U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Thread summary:

Questions to the experts, tell me about: home mortgage refinance, loan modification, principle reductions and fixed rate home equity loan.

 
 
Old 12-04-2008, 02:22 PM
 
Location: Coachella Valley, California
15,607 posts, read 38,740,487 times
Reputation: 13405

Advertisements

I posted this in another thread here in the Mortgages forum but nobody responded and I still have these questions! Any advice is appreciated. Thank you in advance.

I have a question and I hope everyone doesn't dogpile on me, so here goes ...

I own an investment property with three other people. All four of us are on title, but the loan is in my name only. We are each responsible for 1/4 of the payment and any repair costs, etc.

About 6 months ago I was informed that two of these people will no longer be paying their share of this obligation. Why? Because they are retired and they don't want to spend their money on this anymore. Also, this ugly comment was made by one of these people: "Let her pay for it - she spends thousands of dollars on ballroom dance." The third person may not be able to pay his share of this obligation as his job is in a precarious spot right now. He isn't sure whether he will be laid off or not. There is a renter in the property, but even so, if I am left having to pay this entire obligation myself, I won't be able to do it. So far, everyone has (begrudgingly) made their share of the payments, but I am not sure how long this is going to last. This property is upside down - by about $200,000.00.

I am stressed out every single day over what to do. The two retirees insisted that I "go to Countrywide and get a loan modification." Well, it's not that easy. First of all, you can't just go over there - they will not talk to you. For the past 6 months I have been dealing (rather, TRYING to deal) with Countrywide. I sent them a letter explaining the current circumstances. I sent them all sorts of documentation - copies of all my bills and expenses, copies of my paycheck stubs, copies of tax returns. Countrywide STILL has not gotten back to me about the letter or the documentation I sent them. I get the run-around every time I call. I never get to speak with the same person twice, I can't get a straight answer from Countrywide, and every time I call I have to be transferred to a call center in New Delhi, India before they transfer me to their Workout Department. It is very time consuming and I have gotten nowhere!

We are current on these payments and we have a fixed rate at 6.75%. I am at my wits end. I don't want to default on the property because I have otherwise excellent credit that I don't want to destroy. I feel completely pressured by these other people to "do something". I am no longer speaking with the two retirees, and it is really none of their business what I spend my money on - as long as I hold up my end of the bargain.

I don't know what to do. Yes, these people are my own family. The retirees? My parents!!! If I ever in a million years thought they would stab me in the back like this I would never, ever have agreed to take out a loan in my name for an investment property.

I can't sell this property at this time either. I am not sure what to do.

Does anybody have any answers or good advice for me?

Thanks.
Rate this post positively Quick reply to this message

 
Old 12-04-2008, 02:44 PM
 
Location: Martinsville, NJ
6,163 posts, read 12,135,339 times
Reputation: 3978
Quote:
Originally Posted by Twinkle Toes View Post
I posted this in another thread here in the Mortgages forum but nobody responded and I still have these questions! Any advice is appreciated. Thank you in advance.

I have a question and I hope everyone doesn't dogpile on me, so here goes ...

I own an investment property with three other people. All four of us are on title, but the loan is in my name only. We are each responsible for 1/4 of the payment and any repair costs, etc.

About 6 months ago I was informed that two of these people will no longer be paying their share of this obligation. Why? Because they are retired and they don't want to spend their money on this anymore. Also, this ugly comment was made by one of these people: "Let her pay for it - she spends thousands of dollars on ballroom dance." The third person may not be able to pay his share of this obligation as his job is in a precarious spot right now. He isn't sure whether he will be laid off or not. There is a renter in the property, but even so, if I am left having to pay this entire obligation myself, I won't be able to do it. So far, everyone has (begrudgingly) made their share of the payments, but I am not sure how long this is going to last. This property is upside down - by about $200,000.00.

I am stressed out every single day over what to do. The two retirees insisted that I "go to Countrywide and get a loan modification." Well, it's not that easy. First of all, you can't just go over there - they will not talk to you. For the past 6 months I have been dealing (rather, TRYING to deal) with Countrywide. I sent them a letter explaining the current circumstances. I sent them all sorts of documentation - copies of all my bills and expenses, copies of my paycheck stubs, copies of tax returns. Countrywide STILL has not gotten back to me about the letter or the documentation I sent them. I get the run-around every time I call. I never get to speak with the same person twice, I can't get a straight answer from Countrywide, and every time I call I have to be transferred to a call center in New Delhi, India before they transfer me to their Workout Department. It is very time consuming and I have gotten nowhere!

We are current on these payments and we have a fixed rate at 6.75%. I am at my wits end. I don't want to default on the property because I have otherwise excellent credit that I don't want to destroy. I feel completely pressured by these other people to "do something". I am no longer speaking with the two retirees, and it is really none of their business what I spend my money on - as long as I hold up my end of the bargain.

I don't know what to do. Yes, these people are my own family. The retirees? My parents!!! If I ever in a million years thought they would stab me in the back like this I would never, ever have agreed to take out a loan in my name for an investment property.

I can't sell this property at this time either. I am not sure what to do.

Does anybody have any answers or good advice for me?

Thanks.
WOW are you in a tough spot!
From a LEGAL standpoint, it's going to be difficult, isn't it? Do you have any back trail, proving that everyone agreed to share the cost of owning the property? Just being on the title may not be enough, as it might be argued that you agreed to pay for a property you would all own. And the bank doesn't care. Your name is the one on the mortgage, so you are the one they will come after. But if you have a trail showing agreemenet by the others to share the cost, you might be able to take them to court. Then the question becomes; do you want to resort to that? Perhaps just the THREAT of a lawsuit would be enough to convince them to pony up their share.
The first option that came to my mind, of course, was to sell. Why is that not an option? I know it wouldn't be fun to lose that $200k that you are underwater, but it would be preferable to losing more over the long term, wouldn't it?
Rate this post positively Quick reply to this message
 
Old 12-04-2008, 02:56 PM
 
28,461 posts, read 78,578,082 times
Reputation: 18592
If your "investment partners" are not responsible for the loan there are no negative consequences for their decision to walk away from the loan...

If you are upside down, selling is not really an option, you could still be held liable for the loan.

Did anyone warn you that investing with partners carries risks greater than investing alone? Are you prepared to file suit against your parents? Do they have assets that a court could compel them to use to cover the loan?

This is ugly.

Find a lawyer that has experience with family businesses -- maybe such a person has some ways to plan for this that takes some sting out of it.
Rate this post positively Quick reply to this message
 
Old 12-04-2008, 03:08 PM
 
Location: Coachella Valley, California
15,607 posts, read 38,740,487 times
Reputation: 13405
Yes, there is an agreement and a paper trail. We tried to sell the house once before, when the market was at the start of the downhill slide and it wouldn't sell then. I don't know how it works to sell a property that has been valued at less than what is owed on it. I don't know anything about short sales or any of that stuff. At the time we purchased the property we all brought our financial docs with us to the lady who prepared the loan. Originally we all wanted to be on the loan, but she said that wasn't possible - that only one of us could be on the loan, but that we could all be on title. She chose me as the ginnea pig because I had an almost perfect FICO score at that time. These were my parents, so I didn't have a problem with it at that time because I KNEW my parents wouldn't screw me ...

I just don't see how this place is going to sell being that there are five million other properties on the market in the area where this property is. Nobody is going to pay more for it than what it will currently appraise at - which is approximately $200,000 less than the amount we owe on the loan.

What's the story with these loan modifications? I am having a hell of a time dealing with Countrywide - my lender. it's extremely frustrating and you have no idea how angry I am. I am really trying to keep it together and not act like a total whack-job. I contacted a modification company at one point - a place I saw on a billboard (the billboard is gone now). They were eager to "recruit" me and wanted me to get my stuff together and take off work and get down there as quickly as humanly possible. Something about their eagerness made me uneasy and the word "scam" kept blaring in my head. I asked how much it would cost and they tried to evade the question, finally put me through to another person, a supervisor I assume, and he told me it could be anywhere from $3000 to $8000 depending on how complex the modification was. I declined their offer of "help".

Is there a way to get a fixed rate mortgage modified so that I alone can afford it? I would really, really love to save my credit.

Again, thank you all for your help!
Rate this post positively Quick reply to this message
 
Old 12-04-2008, 03:21 PM
 
28,461 posts, read 78,578,082 times
Reputation: 18592
I don't mean to sound condescending, but anytime you make an investment of any kind there is RISK involved. Right now ALL THAT RISK is on YOU becuase you are the person that is responsible for the loan.

I have a bad feeling that the reason that "it was not possible" to have more than one person on the loan is because the loan is not based on anything other than your credit -- this is NOT what the four you wanted to accomplish!

Loans for investment properties are almost certainly FAR less likely to be modified by a lender than those for owner-occupied. Given the situation with your "partners" the lender would almost have to be nuts...

I am serious about finding an attorney who has experience structuring agreements among family businesses -- that is what you need, and badly!
Rate this post positively Quick reply to this message
 
Old 12-04-2008, 05:08 PM
 
Location: New York
2,251 posts, read 4,636,742 times
Reputation: 1612
Depending on what state you are in, the government is making it a requirement to modify loans that are upside down. Countrywide and Indymac (the two largest mortgage lenders) started doing principle reductions on December 1st.

I had a client earlier this week in upstate New York that was $125k upside down. Speaking with a mitigation agent. Mass, Connecticut, New Jersey and other states are now required to do principle reductions. Unfortunate for my client - New York does not yet require principle reductions. I was told as more and more lenders start doing principle reductions, more will follow.

With a principle reductions - mortgages are being reduced to 90% of the new appraised value. This can dramatically lower the payment.

Again every modification is different depending on the amount of the loan vs the value of the home. Income and expenses. The major requirement for a modification is that you are working or having income coming into the household. Modifications are for people that are in high interest rate, adjustable loans, or behind (foreclosure).

Qualifying for a principle reduction;

* Your need to be $100k upside down.
* 3 months or more late on your mortgage payment.
* Currently working - 100% Household DTI ratio is looked at.
* A hardship caused the situation.

Note - every modification is different. The final outcome depends on the negotiating with the lender.

Loan modifications can be done only once a year, some loans only once in the lifetime of the loan. If a person that has a good rate and is not late, chances are the lender will not do anything to modify their existing loan.

I said this before in other posts - many people who try to do their own modification cutting upfront costs, end up with a modification that benefits their lender. When they choose to go through an Attorney Modification firm, to end result is a modification that benefits them. So for the small amount upfront, they save $10,000's over the life on the loan.

My advise - I want you to consider your future. What you do today, will make you who you are going to become tomorrow.

Right now if you have property, you are going to want to keep it. It is a buyers market out there right now. The value/prices of real estate is the lowest it has been in years. This is the perfect time to invest, because we are in a low point of cycle. They teach this in business school - "what goes up must come down, and what goes down must go up"......

Since you are the only one on the loan, you can take the other party's to court of request them to deed off the title. You can tell them if you do not pay, they will come after them. Chances are they will want to deed off right away. You can do this at your local County Court house. It cost around $25 and will take 15 minutes to fill out the paperwork.

Then the property is all yours. As the value increases, so will the equity (100% yours). A few years go by, they will be sorry they did what they did to you.....

Reviewing your situation - 6.75% is not a bad interest rate. You would need to prove a hardship that prevents your from making your payment. Your lender is going to say - you are making your payments, so why do they need to modify you loan.

If you became late on your payment, your lender will then look at things differently. You would need to develop a hardship requesting for them to reduce your loan.

If you want to contact me to ask further questions - PM me.


...
Rate this post positively Quick reply to this message
 
Old 12-04-2008, 05:16 PM
 
Location: Apple Valley Calif
7,474 posts, read 21,660,964 times
Reputation: 5651
Have you checked with other lending institutions? How much more are the payments than the rental income? Depending on the value, you should be able to get a loan for less that 6.3/4, if you can qualify. As you probably know, the talk is that loans will soon be available for in the 4.5% range. Can you hold out for a couple of more months to see how that shakes out..?
Countrywide was purchased by B of A recently. They were a very bad outfit. I would go to BofA and see about a refi.. Forget Country wide all together..
You learned an expensive lesson about partnerships, especially family...
Good luck, I hope it works out for you...
Rate this post positively Quick reply to this message
 
Old 12-04-2008, 05:23 PM
 
Location: Great State of Texas
86,067 posts, read 78,789,278 times
Reputation: 27668
See a lawyer first. Remember that these people are still on the title so, let's say you do sell, will these other people participate ? Will they want any profits ? Will they pony up money at closing if needed ?

The loan is in your name alone but the property has 4 names attached. Your credit is on the line with the loan.

Messy situation. Good luck to you.
Rate this post positively Quick reply to this message
 
Old 12-05-2008, 07:39 AM
 
Location: A little suburb of Houston
3,702 posts, read 17,291,259 times
Reputation: 2076
Quote:
Originally Posted by Twinkle Toes View Post
Yes, there is an agreement and a paper trail. We tried to sell the house once before, when the market was at the start of the downhill slide and it wouldn't sell then. I don't know how it works to sell a property that has been valued at less than what is owed on it. I don't know anything about short sales or any of that stuff. At the time we purchased the property we all brought our financial docs with us to the lady who prepared the loan. Originally we all wanted to be on the loan, but she said that wasn't possible - that only one of us could be on the loan, but that we could all be on title. She chose me as the ginnea pig because I had an almost perfect FICO score at that time. These were my parents, so I didn't have a problem with it at that time because I KNEW my parents wouldn't screw me ...

I just don't see how this place is going to sell being that there are five million other properties on the market in the area where this property is. Nobody is going to pay more for it than what it will currently appraise at - which is approximately $200,000 less than the amount we owe on the loan.

What's the story with these loan modifications? I am having a hell of a time dealing with Countrywide - my lender. it's extremely frustrating and you have no idea how angry I am. I am really trying to keep it together and not act like a total whack-job. I contacted a modification company at one point - a place I saw on a billboard (the billboard is gone now). They were eager to "recruit" me and wanted me to get my stuff together and take off work and get down there as quickly as humanly possible. Something about their eagerness made me uneasy and the word "scam" kept blaring in my head. I asked how much it would cost and they tried to evade the question, finally put me through to another person, a supervisor I assume, and he told me it could be anywhere from $3000 to $8000 depending on how complex the modification was. I declined their offer of "help".

Is there a way to get a fixed rate mortgage modified so that I alone can afford it? I would really, really love to save my credit.

Again, thank you all for your help!
I have a feeling that you do not qualify for a modification. My understanding is that the modifications are for residences (the home you live in) not business or investment properties. Maybe the more knowledgable on here can comment.
Rate this post positively Quick reply to this message
 
Old 12-05-2008, 08:00 AM
 
Location: San Antonio, TX
556 posts, read 1,975,404 times
Reputation: 855
My very first thought as I started reading your post was - she needs to get these family members to sign a new deed - changing ownership of this property solely into her name, given the responsibility for the loan is 100% hers - and they've indicated they are no longer participating in any payments. I'd do that FIRST - before any real attempts to modify the loan. If everyone is willing to do this, it should be very inexpensive and once recorded in the county real property records, will properly reflect you as the sole owner (less than $50 I would think to record a new deed).

And - our office has clients with investment properties, and we've seen them successfully get loan modifications, however, these loans have not been through a big-box lender like Countrywide. They are through local banks that are unique to our city. So I can't offer suggestions on that - but I do agree with the poster who suggested that your interest rate, for an investment property, seems pretty fair. Regardless - good luck - this has to be an all consuming thought process for you right now.

I'd get that deed changed ASAP.......while everyone is in the "I want out" mindset and the market has that property value down. Should the market rebound and you not have this done, you might find yourself having to pay them to participate in a deed change........
Rate this post positively Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


 
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:
Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Similar Threads

All times are GMT -6.

© 2005-2021, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top