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Old 02-19-2009, 07:41 AM
 
Location: State of Being
35,885 posts, read 65,253,264 times
Reputation: 22270

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Quote:
Originally Posted by tabbcat View Post
^

I bought a house in Detroit and I'm currently renting it out and making $200 more than the mortgage payment. It's a 5 year ARM, that's coming up in the next 2 years... I did an 80/20 loan because I had no downpayment. My husband and I both work and make good money, pay the mortgage on that house and our current house on time, and are just now starting to save money (although we have collectively $300k in student loans). I honestly don't think we'll have the 20% or the equity by the time the ARM resets to refinance, and the way the market in Detroit is, we're not able to sell the house. It's very scary. I'll do everything I can to not foreclose on the damned thing, but I wish I could get rid of it.
Maybe you are a candidate for help from that bill . . . I sure hope so. I think there are MANY people out there who are in similar situations to yours and it isn't as tho they "did something wrong." You deserve a break. Not like you are walking away from an obligation. I hope you can find a solution. Good luck. Keep asking questions and find out if you can qualify for help in your situation.
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Old 02-19-2009, 07:51 AM
 
Location: State of Superior
8,575 posts, read 13,455,740 times
Reputation: 2707
Quote:
Originally Posted by tabbcat View Post
^

I bought a house in Detroit and I'm currently renting it out and making $200 more than the mortgage payment. It's a 5 year ARM, that's coming up in the next 2 years... I did an 80/20 loan because I had no downpayment. My husband and I both work and make good money, pay the mortgage on that house and our current house on time, and are just now starting to save money (although we have collectively $300k in student loans). I honestly don't think we'll have the 20% or the equity by the time the ARM resets to refinance, and the way the market in Detroit is, we're not able to sell the house. It's very scary. I'll do everything I can to not foreclose on the damned thing, but I wish I could get rid of it.
The current efforts addressing the housing problems , do , not apply to investors. There is little help for people who took advantage of the loosey goosey loans , and don't live in the house.... However , you have little to loose, what ever happens. You have 2 years to get the max from the subprime deal , then , you walk. In the meantime , I would seek advice from a tax expert . There may be ways to limit your liability when the time comes. Incorporation may be one , that will give you an arms length relationship with the creditors. Michigan is a tough state when it comes to real estate , bankruptcy , and debt collection. Look for some help from Lansing in the coming months. Its a whole new ball game , for everyone.
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Old 02-19-2009, 08:02 AM
 
Location: Durham, NC
1,049 posts, read 3,339,938 times
Reputation: 727
I'm not actually an investor... we lived in the house for 3 years before we moved to North Carolina for work. I guess I am an investor now though, by necessity

I hate to be lumped in the "irresponsible" category because I really am trying to do the right thing by that house, I just don't know what I'd do if (a) we lost our tenants, or (b) the interest rate skyrocketed. I get that we probably should have waited til we had 20% to put down on the house to not get locked into this mess, but we're both professionals and could afford it. We maybe shouldn't have moved until we had the house sold...but that's a rough thing to say to someone from Michigan right now because (a) there are no jobs and (b) we'd have lost $50k off the top because of all the foreclosures in the area driving down house prices. We definitely didn't overpay for the house... it was 2 years old, $185k, 1500sq ft + finished basement. Beautiful house.

I'm actually doing all I can to keep the house in good shape (I just had an $800 sump pump backup system installed). I'm not walking away from it although that's so easy to do.

Thank you both for the advice, I will definitely consult a tax professional in the near future!
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Old 02-19-2009, 08:11 AM
 
Location: Waterford & Sterling Heights, Michigan
340 posts, read 821,346 times
Reputation: 338
We bought our house brand new but in an area that was already built up with infrastructure and amenities and I only drive 6 miles to work. We live in North Macomb County which are the Northern Detroit suburbs. Clean, safe and affordable area were prices never took off during the real estate boom. We put 20% down almost three years ago on a house after negotiating a price reduction with the builder. We knew that buying in MI was a risky proposition but nothing prepared us for a whooping 35.8% drop in the value of our home. Specially since appreciation (even in good economic times) has never been more than 3 or 4 % in MI.

The weird thing is that if you go to my neighborhood you would not notice the crisis that is going on (at least not yet). In the entire subdivision (250+ houses) there are only two houses for sale and they are foreclosures. Everybody is cemented to their homes, probably because they know they can't leave without destroying their credit and because their families live nearby and they just do not want to leave. That is the good thing about living in an older more established area.

We also own an income property in the Northwest Oakland County. It is located in a more affluent lake community but we bought it more than ten years ago so the mortgage is small. That property is now worth about 25,000 less than when we bought it in 1998.

What really depresses me is that we invested $120,000 of our hard earned cash into our home (between down payment and landscape, grass, patio, painting etc) and its all gone. We are not talking about artificial equity, this is money that took us almost ten years to save (not easy with a family of 6) and it has just disappeared.

My parents has been pressuring me to move out of MI (They do not live in the US but own property in FL). To be more specific they said 'move out of that "hell hole"'. Now they refuse to even visit me, they say its 'too depressing' (the state of MI as a whole). But right now it is impossible for us to move (I still have my job which pays well, at least for now).

I do not see how anything in the stimulus package will help us here. In the rest of the nation eventually the economy will improve and prices will increase again. Here I do not see a bottom. And even if there is how many years will it take to recover from as 40-50% drop in RE values, specially when historically prices appreciate at the rate of inflation?
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Old 02-19-2009, 08:30 AM
 
Location: Houston
529 posts, read 1,140,491 times
Reputation: 373
Why is it so hard to understand for some people that everything in life involves risk and sometimes you have to lose?
Some of the responses here are incredible, it's like they feel that they are entitled to receive a bailout from the government. Some of you really think that buying a house was a win-win situation and if it's not happening uncle sam should come to the rescue.
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Old 02-19-2009, 08:42 AM
 
Location: State of Superior
8,575 posts, read 13,455,740 times
Reputation: 2707
Quote:
Originally Posted by tabbcat View Post
I'm not actually an investor... we lived in the house for 3 years before we moved to North Carolina for work. I guess I am an investor now though, by necessity

I hate to be lumped in the "irresponsible" category because I really am trying to do the right thing by that house, I just don't know what I'd do if (a) we lost our tenants, or (b) the interest rate skyrocketed. I get that we probably should have waited til we had 20% to put down on the house to not get locked into this mess, but we're both professionals and could afford it. We maybe shouldn't have moved until we had the house sold...but that's a rough thing to say to someone from Michigan right now because (a) there are no jobs and (b) we'd have lost $50k off the top because of all the foreclosures in the area driving down house prices. We definitely didn't overpay for the house... it was 2 years old, $185k, 1500sq ft + finished basement. Beautiful house.

I'm actually doing all I can to keep the house in good shape (I just had an $800 sump pump backup system installed). I'm not walking away from it although that's so easy to do.

Thank you both for the advice, I will definitely consult a tax professional in the near future!
You have not lost anything. by preserving your cash , you did the right thing.... The sad story is the folks who put out cash as a down payment equal to the amount that the house has deprecated. They will never recover. cash is King ... preserve it at all costs... its only going to get worse.
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Old 02-19-2009, 08:51 AM
 
Location: State of Superior
8,575 posts, read 13,455,740 times
Reputation: 2707
Quote:
Originally Posted by MIEng View Post
We bought our house brand new but in an area that was already built up with infrastructure and amenities and I only drive 6 miles to work. We live in North Macomb County which are the Northern Detroit suburbs. Clean, safe and affordable area were prices never took off during the real estate boom. We put 20% down almost three years ago on a house after negotiating a price reduction with the builder. We knew that buying in MI was a risky proposition but nothing prepared us for a whooping 35.8% drop in the value of our home. Specially since appreciation (even in good economic times) has never been more than 3 or 4 % in MI.

The weird thing is that if you go to my neighborhood you would not notice the crisis that is going on (at least not yet). In the entire subdivision (250+ houses) there are only two houses for sale and they are foreclosures. Everybody is cemented to their homes, probably because they know they can't leave without destroying their credit and because their families live nearby and they just do not want to leave. That is the good thing about living in an older more established area.

We also own an income property in the Northwest Oakland County. It is located in a more affluent lake community but we bought it more than ten years ago so the mortgage is small. That property is now worth about 25,000 less than when we bought it in 1998.

What really depresses me is that we invested $120,000 of our hard earned cash into our home (between down payment and landscape, grass, patio, painting etc) and its all gone. We are not talking about artificial equity, this is money that took us almost ten years to save (not easy with a family of 6) and it has just disappeared.

My parents has been pressuring me to move out of MI (They do not live in the US but own property in FL). To be more specific they said 'move out of that "hell hole"'. Now they refuse to even visit me, they say its 'too depressing' (the state of MI as a whole). But right now it is impossible for us to move (I still have my job which pays well, at least for now).

I do not see how anything in the stimulus package will help us here. In the rest of the nation eventually the economy will improve and prices will increase again. Here I do not see a bottom. And even if there is how many years will it take to recover from as 40-50% drop in RE values, specially when historically prices appreciate at the rate of inflation?
Pray for inflation , that will be the sign that the spiral down has been broken. All the efforts by the Government are directed , right or wrong , at doing that. They will continue to throw money at the problem , at all costs . Will it work ? No one knows , its a new world out there , and its scary.
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Old 02-19-2009, 09:03 AM
 
8,649 posts, read 14,870,155 times
Reputation: 4563
Quote:
Originally Posted by tabbcat View Post
I'm not actually an investor... we lived in the house for 3 years before we moved to North Carolina for work. I guess I am an investor now though, by necessity

I hate to be lumped in the "irresponsible" category because I really am trying to do the right thing by that house, I just don't know what I'd do if (a) we lost our tenants, or (b) the interest rate skyrocketed. I get that we probably should have waited til we had 20% to put down on the house to not get locked into this mess, but we're both professionals and could afford it. We maybe shouldn't have moved until we had the house sold...but that's a rough thing to say to someone from Michigan right now because (a) there are no jobs and (b) we'd have lost $50k off the top because of all the foreclosures in the area driving down house prices. We definitely didn't overpay for the house... it was 2 years old, $185k, 1500sq ft + finished basement. Beautiful house.

I'm actually doing all I can to keep the house in good shape (I just had an $800 sump pump backup system installed). I'm not walking away from it although that's so easy to do.

Thank you both for the advice, I will definitely consult a tax professional in the near future!
If you are renting the house out they said this morning you get no help with that house. Only the home you live in can you get help with.
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Old 02-19-2009, 09:30 AM
 
1,367 posts, read 4,973,372 times
Reputation: 867
Quote:
Originally Posted by anifani821 View Post
Maybe you are a candidate for help from that bill . . . I sure hope so. I think there are MANY people out there who are in similar situations to yours and it isn't as tho they "did something wrong." You deserve a break. Not like you are walking away from an obligation. I hope you can find a solution. Good luck. Keep asking questions and find out if you can qualify for help in your situation.
I wish them good luck too, and wish that the housing plan would help them (although, I don't think it will directly, maybe indirectly by helping the markets).

However. I think we need to get out of this mentality that people in this situation didn't do anything wrong. It's okay to say someone did something wrong but that they still deserve help. It's NOT SMART to take on a 185K mortgage, no money down, with an adjustable rate, when you already have 300K in student loans and no savings. Even if the house was cheap, even if they had good jobs, they were taking on major risk. It sounds like they meant well, have been responsible since then, but their original decision to buy was bad.

And that is okay. A lot of people make bad decisions every day. It just happened that a lot of people made the SAME bad decision at the SAME time. In America we give people second chances. We pick up those who are down not only because it helps all of us, but also because it is the right thing to do. But, we really need to collectively learn from these mistakes and take personal responsibility while helping others out.
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Old 02-19-2009, 09:31 AM
 
Location: State of Superior
8,575 posts, read 13,455,740 times
Reputation: 2707
Quote:
Originally Posted by elikhom View Post
Why is it so hard to understand for some people that everything in life involves risk and sometimes you have to lose?
Some of the responses here are incredible, it's like they feel that they are entitled to receive a bailout from the government. Some of you really think that buying a house was a win-win situation and if it's not happening uncle sam should come to the rescue.
We have no choice. When everyones values go down , due to your neighbors foreclosure , it hurts us all , and , the economy as a whole. The Government was in part responsible for the problem , allowing loosey goosy loans , and lack of any oversight. ( as was promised , but never happened ).... They now have the responsibility to try and save the Republic as we have been accustomed. Righting the wrongs of the last eight years , will be a monumental task , it may be too late. Reenacting usury laws against the CC companies will be coming , and , its not soon enough. After that , look for the Righties to cry about the Commercial real estate mess , they , also got the Country into , by lack of oversight. They will be singing a different tune , when it hits them , in the pocket...
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