Mortgage burden after relocating. (approve, property, banks, contract)

[novahousehunter]

Originally Posted by pdshah

Also if anybody knows a bank that can refinance when the home worth is less than loan amount, please let me know.
PDSHAH

There is some discussion on that issue on this thread:
Upside down on my mortgage and can't refinance

[NYMD67]

Originally Posted by pdshah

First of all thanks to all the responses. We were pleasantly suprised to see so many helping answers.

First of all, to clarify a question, we are NOT planning to rent the place out. The max we will get for the house is 1500 a month and we cannot risk it being destroyed for that money which is not even half of our mortgage.

Most of you suggested selling the house which was our first inclination. However that would make us incur over 60 thousands in losses. This might be better than waiting out, paying 4k a month for a year or two. However, isn't it better to Foreclose or Shortsell than take that big of a hit? After all is credit worth 60K?

I had mentioned an idea that I had and would like to hear your input.

I am considering restructuring my mortgage, most preferably to a low interest ARM or even interest-only-loan. What this will do is reduce our monthly payment to almost half and would let us weight-out for a year-two-or even three years. Say, we we weight for 2 years for the price to go up where I will sell it for a price that would make my investment even; say the monthy payment is now half of what I pay now. THis means I lose out 48K after two years which is less than 60K now.
THe problem? Here are some I can list:
1. Noone can guarantee that home price will pick up by two years. If it doesn't we are in a big loss.
2. Banks normally don't refinanace if your home's worth is less than your loan amount.
3. We gotta add other home expenses for keeping the house for 2 years, onoccupied. I think this will be offset by the tax return we will get from the house though (remember 4K a month includes the property tax).

Would love to get your input.

Hi,

I am not sure that I will answer your questions, but I am going to share our similar story with you...
We built a home in 2007 in MD, the market was HOT then although we built our home with every intention on staying in it for many,many years....
Unfortunately, my husband's company closed their doors , a HUGE surprise to all that worked there as they just spent about 6 million on a brand new r&d building.... we expected to be there for a very long time...
He was forced to look for other employment and unfortunately, he wasn't able to find anything in the area in which we were living...
Long story short... he found a job,out of state and we had to put our home on the market. We knew that the market had taken a huge downturn (this is now 2008-a year after we built our home), we had it on the market for 6 mos with not even one,single showing. We lived apart for a few months but made the decision to rent a home in our new area (new state) and thought that we should try renting our home out.
Our realtor found renters for us, unfortunately, they too,could only pay 1500K , doesn't cover our entire mortgage but we thought it was better to have something rather then let the house sit vacant with no activity on it as far as a sale....
Now,we are here a year and a half later,with our home still not sold,tons of foreclosures in our old area and we are draining our bank accounts paying for 2 homes.
We have tried to speak with mortgage counselors about obtaining a modification but they won't speak to us because we are current on our mortgage payments AND because we are not living in our home in which we are trying to obtain the mod on....
We didn't have an ARM, and could very well afford our home at the time of builiding it, in other words, we didn't do anything irresponsible.
Now, after months of saying that we refuse to walk away from our responsibility, we may be forced to do just that.
Not one single mortgage company will work with us and don't see our situation as a hardship.
Our tenants are not renewing their lease because they can't afford the utilities on our home and now we will be stuck paying for 2 full payments.(our rent on the home in which we are living is a mortgage payment basically...).
We cannot afford to keep doing this for much longer and are very angry with the banks who want to help out those that have already walked away,but won't do anything to prevent others from having to do so.
A relocation should be considered a hardship if you have a home to sell in today's market.... but it isn't....
We aren't quite sure what we are going to do at this point, but I do hope that your situation turns out much better than ours has.
We have been told that we didn't need to move,but our question is; "what was our choice?" stay in our home while my husband has no job,no benefits,etc... we have a family and a responsibility to take care of them of course! My husband & I both went to college,masters degree,we have student loans to pay off and we weren't just going to wait for a job to happen.
He was offered a great job in a new area,so we took it.. I don't many others who wouldn't do the same just because they had a house to sell.

Good luck to you and your family, I hope the banks are more willing to work with you than they have been with us. What they are doing is possibly forcing good ,responsible people, into becoming irresponsible and having to do something completely against all morals they have....

[pdshah]

I very much appreciate your response NYMD67. Since you are going through this you know our pain. One or two previous posters had wise comments but most were very helpful as well.

I talked to the bank and they are starting the loan mod process but one girl pretty much said that since you are current on your payments that's actually a bad thing for the process. Wow!!

Anyways, where do you live in Maryland? How much did you pay for the house originally?
I have a thought in my mind and just contemplating on that. I might even start a website to make that thought a reality but will give out details later.

[texdav]

Also take into account that if you had lived there for two years and leased the same house for say 2000 a month that would be 48000 you woud have paid. So it's not all loss. Its a decision you have to make really.

[tammie2]

Originally Posted by pdshah

I very much appreciate your response NYMD67. Since you are going through this you know our pain. One or two previous posters had wise comments but most were very helpful as well.

This is when you BECOME late on that payment. If they want to play the game, play it with them.

It is unfortunate, but I would rather see someone skip a payment to get a modification that people that are making the decision to walk away from their responsibilites. I think most would.

[aneftp]

To the OP:

As others have stated you need to prove financial hardship.

I took a $137K loss (yes that's a huge loss) when I sold my house in Maryland over the summer of 2009. I ended up losing the entire 100K in principal/down payment I've made over the past 4 years plus 37K in closing costs.

If you make too much money like I do or have too many assets, the banks won't help you. You will have to make your own decisions what to do.

I took it like a man, and just took the lost (had to wire 37K at closing) just to close the deal.

I made the huge mistake of renting out the home in the summer of 2008 (because I moved to Florida). The Maryland market crashed after Lehman bros. Sept 2008 collapse. My neighbor (who purchased at the same time in 2005) sold it for 580K in Oct 2008. After lehamn bros. collapse, the credit markets froze and I was only able to sell my home for 500K. That' a 80K drop in price in less than 8 month. It's unbelieveable since Maryland (at least the affluent areas) were resistant to the housing collapse until Lehamn Bros.

So by renting out, I lost 80K in a declining market. Guess what? After I sold in July 2009, the builders dropped the prices of new homes by another 30K. So if I didn't sell when I did I would have been out another 30K (because you have to compete with whoever is your comps).

Also think long and hard. The banks won't give you a loan mod if it's not your principal residence. So if you've moved out, you have little chance of getting help (especially if the lender is using taxpayer money to fund some of the load modification).

If you can afford it, just write a big check at closing and move on with your life.

I did and it's been the best 6 months of my life. I was stressed out. But now I've so liquid. I purchased a new home in Florida (paid 140K less than my neighbors (sell low, buy lower). I'm trying to take a positive spin on things. Plus since I've become liquid, I freed up money to invest in the stock markets. I've made about 60K in stock gains in 5 months.

Once you free yourself of that 4K a month mortgage, it gives you so many more options.

If you can't afford to write a big check, than I think it's a bad idea to rent out your place (as others have stated) since you won't generated enough money to cover your mortgage.

Be very careful if you go the short sell route. No one really know how much your credit score will dive. Some have had their credit scores gone down by 200 plus points.. Others only 100 points. It depends how lenders report it.

[pdshah]

I have a follow up question.
Because of the advice from most of you folks here, we are considering selling the house now. However what are the options we have to make up for the difference? While we make good amount we don't have too much in savings (we are young adults and just off in our career path).
Would the existing bank consider separate loan to make up for the difference? I want to ask you folks first since we have applied for restructuring the mortgage right now I don't want to ask them too much question to throw the restructuring thing out of the window.

Also, if we buy a house in the new location would a bank transfer the difference to the new place? We don't want to short sell if we don't have to.

[NYMD67]

Hi pdshah,

Unfortunately, I don't have the answers to your question... you probably are best talking to a RE professional, and possibly one that specializes in Short sales as it sounds as though you may have to go that route.
Our house is located on the Eastern Shore of MD, built it in 2007 for $395K (4 bedroom,2.5 bath home) and we are now probably going to put it on the market for somewhere around $250K-HUGE loss for us!
We have now met with 2 different realtors who are now mainly dealing with short sales,people in our position who are not behind on mortgage payments but probably will end up having to be if the banks want to play this silly game with us.
Our situation is not considered a hardship because of our household income, even though we have the other home to pay for....
BOTH realtors have now told us the same thing that the mortgage counselors have told us,and that is, to be late with some payments. There is no other way we will get approved for a short sale or anything.
This is a hard pill for us to swallow as we just are completely against it. However,after some hard thinking and understanding that we didn't do anything wrong here, we bought something well within our means with the intention of living there for a very long time, my husband lost his job forcing us to look elsewhere... it is still difficult to accept.

Again,good luck to you, it is a shame that so many people are now having to pay for so many others mistakes.

[darwin5]

Originally Posted by pdshah

However what are the options we have to make up for the difference? While we make good amount we don't have too much in savings (we are young adults and just off in our career path). Would the existing bank consider separate loan to make up for the difference? I want to ask you folks first since we have applied for restructuring the mortgage right now I don't want to ask them too much question to throw the restructuring thing out of the window.

Also, if we buy a house in the new location would a bank transfer the difference to the new place? We don't want to short sell if we don't have to.

I asked a very similar question just over a month ago. You can read the responses here: Questions from an underwater homeowner. Long story short, I believe the only way this would be possible is if the lender agreed to a short sale and allowed you to carry a promissory note for the difference. You'd have to talk to your lender about the viability of that option.

I had a the idea of transferring the difference to the new home loan. One of the responses in the thread linked above explains why that isn't possible. It simply isn't possible to get a mortgage for the new home with a LTV ratio as high as it would need to be to also cover the amount you're underwater.

darwin5

[Fighter 1]

Originally Posted by pdshah

I have a follow up question.
Because of the advice from most of you folks here, we are considering selling the house now. However what are the options we have to make up for the difference? While we make good amount we don't have too much in savings (we are young adults and just off in our career path).
Would the existing bank consider separate loan to make up for the difference? I want to ask you folks first since we have applied for restructuring the mortgage right now I don't want to ask them too much question to throw the restructuring thing out of the window.

Also, if we buy a house in the new location would a bank transfer the difference to the new place? We don't want to short sell if we don't have to.

Before you make up your mind as to what is best < take a look at some of my post on filing a UCC-1 for the value you have given to the home. be fore you walk away. Just another option!