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susanspencer32 · Joined: 27 May 2008 Posts: 3 1.97 Dollars($)

I purchased a condo in July 2006 and planned to stay for less than 5 years. I'm looking at retiring in near future. Unfortunately, I've experienced health issues which has made swallowing the mortgage, HOA, and taxes too great of a burden to continue. My home is currently worth less than the loan amount so I cannot look at selling.

I have a 30 year fixed loan at 6.25%. I am current so my lender won't talk to me in regards to modifying loan. They don't understand I am tapped out and close to default.

I was offered a loan over the holiday weekend by a relative who knows I am in trouble. It was proposed so that I could perhaps pay down my loan principle and ride out the market. When I sell, I would pay them back.

In this scenario, would I approach current lender to refinance OR restructure my current loan? Or should other mortgage brokers be contacted? I am most likely here for 2-3 years and do not want to pay out monies that I won't see back and that I don't have. Is paying down the principle the way to go given the decling value of the property?

Thank you for sharing your feedback. When you are in this situation and looking at loan fees on top of what you currently are drowning in, you are indeed cautious and hesitant to trust.

Thank you for your feedback! It is appreciated!

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

Hi susanspencer,

Welcome to the forum.

Do you have problems on your monthly mortgage payments? If so then talk to your lender and you can request him for the loan modification of forbearance. There are different ways to avoid foreclosure. Check out the ways to avoid foreclosure at http://www.mortgagefit.com/foreclosure/17ways-avoid.html

you can even refinance it if you are offered a better rate and terms.

Feel free to ask if you have any further questions.

Best of luck,
Larry

susanspencer32 · Joined: 27 May 2008 Posts: 3 1.97 Dollars($)

I explained to lender that default was imminent and it fell to deaf ears. They were only willing to talk to you if you were 3-4 months behind. I am in So. Calif.

Would you recommend using the money offered to pay down the principle as mentioned in my email?

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

Hi susanspencer,

Welcome back.

You have the money to even pay down the principal... right? So you can pay the lender off if you don't want to stay on the property or afford it any longer. BTW don't just get "3-4 months behind" on your monthly payments. In that case you may face foreclosure which will have a huge negative effect on your credit report.

Feel free to ask if you have any further questions.

Best of luck,
Larry

cliff3 · Posted: Wed May 28, 2008 2:48 pm Post subject:

Hi susanspencer,

Larry is right if you start to miss payments it will definitely affect your credit score.

Do you want to keep the condo?

What is the current value of your condo versus what you owe on the condo?

Who is you lender?

This information will greatly help us asses the best potential options for you.

Guest

Thank you. As mentioned in my email, with loan from relative I would not be in a position of default. My credit and score are fine. I would prefer not to have to stay here 3-5 years until market turns around. I would also prefer not to have to sink more money into place. I would to sell however market has declined. I owe around 375 and the value is approx the same or a bit less. Lender Wells Fargo. Question in regards to contacting lender to restructure loan and lower payments and interest rate with monies from relative or ?

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

Hi Susan,

Now the decision is yours. You can sell the property and pay off the lender if you don't want to stay in the property any more. See in this financial crunch thousands of people are in deep trouble and even more than you. So the lender may neglect your case thinking that you are good enough to pay the monthly payments.

Best of luck,
Larry

Posted: Thu May 29, 2008 12:18 pm Post subject:

Hi Susanspencer,

Larry is right depending on your lender they may not restructure your mortgage. However, we have found lenders whou will still reset your mortgage to a fixed rate. In addition, you could even do what is called a "short sale."

I will tell you this Wells Fargo has a pretty tough loan servicer but, at the end of the day the only way to know is to contact your mortgage company.

Would you like some information that could help you with that process?

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

Hi Guest.

Welcome to the forum.

I think it will be great if you can share with us the process that you think may help the original poster Smile

Best of luck,
Larry

smckaybiz · Posted: Sat May 31, 2008 6:12 am Post subject:

If you don't have plans of staying in the condo and you can't afford to live there yourself have you ever considered just renting the condo until the market has turned around. This will make it possible for the mortgage payments to keep being paid while possibly paying down your principle little by little in the meantime. Just a thought...

gmakerley · Posted: Mon Jun 02, 2008 7:12 am Post subject:

y'all don't seem to be reading our poster's words very well. she has clearly stated that she would like to sell, but the market is not supportive of a sale. also, she mentioned that wells won't talk to her unless she is 3-4 months delinquent; she also noted that she is current and intends to remain that way.

susan, one thing you didn't mention is the amount of money you'll be able to borrow from the family member - not sure if you're strictly paying down, or making a series of regular payments.

the trouble you might encounter in trying to refinance is your equity situation, unless you can bring your new, proposed loan to 97% of the value, which would work under fha guidelines.

it's hard to advise without having a bit more information, frankly.

Jason1 · Posted: Wed Jun 04, 2008 9:41 pm Post subject: Re: Mortgage Crisis

Hi Susan,
I have similar questions for you but will try to help with the limited information I have. First, good job on reaching out to the lender regarding modification. Lenders are tough to talk to when you're not delinquent but some will listen if you're persistent enough, but even if your loan is modified you currently have trouble making ends meet so a modification might not be a good enough solution. You may try to approach the lender regarding a short sale, this is where the lender allows you to sell the property, subject to their approval of the offer, for less than the balance owed. Unfortunately, most lenders will only entertain a short sale if you are behind on your payments and the goal may be to preserve your credit.

If you have a relative willing to lend you enough to reduce the principal balance sufficiently to where you might find payments affordable than you have one more option. My advice would NOT be to refinance to a more managable payment. Let's say your relative can help you reduce the principal balance by 10% or around $37,500. A new loan, even an ARM, would incur closing costs in the thousands of dollars just adding to the amount you owe without reducing the interest enough to justify further principal erosion (ultimately more money you will need to pay back). You would now have mortgage insurance added to the payment as well. 6.25% is a great rate in the big picture and a 30 year fixed is a great program. If you take the $37,500 as a loan, which can still be secured against your property as a second mortgage, you might want to consider putting it into various term CDs or a money market where it might earn some interest and draw from it only as needed to supplement your payments. The money could give you $1,000/month relief for maybe up to four years depending on investment account yields. This sounds like it might get you past the bump in the road.

One last thing, a comment was made that your situation isn't as bad as many others. While this is very true I understand that your situation is the most important one to you right now and you are taking the right steps with contacting the lender and reaching out to industry professionals. In reality, I think you will find values will continue to dip in most parts of Southern California at least through the last quarter of this year but my personal feeling is that there will be a fairly strong correction fairly quickly and your property will have equity again rather soon. We're in a phase in California where there's too much inventory right now and too many foreclosures that will still be hitting but before long you will find the bargain hunters diving into the marketplace which will increase values.

I hoped this information is helpful and wish you the best luck.
Best regards,

Posted: Fri Jun 06, 2008 9:18 am Post subject:

George is right and you need to consider a short or a DIL. Here is a brief explanation.

Deed-in-Lieu: A Deed in Lieu of foreclosure (DIL) is a disposition option in which a mortgagor (home owner) voluntarily deeds the property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from home owners who can financially make their mortgage payments

Short Sale: A “short sale” is a sale of the property for less than the total amount owed on the mortgage. If the home owner owes more on their property than it is worth, an investor (we can arrange you with an ethical investor) may be able to convince the mortgage company to accept a short sale. Most lenders would rather have the majority of their money back than the hassle of a foreclosure, legal fees, renovation, and marketing costs associated with the reselling of the property.

Hope this helps. If you would like more free infromation about this visit home-buddies.com

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