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I am in a tuff bind. I have a primary residence and 2 investment properties. All three mortgages are the pay option mortgages with Countrywide. Once these turn over, all three loans will double. I will not be able to afford to pay the full payment on any of them. I have contacted Countrywide and told them the situation, but they will not talk to us because we have never been in default (5 years now) on any of the loans. I am now to the point where I need to do something. I am not quite sure if I should start to defaut or not. I know that there is no way around getting rid of the properties. With our income and the stress, I cannot do it anymore. We already have rocky credit, due to us going through a credit agency for our credit card debt. That seems to be working out fine. Also our debt to income ratio is over the top. So the credit I am not so nervous about. What I do want to know is will we be able to purchase another home again. I have a 4 year old and stability means everything to me. We have been proposed an offer to lease to purchase a home in our hometown, and I am eager to say yes. The reason for these problems is I am a real estate agent in Destin and the market value has dropped tremendously! I have not been able to recover financially since last year and the adjustable rate are just not feasible.
I'm just wondering what you ended up doing. We are in the SAME predicament. Job transfer from Los Angeles to NC last year. House has been on the market since and no bites. At the current advertised price we wont even break even. It is rented but the overhead is 1300/month. We just bought another house here and will be in it for at least 5 years. I don't anticipate needing any major credit either and if so could always look to family. I'm worried about the judgement afterwards.....no way we could pay off 100,000 HELOC.
Hope someone here can answer my questions. My lenders won't talk to me until I miss a couple of payments, but I don't want to miss payments until I get a straight answer from someone.
Here is my situation, our family moved out of state for a new job last year. Our house in Arizona has been vacant since last November and despite being the cheapest house on the block has not sold. I have had four offers that have all gone south, mostly because the potential buyers can't get financing. So based on the advice of my agent who says the market in Arizona is only getting worse and the advice of a family member who is a real estate attorney, we are going to let our house go into foreclosure. Almost a year of dual mortgage payments has taken it's toll.
My question is what happens to my HELOC when I let my house foreclose? We borrowed money from our HELOC to make the down payment on our new house. Do we let both our first mortgage and our HELOC go into foreclosure and let the two different companies figure out how to divide any proceeds from a foreclosure sale. Or, will we be responsible for the whole HELOC when our mortgage company takes over the property?
Micro, before you just chuck it up and let the banks have it, use your HELOC to pay your mortgages while you try to sell.
Example, if your payment on your HELOC is $1000 a month.. write a check every month from your HELOC to your checking account, for $800, and then write a check from your checking account to the HELOC for $1,000 ($200 out of your pocket to cover interest)
While you'll still be covering the payments out of your pocket, it will only be $200, vs $1000.
This will allow you more time to sell your property, and protect your credit, pretty much turning the HELOC into an interest only mortgage. Note, I did NOT say to cash out your HELOC, and live off the funds, and use it for other expenses, I said to simply use the HELOC to pay the ongoing mortgage until you can sell it.
It's been a while since I checked this, I had forgotten that I wrote this. Surprisingly, Countrywide Mortgage has been willing to work with us to do a deed in lieu or voluntary foreclosure. As long as I call them once a week to check in, I don't get any nasty phone calls like I was warned that I may receive. The only hang up is in dealing with PNC Bank who did our HELOC, but it looks like they might do a HELOC on our new property that would allow us to pay off the other HELOC.
Our old neighborhood is being hit really hard with foreclosures, so unless the bank owns your house, you can't price it low enough to sell. I have just resigned myself to the fact that I will have a foreclosure on my record and hope for the best. The only thing that concerns me is how high my credit card account is because I had to pull two mortgages for a year and I had to use my credit card to buy groceries and other items that I would normally never put on a credit card.
I'm glad to hear I am not the only person in this situation...My hubby took a job in October (our house was already on market for 6 months) in Texas. I am here with 3 kids and no family and our house will never sell. Just like the above poster, there are too many foreclosures that can't get sold. A short sale would more than likely not work either. We owe way more than we could possibly sell for. Our bank told us to go the rental route and hope the market improves in a few years to be able to break even. After rent money, we will still have to put in a thousand dollars or more to make the mortgage. We are hoping for big tax returns to supplement that cost. ( we were told we could still get another loan for a new house in TX). My concern is, if we go this route and come to the point where we can no longer pay the mortgage and have to foreclose, can they take our new home in Texas where we will be current on payments? I'm just looking at worst case scenerio. Heck, I'm not even sure we will be able to get a renter..does anyone know if the rental market is any better? All our property manager we are listing with will say is that it changes day to day.. UGH!
A friend of mine that's back in Phoenix has a couple of rental houses that he can't sell and he is having a hard time getting enough rent to cover his expenses. He told me that you want to bring in 30% more in rent than what your expenses are, so when your renters trash your house you have the money to fix everything back up.
The other thing to watch out for is that there are some people that have figured out that people are desperate to rent their vacant house, so they move in and only pay the rent for a month or two. Even if you try to evict them it will take 4-6 months, so they get to use your house for free. That happened to a couple of houses in my old neighborhood. The owners were so happy to find a renter for their house that they decided to save money and not spend $50 on a credit/background check. That would have been $50 well spent.
I can't beleive how many people took out option ARM loans.
A word of advice to the masses...IF THE PAYMENT SOUNDS TOO GOOD TO BE TRUE IT IS!!!!!!!!
That is true. However, some people don't have a choice. Due to certain situations (credit score, or debt to income ratio) you may not be able to qualify for a reasonable fixed loan - or at all even. In this case an ARM is offered to give the borrower time to fix what ever the problem is and then refinance....even the bank knows that.
5 houses for sale on my block in AZ, one for 2 million, been on the market 3 years, finally decided to rent it out the other day. Houses are NOT selling now. Better to rent than to foreclose, but that's my opinion.
That is true. However, some people don't have a choice. Due to certain situations (credit score, or debt to income ratio) you may not be able to qualify for a reasonable fixed loan - or at all even. In this case an ARM is offered to give the borrower time to fix what ever the problem is and then refinance....even the bank knows that.
There is always a choice. That choice is renting.
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