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The banks are running scared right now, too. They are losing billions of dollars and the are laying people off left and right. They screwed up their own finances by making loans they shouldn't have made and now they are making cuts and changing their spending habits to recover.
What may seem like an obvious solution to someone with an ARM that is about to reset is not as obvious from the perspective of the bank who loaned the money out. They are already out more money than the house is worth, which was their mistake. They should not have loaned you as much money as they did. I don't think banks should ever loan more than 90% LTV. But you asked for it, and they gave it to you because you both assumed that real estate values were going to continue to climb like they did before.
They assumed that even if you stopped making payments, they'd still be able to sell the house and get their money back. You assumed that you'd be able to refinance the ARM before the adjustment hit. You were both wrong, and you both didn't make contingency plans in case the real estate market slipped or interest rates climbed. You were both speculating. Unfortunately for you, you were speculating with your home and your family's future instead of with money that you could afford to lose.
The bank needs to show its shareholders that it isn't making those mistakes any more. Unfortunately, that means that they are going to hold you to the contract that you and your husband signed. They can't just change the terms of the contract, which is what you are asking them to do. You have to negotiate a new contract. And because you used up your equity and you have no savings you're not in a position to negotiate the best deal.
Have you tried going to the bank itself to sit down with someone face to face? Explain to them that this is a problem for both of you and see if you can figure a way out of it. If the person you are talking to can't make that decision, ask him or her who can and make an appointment with them. This isn't something that you should be doing over the phone.
My loan did not have a higher LTV than 90%. And I didn't tap into the remainging equity .. the over 10% equity that I had. That equity was lost in the market.. that's why my LTV is now lower. Despite the improvements to the home.. I'm probaby at 100% LTV at this moment.
My mortgage is apparently not with a bank.. but with an investor group. They too, are bleeding money.. See.. I wasn't that much of a risk. The problem is that the product for me was pulled from the shelf last year when the mortgae industry came to a screethign halt. Well...yes.. now that my LTV was higher.. it did become slightly riskier.
But here is where the problem is. First, they loose more money by foreclosing on my home. IF they would evaluate my situation and see .. okay..here is someone that purchased a home and was paying a 6.95% rate on the home for a 30 year period. That, and she made those payments on time for 2 years.. PLUS her score has risen.. which means she is managing her money and credit just fine. Also.. because i"ve paid on time and all that for two years, I obviously can afford too at that percentage rate... and was evident when I showed the documentation to t he original lender (it was sold atleast once during it's life).
They could loos more money by throwing out the good with the bad. I could be good.. because i can pay a 6.95% interest or return on the initial amount. AND I have shown a desire to remain.
They will end up loosing more money foreclosing on me and even on a short sale (if I'd even be able to sell it at this point) than if they just would fix the rate and continue to collect their principal plus interest.
THAT is what gets me so upset. It just doesn't make sense. I could understand that if the return was small..if I was at a really low rate and couldn't afford more..but it's NOT a low return..not at the rate I'm paying.
The entire industry is really just whacked. Whatever will be will be. I'll get over it and move on.. just for now I'm not going to just give in without a fight. There are days where I just want to...you have NO IDEA the enormous amount of stress this causes... it's awful!
I consulted with an attorney yesterday about Chapter 13. It's true that hte legislation didn't pass that would allow those who file Chapter 13 to rework their home loans in order to fix the rate and continue paying. Basically Chapter 13 will not do anything to save my home and since that is the only reason I'd file it I won't file it. There is a way to protect myself from the balance should my home go to foreclosure and they try to come to me for the difference.
But here is the iron part. If my home were my second home.. like a ski chalet or a vacstion home or a yacht or boat.. the courts allow for modification of the interest rate on said loas!! WTF!!! Okay. . sounds like another law written by the rich, for the rich with a nice little loop hole to save their second and third residences.. yet those of us with only 1 home get screwed.. LOL.. WHATEVER!!!
I will continue to fight and hope that I can turn this situation around. I guess if I can't I'd have to start all over again.. oh well.
Have you spoken to a mortgage broker that does "manual underwriting"? I do not know all the details about the manual underwriting process, but my understanding is rather then relying on strict "formulas" that look at credit reports, FICO scores, LTV etc they take an approach that is more "personal" and evaluate the whole story when making a decision about approving a refinance/mortgage.
Other posters have suggested that you look into financial advisor Dave Ramsey's books-he is a big advocate of "manual underwriting" and often recommends a company called Churchhill Mortgage on his radio show. Also it seems that everyday on his radio show he talks to (and provides good advice) to people in your situation. I would highly recommend you look into his books, website, radio show or his TV show on the FOX business network.
Have you spoken to a mortgage broker that does "manual underwriting"? I do not know all the details about the manual underwriting process, but my understanding is rather then relying on strict "formulas" that look at credit reports, FICO scores, LTV etc they take an approach that is more "personal" and evaluate the whole story when making a decision about approving a refinance/mortgage.
Other posters have suggested that you look into financial advisor Dave Ramsey's books-he is a big advocate of "manual underwriting" and often recommends a company called Churchhill Mortgage on his radio show. Also it seems that everyday on his radio show he talks to (and provides good advice) to people in your situation. I would highly recommend you look into his books, website, radio show or his TV show on the FOX business network.
hi,
No I haven't .. didn't know anything about that.. so thank you for the information. I will check that out!
TristansMommy's story is one of thousands upon thousands that is being played out across America.
Bottom line, the housing bubble/credit bubble, made homes unaffordable. A starter home should never had to cost this much for this young family.
I don't agree with some of the posters calling this gal greedy, I don't see any greed here.
The real finger pointing should be at The government, Alan Greenspan+ The Fed, speculators, investors, appraisers, banks, and mortgage brokers, the NAR, builders.
TristansMommy, don't worry, there are brighter days ahead for you. Thank your lucky stars that you are young and will recover from this.
I really hope you finally just simply mail back the keys but not after first stopping the payments and use this time to save that 3,000 per month. The way the process to REO is moving you should have a year to live in your house before you have to leave.
Any landlord will be thrilled to have first and last and damage deposit, the black mark on your credit report from this will not mean as much as you think, just be sure to be current on everything else if you have any other debts being reported.
When you are ready and have the 20% down payment available, you will be able to purchase a nice home at 2.5 - 3 times your income easy, like it should have been all along if this bubble had not happened.
The real finger pointing should be at The government, Alan Greenspan+ The Fed, speculators, investors, appraisers, banks, and mortgage brokers, the NAR, builders.
In other words, everybody but the person who signed the papers to take out the loan? And that is the one party to the transaction that had the right to say "no" at EVERY step of the transaction, that in fact, initiated the transaction, of their own free will! Can't afford it? Just say "no." Don't like the terms? Just say "no." Think the lender is predatory and the risk too great? "No" and "no." Think the government, Alan Greenspan+ The Fed, speculators, investors, appraisers, banks, mortgage brokers, the NAR, builders, Jimmy Hoffa, Santa Claus and the Tooth Fairy, etc., etc. are leading you down a treacherous path? Don't follow. But if you do, don't blame everybody else for your own choice.
How is it possible that people believe that homeowners have ZERO responsibility for the legal documents they sign? If a gun was held to the borrower's head, then the authorities should be called; otherwise, you should only sign contracts that you intend to honor. And if circumstances change and you can't honor them, how is it anybody else's fault? Looking for viable solutions is much more productive than finger pointing.
This is a general comment, directed toward a generic, collective "you"-- not directed personally toward the OP, so please TristansMommy, don't call me any more names or start another personal vendetta. I am commenting on a broad issue affecting our entire economy, not your personal situation, which others may or may not find sympathetic.
As for landlords not caring about foreclosures, I own multiple rental properties and I can assure you that I consider a foreclosure much more than a black mark. I consider it a reason to say "no." And I do. But that's just me... and every other landlord I know.
A chapter 13 will not modify loan or amortization scedual for adjustment of rate it will how ever lower your monthley payments on bills it re negotiates a payment do you have a pre payment penalty on your loan is it up yet ? the only way to get a fixed rate is to refi and then most lenders want to give you a IO/IO OPTION loan so befor you pay for an appraisal get in writing that they garantee a fixed rate 10 15 30 years not a fixed for 2 3 5 10 years theres a lot of vonerability in a customer that a lender can make happen to you and they do to take full advantage of you 1st off dont get yourself in a situation or a short time to do this or time is of the esense thats when they get you i sugest that you have 2 banks at the same time fighting for your business leting them compete against each other is your best bet wene banks compete you win
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Manual Underwriting??
