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Guest

I bought house at the peak of the market in California in 2005. I put 10% down and to avoid PMI, I opened a Line of Credit for the other 10%. I have the first and second loan with the same lender. The total amount of both loans is around $715K and the house is worth only around $500K now. The loan term is 5 year ARM interest only, which will go into variable in around one year from now. I am having problem making the payments as it is, so defiantly I won't be able to effort it when it goes to variable.

I called my lender twice so far for, but they didn't provide any advice since I am not late on my payment and I still have one more year before my loan rests to variable, they told me to call back in two months once and they might have some better programs then, and the other time they told me to call "hope now". I called few Mortgage Modification companies but they didn't provide me with any convincing argument that what they are offering is the best solution for me.

Here are few options that I have been considering:

1-deed in Lieu
2-Short sell
3-Simply, walk a way from the house

Ideally, we would have liked to get a mortgage close to market value of the home or something that we can effort, but that does not seems achievable? So what do you think I should do?

My other question is; In case of any of the above 3 options, we still would need a place to live, so should I buy another house first while my credit score is still high, or that will cerate issue with letting the house goes. I have young once that are in elementary school and hate to move them around a lot from one house to another

I greatly appreciate your advice

Guest

Bought in 2003 for 525k. 20% down. Can make payments but current value is 350k. Can government help me? I hear they are helping lower mortgage to 90% of current value. I want to stop paying from this month so I should get the same helping hand.

bearboysj · Joined: 25 Oct 2008 Posts: 42 17.02 Dollars($)

Lawiz -

Please don't just walk away - this type of action is hurting the industry more than helping it - It sounds like you have already contacted your servicer and they are right, most of them will not do anything until you have physically defaulted on your loan.

My next suggestion would be to contact a lender/broker and have them possibily work with the servicer and see if they would be willing to settle for less pay off - I work with a lot of servicers now days are reducing the payoff amount so someone can refinance out of there upside down loan.

Jbill -

Please DO NOT stop making your mortgage payment.

Contact your current servicer and see if there is anything they can do about your upside down loan.

The biggest misconception about these bailout programs in process by the governement is that they are going to help the individual user - and while in the long run they will, in order to access the help you need to contact your servicer or refinance out of your current situation into a more affordable payment.

smithsussane · Posted: Sun Nov 02, 2008 9:23 pm Post subject:

Hi

Lawiz:
Deed in lieu foreclosure or short sale is a better option than simply walking away. Walking away from the home will initiate immediate foreclosure and will also badly affect your credit score. The lenders will not offer loan modification plan unless you default on the loan. I think it will be better if you can rent a house and stay for few years. Once your credit improves, you can try for a new home loan.

jbill:
I think you can take a look at the "Hope for Homeowners" which has come into existence since October this year. Check the given link to know more about the program:
http://portal.hud.gov/portal/page?_pageid=73,7601299&_dad=portal&_sche ma=PORTAL
However as "bearboysj" has suggested, you should not stop paying mortgage payments.

Feel free to ask if you have further queries.

Sussane

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deed in lieu vs. walking away from the house