Any Mortgage/Foreclosure gurus?

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seabee

seabee

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Anyone have any experience with getting out of a mortgage?

Six years of watching our house price sink through he floor while paying BofA , a major reason for that sinkage in the first place, is getting old. Short sales are plaguing the neighborhood and we currently rent it out at a $700 loss each month when we can find renters. It's about 2/3rds upside down at the moment.

To be clear, we weren't sub-prime borrowers, flippers, or gambled with an adjustable APR. It was just that time in our life where we wanted to buy a home to have kids in. It just happened to be the worst time in history to buy one. We bought one under half of what we qualified for and did a standard fixed rate VA loan. We even adjusted for if we got transferred and had to take a loss.
 
Nope, I just heard many folks walked away and just rented. Many people got taken

If your loan is worth more then the house is worth, many people just stop making payments. Might not be right but look what the banks did to you
 
Rental?

Hate to say it but taking a $700 neg bath every month even when it's rented isn't good. It's a business decision and I know what I would do.
 
dodge freak said:
Nope, I just heard many folks walked away and just rented. Many people got taken

If your loan is worth more then the house is worth, many people just stop making payments. Might not be right but look what the banks did to you
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Right OR wrong, who cares really. The banks got us into this mess and when they took such big hit to their profits WE bailed them out only to be slapped in the face yet again and again. Let them have it back I say.
 
Sorry to hear your in a bad position with your mortgage. I guess it would depend on how far upside down you are. The average people I know are upside down from 150,000 to 400,000. Many I know that have not walked Away yet will soon do so. Good luck to you. MMG
 
You'll lose your down-payment if you walk away and will probably continue to owe Money. You really need to look at what the home is worth. Better to sell it than walk away in most cases. You need to talk to a Lawyer and find out your Liability AFTER walking away. I would live in it and tough it out. You gotta live somewhere.
 
My friend has been trying to short sale for 6 months with no luck. He bought high ($@225,000) and now its worth under $100,000. Its a condo and they're not exactly hard to find condos in our area.

On the flip side Im trying to buy for the first time with no luck of securing a mortgage despite my good credit because cause I cant afford to put 20% down on a $250,000 house. (which is a cheap home in my area.)
 
California is a non-recourse state. The home is the only collateral in the deal. There are some caveats to that. If the home was purchased then refinanced, but, it rarely ever happens because the foreclosure procedure to go after the re-fi monies is long, difficult and expensive.

If you sell the house in a short sale, you lose your down payment anyways, moot point.
 
I feel for you and totally understand your position. Both of my sons are in the same place along with a few of their buddies. I raised my kids to be responsible and to man up to their obligations and they are. However, I wish that maybe the banks would adjust their mortgages to what their homes are worth now, but they won't, the banks would rather take a bath with losses than give a hand. The only hand being offered, that I know of , is if you are behind in payments 3 or more months and then maybe the banks will adjust your mortgage. My sons are not behind in their payments they are meeting their obligations but I wonder sometimes if they should.... A short sale sounds good but what most folks don't realize is that if your lender allows a short sales the difference between the short sale price and the mortgage is ordinary income for the seller and must be added to the seller's income at tax time. Now you have a larger tax bill. John Q can't win.

:wack:
 
i have heard they there is supposed to be a bill signed soon that will leave you free and clean and no credit hit for a short sale after the place actually sells. not sure on all the details though. may be something to look into...


I raised my kids to be responsible and to man up to their obligations and they are.
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thats good for most things but the house is a business decision. is it in their best interest to short sale or fall behind so they can be adjusted? businesses do this stuff every day. i say screw it, do what ya gotta do.
 
I agree that it is a business decision. In earlier life, I might have thought of "obligations" and "keep a good name", but then I got an MBA which teaches a different view. The bank and mortgage buyers should have known the risks they were taking on. They were certainly happy to profit in good times. If you can now walk away with no negative effects other than a temporary bad credit rating, seems smart to do so. Don't let the mortgage servicer make you feel guilty. It is all about incentives and controls. The bank is the one who gambled on the future value of the house, not you.
 
I thought the shrub said the people who lost their homes wouldn't get 1099's for the loss. I heard him say it during questions after one of the "contained to subprime" tee vee speaches he used to do with paulie and bendover bernanke.

Say it ain't so. You shoulda stopped paying a long time ago and kept collecting the rent.
 
It's a lose/lose scenario. If you continue to work off your existing model, you're going to struggle for quite a while. If you walk away, your credit is jacked for the next 7 years (at least). Unless you plan on paying everything with cash moving forward, walking away may not be the ideal solution. Plus, if you walk away just to screw the bank, ask yourself "are you really screwing them?" It's not like Bank of America will go out of business if you walk away. They will just re-sell and refinance the property.

Personally, I would move into the house and live out of it while your paying the mortgage. If you're really struggling, rent out a room.
 
BillGrissom said:
I agree that it is a business decision. In earlier life, I might have thought of "obligations" and "keep a good name", but then I got an MBA which teaches a different view. The bank and mortgage buyers should have known the risks they were taking on. They were certainly happy to profit in good times. If you can now walk away with no negative effects other than a temporary bad credit rating, seems smart to do so. Don't let the mortgage servicer make you feel guilty. It is all about incentives and controls. The bank is the one who gambled on the future value of the house, not you.
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i agree 100%.

i have no problem paying my bills but man i think of walking away from my place every day. i'm willing to lose my down payment and not willing to wait around as this place loses and loses value.

the asshole banks got greedy (big surprise) and it screwed everyone.
 
Thanks for the comments.

OwdKasd said:
You'll lose your down-payment if you walk away and will probably continue to owe Money. You really need to look at what the home is worth. Better to sell it than walk away in most cases. You need to talk to a Lawyer and find out your Liability AFTER walking away. I would live in it and tough it out. You gotta live somewhere.
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I would love to live in it, but the military has us three States away. The original plan was to move back in after retirement which is 9 years away because we love that area. We already knew we would rent it for less than the mortgage and adjusted to fit. What we didn't expect was the bottom to fall out of the housing market to this degree and our neighbors to run for the hills.
 
Seabee, sorry to hear that you are stuck between a rock and a hard place. The only two courses you have seems to be either a short sale or foreclosure in order to get out of the mortgage. The only other way would be the re-fi under the newest Obama rules. That would lower your monthly payment but it extends the loan out further.

My sister has been a loan officer for Wells Fargo for over 25 years. The banks did not create the mess that we are in. Congress, wanted to get more "underpriveliged" families into homes during the Clinton years. They used pressure tactics in the forms of tax penalties and increased the fed loan rates on banks and lending institutions that didn't help the "underpriveliged" get into homes. They used Freddie Mac and Fannie Mae to guarantee the loans if the banks lifted the 20% down requirements to avoid the penalties. So the banks went along because now they were having to compete with start-up lending companies such as Countrywide. When things went belly up, the Obama administration used bailout money as a way to take partial control of the banks. Any bank taking bailout money had to take on bad loans of defunct lending institutions. For example, BofA was forced to take Countrywides bad loans if BofA wanted to stay in business. Chase was forced to take Washington Mutual's bad loans, and so on. Wells Fargo took the money and returned it the next day after learning that they would be under control of the Obama administration. Obama Re-fi Plan #1 didn't stop the upside down foreclosures so Obama Re-fi Plan #2 was instituted. My friend took Plan #1 and got his mortgage payment reduced and the loan extended and he was able to stay in the house. He became livid when Obama Plan #2 came out and he couldn't take advantage of that because it didn't allow anyone to use Plan #2 if they used Plan #1. Meanwhile, Feddie Mac and Fannie Mae didn't have enough cash to guarantee all of the loans that they said that they would. Guess who was left holding the bad loans? The banks. Guess who gets penalized? The public.

Just remember, it was Congress in the 1990's that created the home market boom and bust. It was Congress and the Obama administration that has us in the situation that we are in today.
 
You forgot Bwarney Fwanks and his "policy" of subslime loans.

I doubt that when Ken Lewis got BAC to buy CFC that it was forced. He was greedy and Mozillo went away laughing after selling all his stock in CFC at $60 before it collapsed to zero. BAC even paid his lawyer bills and fines.
 
If you were living in it now, I'd tell you just stop paying and wait, delay, delay delay and save all the cash you aren't paying towards a mortgage and bank it.

The potential liability issue is all state dependent. NV is different from CA, but, they still have trouble collecting any shortfall from the borrower. Blood from a turnip.
 
The "morality or ethics" issue is what is playing a big factor though. We're not really having financial hardships. We eat well, rent a nice house, have 2 paid off cars, and count our blessings because of it. Yeah, that extra $700 a month would be amazing to spend or pay off debt with, but we're getting by.
 
airwoofer said:
You forgot Bwarney Fwanks and his "policy" of subslime loans.

I doubt that when Ken Lewis got BAC to buy CFC that it was forced. He was greedy and Mozillo went away laughing after selling all his stock in CFC at $60 before it collapsed to zero. BAC even paid his lawyer bills and fines.
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LOL, yep I forgot about Bwarney. And you are right about Ken Lewis and Angelo Mozillo. Geez what a mess those years were. Sorting it out as it was going on was a nightmare!

I took a chance at an adjustable mortgage back in 2006. After paying high interest I am benefitting now with a rate of 1.9% and a monthly payment of $1,000 less than when I started. The downside is now I am paying higher Fed Income taxes because my deductions are way down. They get you one way or another.
 
DFX 340 Duster said:
Seabee, sorry to hear that you are stuck between a rock and a hard place. The only two courses you have seems to be either a short sale or foreclosure in order to get out of the mortgage. The only other way would be the re-fi under the newest Obama rules. That would lower your monthly payment but it extends the loan out further.

My sister has been a loan officer for Wells Fargo for over 25 years. The banks did not create the mess that we are in. Congress, wanted to get more "underpriveliged" families into homes during the Clinton years. They used pressure tactics in the forms of tax penalties and increased the fed loan rates on banks and lending institutions that didn't help the "underpriveliged" get into homes. They used Freddie Mac and Fannie Mae to guarantee the loans if the banks lifted the 20% down requirements to avoid the penalties. So the banks went along because now they were having to compete with start-up lending companies such as Countrywide. When things went belly up, the Obama administration used bailout money as a way to take partial control of the banks. Any bank taking bailout money had to take on bad loans of defunct lending institutions. For example, BofA was forced to take Countrywides bad loans if BofA wanted to stay in business. Chase was forced to take Washington Mutual's bad loans, and so on. Wells Fargo took the money and returned it the next day after learning that they would be under control of the Obama administration. Obama Re-fi Plan #1 didn't stop the upside down foreclosures so Obama Re-fi Plan #2 was instituted. My friend took Plan #1 and got his mortgage payment reduced and the loan extended and he was able to stay in the house. He became livid when Obama Plan #2 came out and he couldn't take advantage of that because it didn't allow anyone to use Plan #2 if they used Plan #1. Meanwhile, Feddie Mac and Fannie Mae didn't have enough cash to guarantee all of the loans that they said that they would. Guess who was left holding the bad loans? The banks. Guess who gets penalized? The public.

Just remember, it was Congress in the 1990's that created the home market boom and bust. It was Congress and the Obama administration that has us in the situation that we are in today.
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Absolutley right! What's unfortunate is so many people had no idea how many substandard loans were being made that would eventually go default & cause the home values to drop so badly when they bought their homes & are now victims of it now. The banks won't even take the titles or deeds back on so many homes now in default because if they did the numbers would drop so bad the entire market would collapse! This problem is waaaay worse than what we are being told. So many more homes are in the rears for moneys owed on them that would have gone to foreclosure & sherrif's sale in normal times, but they don't dare because it would be devastating. So much for transparancy...

I would say never, never default on any loan unless it's the absolute last option. You can try to contact the lender & make smaller payment arrangements if you can & try to aviod forclosure. They would rather get something than nothing. Good luck, I hope things work out for you.
 
seabee said:
Thanks for the comments.
I would love to live in it, but the military has us three States away. The original plan was to move back in after retirement which is 9 years away because we love that area. We already knew we would rent it for less than the mortgage and adjusted to fit. What we didn't expect was the bottom to fall out of the housing market to this degree and our neighbors to run for the hills.
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First off. Thanks for serving our Country. What You're saying makes Sense! It's definitely a tough situation.

seabee said:
The "morality or ethics" issue is what is playing a big factor though. We're not really having financial hardships. We eat well, rent a nice house, have 2 paid off cars, and count our blessings because of it. Yeah, that extra $700 a month would be amazing to spend or pay off debt with, but we're getting by.
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I wouldn't worry for a second about Morality/Loyalty to the Banks. They have been sticking it to us in a big way forever. The Housing market will turn around eventually. Even though you are in the hole each month for $700, You are growing closer to owning the home. If it's where you want to be in 9 years then maybe still tough it out. If you want to live elsewhere than Do what you gotta do.
 
Every state is different. In AZ you can pretty much just walk, that is what I did. AZ has a non-recourse law, no lender can pursue you. We walked away from our house there, never even got a single letter from either one of the mortgages. Might have a tax issue with the IRS. For a while there was a rule in place, something to the effect of mortgage debt forgiveness or something of that nature. Pretty sure it is no longer in place. A lot of folks might question you for walking. Screw em. Sometimes bad things happen to good people. I had a neighbor in AZ get all over me for walking, claiming i was killing the values in the area. Did not matter that at that time there was 14 other houses in our hood in foreclosure. Funny thing is he just had his house foreclosed on. Keep in mind the obvious credit issues you will be creating, but in time that to will pass. Have not read all the comments, so this might have been mentioned already. A short sale. For a long time everyone claimed they were the answer. I contacted a short sale specialist in AZ before deciding to walk, he told me not to bother with it. He told me that getting your lender to agree to it is not very easy. In the long run the hit on your credit report will be the same, especially if you have a second mortgage. BK used to also be a way out, but thanks to the changes in 05 (?) it is not that simple any more.
 
I myself dont like hearing that the bank should absolve the difference from what it is now worth and what is owed. My point for thinking that is so someone gets off the hook on debt but someone like me that was smart and paid xtra on the payments and now it is worth what I owe I am not being forgiven on any debt. Why should I not receive the same deal as others on forgiven debt. It was a gamble when bought and some ended in a loss so walk away and take the dent or stay and pay is my 2 cents.
 
The banks issued too many loans without even checking if the info-work history, salary was correct. They used robo signers who didn't even look at the paper work.

The banks figured home values always increase, so worst case they just take the home away and re sell it.

All the banks did it and drove home values way too high.

Yes the D's pushed for more people to buy homes but banks were not careful the least on who they issued loans to.

Not much has been learn, Chase Bank loses 2 billion in 2 months by their big shot 14 million dollar a year banker in Europe. And yep, if JPM needs a loan uncle sam will bail them right out, cause they are too big to fail
 
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