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Old 09-03-2008, 02:08 PM
 
Location: Pennsylvania, USA
5,217 posts, read 4,115,320 times
Reputation: 908

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Hey Everyone,

Pleae be kind.. don't rip into me.. I've had enough of that here on these threads. I will tell my story briefly for those who don't know it already and offer and udpate...

2005 bought a small starter home on LI that needed fixing up. Self employed, no open lines of credit ( I paid off my credit mistakes from my early 20's and swore off cards). Decided it was time to buy a home after moving from rental to rental on LI and was ready to have my first child.

Was told by mortgage broker that while my score was not bad,it wasn't good enough to qualify for a FIXED interest rate mortgage and was offered and Alt-A 2 year fixed ARM. Was advised that if I pay my mortgage on time, open a line of credit or two my score will pull up significantly and I could refi before it resets into a fixed interest rate. Figured that with the equity built in from th downpayment AND the improvements we would make to the house (needed new bathrooms,kitchen..etc) that we would be fine, even if the markte stayed at it's current level (never imagined a sharp dip).

Well..as you all know things started unfolding in 2006 just around the time I was looking to refi. While my score was improved by my mortgage payments made ON TIME at a 6.95% fixed interest (with escrow my payments were approx $3300/month) the equity in my home dissappeared. I suddenly found myself at 100% LTV and being self employed even with a good score i no longer qualified for a fixed mortgage..heck even another ARM was slim with a low LTV and the market in a decline. So. .I was locked out.

Started calling in Sept to BEG the current mortgage company to keep the rate fixed at 6.95% . AFter months of back and forth they refused..so I stopped paying at the first adjustment but never gave up on getting them to fix it. We realized they wouldn't budge and we decided short sell was our only option.

Now.. we did get a little over our heads because while we were fixing up te house we did fall behind on income taxes (as happens with alot of self employed individuals.. guilty of that!) plus some stuff from my husbands pre marriage taxes that caught up to him (hey.. men are terrible withthose things!!) So there was now a tax lien on the property..ouch!

But.. put it on the market. It appraised for $120K less than what it was appraised for whenwe got our mortgage. We lowered the price and we started showing it like mad. Got 3 offers.. all went to full appraisal price and WELL over the minimum that the bank would have accepted (they usually accept no less than 90% of the appraised value).

met with a roadblock when we submitted the offer with the HUD that included a lien payoff. They came back said they woudln't do it. To that I answered .. well as I see it ,I do not have time nor the money to remove that lien so we'll loose our buyer, we'll loose the sale and go to foreclosure and you will get ALOT less for the house than you have now.. which even with the lien is well above the minimum (as my lien isnt' even half of the difference between what they got and what they would hav eaccepted as a minimum). At this poitn I had nothing toloose. The credit I built was gone, the home was pretty much going to be lost to me.. NOT TO MENTION.. the 80K in repairs and renovations we'd done since buying it. I was looinsg my home and $100K out of my pocket when all was said and done. Itold them at this piont only they had more to loose than I did.

So offers were submitted (in the meantime a third offer came in..). Took awhile but today the bank accepted the offer with the lien payoff worked into the HUD.

Thank GOD that the bank saw the light of day and saw that foreclosing would only hurt them and everyone involved.

Ii'm happy that I was able to get out from under this as best as possible for ALL involved..the bank AND myself.. AND someone else, who really loves the home and wanted it so badly (because we really did a nice job) gets to enjoy it.

I will then work on repairing my credit, rent for awhile and hopefully will purchase with many lessons having been learned from this experience. Hopefully the next house I purchase I will be able to put down more cash and maybe even find something owner financed..so I don't have to deal with banks, large fees etc. it's apossibility with the house we're renting, I think.. should we like it.

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Old 09-03-2008, 02:26 PM
 
25,351 posts, read 37,514,449 times
Reputation: 13271
I'm glad to hear it worked out for you! Good Luck in the future
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Old 09-03-2008, 04:33 PM
 
Location: Big skies....woohoo
12,421 posts, read 2,790,904 times
Reputation: 2186
It's a rough time for a lot of people. Hopefully things will improve for you.
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Old 09-03-2008, 05:11 PM
 
930 posts, read 2,122,225 times
Reputation: 1000
Sad story and I am sorry for all you went through. It never ceases to amaze me how very little value "upgrades" add to the bottom dollar of a home, and how much timing of the market adds or subtracts from the value!! I learned the same lesson you did.

We could all benefit from watching less HGTV "my house is worth what" :0
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Old 09-03-2008, 08:07 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,101,195 times
Reputation: 1008
tristans - i think they were ragging you in the political forum. j/k

Anyway, congratulations on your shortsale.

My advice is to NOT put a LARGER down payment next time.
What if the market drops again then you just lost all of it ?

Also, having cash in the bank is HAVING CASH IN THE BANK.
Most borrowers put 20% down then get a home equity line of credit.
The problem with that is that the banks are now shutting down those HELOCs, and the borrowers have no access to cash.
The reason? The banks feel that there's no equity in the home so they cap the line or just freeze the whole thing.

never put all your eggs in 1 basket!
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Old 09-03-2008, 08:15 PM
 
Location: Houston, Texas
10,425 posts, read 43,547,480 times
Reputation: 10329
Im glad it worked out in the end for you also. I followed your story from the beginning. Those damn banks.

Next time any of you read or hear on TV that banks dont want the house and are always willing to work with you then you know you have been lied to. No lender will work with you, all of them, bar none would much rather foreclose at an average cost to them of $50,000 then to simply modify the loan or defer a payment or 2. Solid proof that they would rather be in the Real Estate business then the business of lending money.

I have a dream. I wish ALL banks and mortgage lenders would just blow up into a firey inferno.
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Old 09-03-2008, 08:16 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,101,195 times
Reputation: 1008
and the credit card companies

Quote:
Originally Posted by desertsun41 View Post
Im glad it worked out in the end for you also. I followed your story from the beginning. Those damn banks.

Next time any of you read or hear on TV that banks dont want the house and are always willing to work with you then you know you have been lied to. No lender will work with you, all of them, bar none would much rather foreclose at an average cost to them of $50,000 then to simply modify the loan or defer a payment or 2. Solid proof that they would rather be in the Real Estate business then the business of lending money.

I have a dream. I wish ALL banks and mortgage lenders would just blow up into a firey inferno.
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Old 09-03-2008, 08:19 PM
 
Location: Houston, Texas
10,425 posts, read 43,547,480 times
Reputation: 10329
Quote:
Originally Posted by renriq02 View Post
and the credit card companies
Im with ya on that one !!!!
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Old 09-03-2008, 09:00 PM
 
Location: Montrose, CA
3,031 posts, read 7,869,281 times
Reputation: 1925
Quote:
Originally Posted by desertsun41 View Post
Im with ya on that one !!!!
I don't get it, I really don't. Nobody put a gun to your head and made you get a credit card or a risky mortgage
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Old 09-04-2008, 07:22 AM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,101,195 times
Reputation: 1008
YOU don't get it with credit cards.

I had a gas card of 100 limit, and used it up all the time
Paid it off every month.
Because the credit card reports on a different date...my credit report was showing that it was maxed out all the time.

My credit score dropped....and almost all of my credit card rates went through the roof due to the Universal Default.

Quote:
Originally Posted by SuSuSushi View Post
I don't get it, I really don't. Nobody put a gun to your head and made you get a credit card or a risky mortgage
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