is good, I think you will be able qualify for a refinance loan. But before that, the house title must be transferred in your name.

Guest

Hi Taylor,

In this situation, you can go for a cash-out refinance and pay off the 80/20 mortgage first. After repaying the 80/20 mortgage, you can make the payments towards 30 year fixed rate mortgage with the extra cash obtained through refinancing.

helping_user

Welcome Taylor.

I think you can ask your wife to go by what Eric is suggesting. If that's not possible then you can look for the friend to assume her loan but then I think it's not possible if there is an acceleration clause in your loan. This is because if such a clause is there, then the loan becomes due and callable and then what if the friend cannot pay the entire amount. In that case, you wife has to pay it.

Rgarding the seller financing, your wife can go for it but for that she needs to have the house enitirely in her name. I don't think the friend will be interested in buying it from her and so, she will have to find out a potential buyer for herself.

Thanks.

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