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CDA Loan - refinance or loan modification? Need to move...

So here is an overview of my situation. I have a mortgage that was obtained approximately 4 years ago through Maryland’s CDA/More-Home-For-Less program. Unlikely many unfortunate souls who I see posting on here (my heart goes out to all of you in far worse shoes than I), I am actually not in any danger of foreclosure or losing my home. I have a stable full time job (have been here about 3 years) and have paid my mortgage on time since I have owned the home. My house (condo) is indeed upside-down on the mortgage, but only by about 15K (condo is worth around 170K now, mortgage currently at about 186K), which in the world of mortgage isn’t much at all.

The problem is I am looking to move away to the other side of the country for personal reasons (new job, boyfriend, etc.) in about 1 year. I want to keep the house, but of course rent it out. The problem is CDA mandates that the original owner occupy the home FOREVER, period. As in no matter how long you have lived there, you can’t ever rent it with a CDA loan (I had no idea this was the case until recently). In addition, my home does NOT qualify for the 125% remortgage program under Obama’s program because it’s not held by Freddie Mac or Fannie Mae, but rather bond-held (as I understand it, but I might be wrong).

There are other good and bad sides to my current financial situation otherwise. The good side, as aforementioned, is I am not behind on my mortgage, and I have a stable job. I also have a good amount of spare cash in savings in the bank. I also have an excellent credit score (not a single late payment of any kind on record for anything). The bad news is I have my fair share of credit card debt and student loans which I am working to pay down, which may hinder my ability to [url=http://www.mortgagefit.com/refinance.html]refinance[/url] (though I am not at all behind on either).

I am wondering what the best option is. I called my mortgage-holding company (they are a sub-servicer, so they don’t refinance loans, only modifications to existing ones in cases of hardship), and they said there is no way to get a CDA loan to allow for renting unless I can file a hardship letter which gets approved by the MD Department of Housing and Community Development, and they can then put a waiver on my loan that allows me to rent it out. The problem is, until I actually move away, I don’t know how I could file a hardship at this point since my financial situation hasn’t really changed for the worse yet. In addition, if I wait to actually move away, I would be stuck fixing up the condo to rent and then having it stand vacant until I (maybe) get approved for a rent waiver, and if I get denied, I am really screwed, as I would be forced to stop paying on it, and likely lose the home all together.

The only other option I have is to refinance or sell (I have no desire to sell, and likely couldn’t in this climate anyway). I am wondering if there is any lawyer/non-profit/entity out there that could help me refinance with another company so after living there 1 year, I could do what I wanted with it. I don’t consider it rental property because I will be moving back within a few years and living in it at that time, so the renting is temporary.
I have done a good amount of browsing on these forms, and see many references to places like NACA, HopeNow, etc., but I seems like they all specialize in foreclosure-bound properties and working with people who are unemployed, etc. Since my situation is quite different, I am trying to fish for what the best option is. My hope is that I can simply get the renter waiver based on hardship and avoid a full refinance, but I am not sure what hardship I would need. If that is out, then I need to refinance, but I need to know how to get started and whom to do it with (safely and effectively).

The plus side is as noted, i have money in the bank and can likely afford a lawyer if i can find one who specializes in CDA loan mods (depending on what they charge and assuming they are reputable).

Any recommendations or help anyone can offer is much appreciated. I know my situation is complicated.

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I also have a CDA loan and I am also underwater, but by a lot (-$150,000). I was not aware that there was a prohibition on renting. I guess when I have to move I will have to allow foreclosure.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I also have a CDA loan. We purchased at the height of the housing boom. I think our home depreciated about 40k. Of course when we brought our home(townhome) we had one child now we have 3 and one on the way. CDA said that we cannot rent out our home. We have to move, or we'll be walking all over each other. Called the CDA program to find out what can be done. Was told to just "hunker down." and be uncomfortable for a while until we can sell our home. We are not behind, never been late, no hardships at this time. Please, we will accept any advice you have at this time.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Everyone,

As there is no equity in the properties, none of you will be able to refinance the mortgage with some other lender. As far as I can understand the situation, you all will have to sell off the property or have to apply for a hardship so that the lender allows you to rent the property.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Sorry to say that we are in the same problem with everyone else. We want to move as well for a larger space. We found out the day of signing with no mention of the non-rental being said thru-out the whole process. We are trapped with the up side down market. We have never been behind nor late.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We also have a CDA loan, I have also tried everything to refinance it, move, etc. Our house is now $60K under and we don't have that money to come up with. Our interest rate is 7.25%, this is so ridiculous that there is no one out there to help. We are literally trying to borrow money just to get out, to then have to pay off a loan for the next 10 years...of course it has to be a personal loan because no bank will lend us the money. But it seems better than living in a tiny house, paying out of our behind for something that will NEVER go back to what we bought it for.....it's so depressing. :(

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Special Girl, I just found this board because I'm in the same boat, only I didn't realize that I couldn't rent out my house until after I had already accepted a job in VA. What did you wind up doing? (or anyone else on this board)

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We stopped paying and moved a few months later. They told us we could short sell. We got a buyer and a contract. Then Bogman, Inc (the servicer) told us that we would have to pay out all of this money in order for them to approve the short sale. It has been one surprise after another, no transparency. Looks like we will have to [url=http://www.mortgagefit.com/bankruptcy.html]declare bankruptcy[/url].

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

The lender is constantly harassing you. It will be better to file bankruptcy in order to get rid of it.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am trying to short sale it right now. NickG2000 did you use a realtor to negotiate the short sale?

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Kfr,

You can negotiate on your own with the lender and apply for a short sale. It will be the lender's discretion whether or not he will consider your request for a short sale.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We still are crammed in our small house. The CDA program is a joke. We have done everything in our power to get out of this house to no avail. We spoke with an attorney that stated that until they change their restrictions the contract is binding.

BUYER BEWARE, do not get a CDA loan for your first home. You have to live in it forever if you cannot sell. Open to any suggestions of what others may have done.

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi cantgetout!

Welcome to forums!

You can check out all about CDA loans from the given page: "http://www.mmprogram.org/faqs.aspx".

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Anyone try contacting the governor?

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Kfr!

Welcome to forums!

What for should anyone contact the governor? For a short sale? That won't be of any help. You should contact the lender if you wish to short sale your property.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Ok this is what you need to do....when they come back with the obscene amount of money you need to pay you need to negotiate through your realtor to bring it down. It will work. Even if they do not give you much of a break….take it and short-sale….pay the note for a year and then negotiate it down…

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I also have a CDA bond loan and after signing papers have learned how awful it is. I'm trying to do a short sale with Bogman Inc ad the lender and they are asking for promissory notes amounting to thousands and thousands of dollars. I've lost one buyer and possibly will lose the current buyers. THIS IS NOT A LOAN I WOULD RECOMMEND TO ANYONE. This almost forces you into foreclosure.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We need to protest to the state of Maryland about this CDA Loan. Let's start a CDA loan sucks webpage!

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Same situation as the rest of you guys... MD CDA loan, about 40k underwater, never been late on payments, family growing, this was a condo and we needed to move....So we did. We got a loan for another house and moved. We are renting the condo. The new mortgage company didn’t seem to care about CDA. Our new loan is FHA and they didn’t seem to care about CDA restrictions. Their advice to us was to move because there aren’t any CDA police out there that will track you down and tell you otherwise. As long as you keep making your payments, I think you will be ok. Here is what they risk if they force they take you to court, money. Why because they are struggling with the bigger issue at hand, and that is to collect money form the people who are making their payments.
Just move. Then rent it. MD CDA had this restriction because they wanted to keep investors out from the CDA program. That makes perfect sense, we all get it and understand why…however MD CDA did not account for the market to crash the way it did. We are not investors trying to profit from a rental … in fact, I am renting that condo as we speak and I am still losing. This is because my mortgage is $400 more than what I collect in rent each month. Now am I a bad person for violating the CDA restriction?
Don’t discuss it, don’t worry about it, just move.

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks for sharing your opinion, Guest!! :)

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I read the FAQs referenced above and they say the loan is available to an owner-occupant, but did not see the word "forever." Is there more definitive wording listed elsewhere? And is this restriction in the loan documents that you sign?

(I do not have a CDA loan, but am trying to help a friend who does.)

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

I don't think any such word will be listed in the mortgage docs. Nevertheless you can go through the loan doc once again to find any such word or contact your lender and take his opinion in this matter.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

For those still looking for help here, I have to agree with "G" from a few posts prior. Just rent out the place, and don't worry about the CDA people. However, if you badger them enough, the possibility does exist that you can eventually get an email from them that says they won't accelerate your loan if you stay current. I was in the same situation. I bought a house with CDA in early 2007. It is now $120k underwater on a a $280k loan. There is no way I could sell if for at least 15 years. My wife also owned a home with an owner occupant requirement when we got engaged, so one of us had to move. I kept harassing CDA via email until someone finally told me in wriing, that as long as I stay current, they won't come looking for me. I get annual letters from Bogman now, asking why I don't live at the property. I just have to call them, tell them it is still significantly underwater, so I can't sell, and they reset it for another year. Being a landlord is annoying, and I also come out of pocket $400 each month, but it beats foreclosure and I wont qualify for bankrupcy to avoid any deficiency lawsuit later on. Your money is way more important to them than whether or not you actually live in the house.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thank you for sharing your experience with us in the forums!! :)

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We relocated from WY to Sc for work and wrote a letter stating 'hardship' although we are scraping through financilly and have never been late on a pyt, our 'hardship' was paying the mortgage and our rent in SC on 1 income. WCDA agreed to let us rent our house for 6 months and just reapproved us to rent for another 6 months, it wasn't a big deal to write the letter, seems just like an exercise in paperwork, we also had a friend who rented out her home in Idaho for 3 years, just kept getting a new letter every 6 months....

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome cece,

Thank you for sharing your experience with us!! It's feels great to note that your lender had been so helpful to you!! :)

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

what do I do to [url=http://www.mortgagefit.com/refinance.html]refinance[/url] a CDA loan? Can't get a person to call me back from the CDA phone line. I have not missed a payment and live in the house. Please just an answer on how to proceed. The house is underwater by 50,000

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Vicky!

Welcome to forums!

As your property is underwater, you won't be able to refinance the mortgage. You can, however, apply for a loan modification.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thank Curious Guy and Another Guest for that information. I too have a CDA loan and I am looking to purchase a home because my family has increased in size and the area has been going down in terms of crime. My condo is underwater by $180K and I am current on my payments so the only option I have is to rent it out and I heard about the so-called "rental restriction" with CDA. I will be definitely emailing them and let them know I have to rent out...I'll be damn if I stay any longer.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I emailed everyone I could at DHCD including all the Executives and the Maryland governer asking why CDA was unwilling to help its customers and would not participate in any of the Federal goverment programs. They mailed me a letter within a week that basically said, in a nut shell, we would rather eat glass then help anyone refinance their loan.

They cant risk lowering their bond ratings and blah blah blah. These are are some of the most greedy people in the business and they are a government program! Unless the Federal goverment comes up with a program forcing them to help, CDA will continue to spit in their customers faces. It is literally sickening how disgusting of a program this is.

Here is the contact information for the CDA Exectutive Director

Frank B. Coakley, Executive Director (410) 514-7410; 1-800-222-3919 (toll free)
e-mail: coakley@mdhousing.org

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

That is good to know that I can write a letter to Bogman to get permission to rent. I took the risk and have been renting my condo, also under a CDA loan, for the past four years. Like others, I am also paying about $400 out of pocket so I am looking for other options - $400/month times four years is a lot of money...Are there any other options beside foreclosure? I am willing to take a delinquency credit hit but not a 7-year foreclosure credit hit. Any suggestions would be much appreciated.

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi SandR!

Welcome to forums!

You can apply for a short sale in order to get rid of the property and the mortgage. However, you will have to prove your financial crisis to the lender in order to get qualified for the short sale.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am also in the same situation! I am current, income has actually increased but I am looking to purchase a bigger home and CDA seems to prohibit renting. My bigger concern is that they do not offer its customers an opportunity to take advantage of any of the programs that are out here. I just sent an email to the head of CDA, Maryland's Governor, Lt. Governor, and the County Executive's office. We will see how this goes.

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Bonironi!

Welcome to forums!

Thanks for sharing this with us... Do keep us posted what reply you received regarding the letter that you sent them.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I just wanted to [url=http://www.mortgagefit.com/refinance.html]refinance[/url]. I was thinking of renting, and buying elsewhere in a year or two. I talked to my lender today and found out about our "unique" situation. PMI out the yinyang, or appx $40K up front! What a hosejob!

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest!

Welcome to forums!

What unique situation did he inform you about? Please explain.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have decided to walk away from my cda loan in January 2013. In Baltimore and can't stand the issues with crime and grime here. The city doesn't care about communities, so I'm leaving. My house is 6.5% rate and 60,000 underwater with MD CDA and will not ever be favorable again without more investment in the home and community turns better( not happening). CDA is a scam, they should allow streamline refi on FHA insured loans.

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi AllenBb,

Thank you for sharing your opinion about CDA with us. :)

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I had no idea there were so many other people out there with the same issues that i was/am having. i bought at the peak of the market and dont think i am upside down too bad but i just recently bought my second home. I moved right out and rented my cda house. i have been renting for nearly a year now and never hear a peep from anyone about it. i want to refinance but i think i better not stir up anything with trying to refi. just walk away.. there are no cda police... as long as you pay they dont care at all.. good luck

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks for sharing your opinion, Guest!! :)

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I was under the impression that we had to first pay back the $5000 dollars we got from the state in the process before we were allowed to make any profit on the property. So if you are renting to someone else and not charging more than your mortgane, does this apply?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If you're not making any kind of profit, then I don't think you will have to pay back that $5000.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Sometime this summer HARP 3.0 will be put in place to assist those with underwater CDA loans

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks for the info!! :)

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

A year ago I applied for a mortgage loan to buy a new property with the condition that I'd rent out my current condo (with CDA loan) and was told that I couldn't get a new loan unless I could show rental income on my current property for one year... which makes no sense because I live there. How can I rent it? Did anyone else have this experience? So now I'm stuck like the rest of you. Who knew?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi cole,

Well, that's quite strange!! I will suggest you to contact other lenders and apply for a loan. Check out what they have to say in this regard.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Cole,

Navy federal will give you a long without a year of rental history, they will want to see a signed lease ready though so when you move out they know someone is already going to move in. Thats how I did it. Although now Im worried I will never be able to refi my CDA loan because the house is no longer owner occupied. CDA loans suck so bad. For a state run program, I cant beleive they treat people like this. I dont know why our congressman and state reps wont get involved. CDA would rather you forclose than refi your loan. How can they operate like this?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Sorry, that meant to say Navy Federal Credit Union will give you a loan without a year of rental history.

Darn autocorrect.....

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello everyone!

As other posters have stated, I can't believe how many of us are facing the same issues, and none of our legislators have stepped in to help. I was planning on writing letters to my State delegates in order to attempt to get some relief. Here are the details of my situation:

Purchased condo in 2007 with CDA at 6.5%
Condo is currently underwater $80,000
Just got engaged and need to move into a larger home to start family

I was thinking of referring this issue to one of the investigative journalist teams to see if they can look into the program and try to expose how fraudulent and unwavering the State has been when enforcing CDA loans. Has anyone had any luck contacting representatives, lawyers, or investigative journalists? I feel helpless because I have no hardship, but really need to move.

Thanks for you input.

Brian

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Well, haven't heard much in this regard!!

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I dont know why my last post was deleted, but Jamie Smith Hopkins from the Baltimore sun has done a story on how frustrating CDA can be for homeowners. Try contacting her, you can find her info easily. I emailed her a while back and she was interested in a doing a follow up story. She seemed very sympathetic to our plight. I didnt want to be interviewed but maybe one of you guys would be more willing.

Hopefully this post wont get deleted too......

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