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Can I refinance or modify a non-Fannie/Freddie/FHA loan on a rental property from an underwater interest-only loan?

I purchased a two-level townhome in 2006 with the intention of residing and raising a family. Last year, my wife, kids, and I moved in with my in-laws for mutual benefit. I have been renting the house for almost a year at a loss. I am underwater on the loan over 100K. It is not serviced by Fannie Mae or Freddie Mac nor is it a VA or FHA loan. I have updated almost everything in the house aside from the windows but the structure is 20 years old. Are there any options to refinance or modify to make the payments more manageable? I appreciate any feedback, thank you. by veggies from centreville, Virginia. Mar 4th 2013 Reply


Charlie Sparks (CharlieSparks)
#9 ranked lender in New Mexico - 400 contributions

Like thousands of of others you are stuck in a no-mans-land with your current mortgage. The only real hope is the rumored HARP 3 program that would allow the non Fannie/Freddie loans to be refinanced into today's rates. This has been batted around for over a year now and others who will post may know more on where it's at. In the mean time, contact your Senators and Representatives in Washington and encourage them to work on this.

Mar 4th 2013
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

I'm going to say, you're pretty much screwed... You can try to contact your current loan servicer, or do a loan modification, however, my experience is that after months if not over a year, you find out that there is little improvement.. The guidelines are pretty much set... and because your property is no longer owner occupied, but rather "investment".. There is little relief for you... even the pending programs (HARP 3.0), are only for slated for owner occupied... Talk to an attorney or a CPA, but a short sale might be an option... It will impact your credit and there could be tax consequences, so be careful.. current guidelines regarding mandatory waiting periods for borrowers wishing to get a mortgage with a short sale is, FHA 3 years, Conventional, 2 years with 20% down... I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Mar 4th 2013
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Peter Botros (PeterBotros)
#70 ranked lender in New York - 895 contributions

Unfortunately your are in a bad position. You can try to have your current servicer agree to a loan modification but that is very tough. You may also consider a short sale of the property. Good Luck!

Mar 4th 2013
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Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 1,823 contributions

Possibly. Your only real hope is to work with your current lender. No one else is going to touch a negative equity situation. It really depends on who the investor is that your bank is servicing the loan for. I actually had a customer that was able to refinance into a lower rate by offering to split the difference with them. They borrower was at 6.75% and upside down about $50,000 and the investor was willing to refi at a lower rate (actually a modification to 4.50% ) in exchange for him paying down the principal $22,000. Considering there were no other options, this was a pretty sweet deal. He just kept hammering at them and they finally agreed. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Mar 4th 2013
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Josh Lund (Josh_Lund)
#47 ranked lender in Minnesota - 113 contributions

Unfortunately not because your loan is not backed by Freddie or Fannie. The HARP loan is only available to government backed loans such as these. I'm not sure what your financial situation is, but the options right now would be to raise your rent at the end of your lease or if you no longer have a renter, you could look at doing a short-sale. You'll need to work with your existing lender if you're looking to do the short-sale.

Mar 4th 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

Sorry, it looks like you are stuck.

Mar 4th 2013
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,240 contributions

There aren't any options for investment properties when not owned by Fannie or Freddie. You can try a loan mod but not sure they will do anything, I would contact an attorney and speak to your accountant about a possible short sale and its ramifications

Mar 4th 2013
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Joe Shamie (Joe Shamie)
#4 ranked lender in New Jersey - 1,412 contributions

Not Much you can do if you are underwater and the current loan does not qualify for HARP.

Mar 4th 2013
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Carlo Sanchez (MortgageLendingPro)
#0 ranked lender in Utah - 1,163 contributions

As all the others have stated that HARP is not available to you, unless Harp 3.0 comes out, but HAMP is! HAMP allows you to Modify your loan so get with a Lender411 loan officer in Virginia to help you.

Mar 4th 2013
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Gary Wellner (garywellner)
#25 ranked lender in Missouri - 4 contributions

Negatory

Mar 4th 2013
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Peter Savino (855411LEND)
#100 ranked lender in New Jersey - 332 contributions

sorry buy NO

Mar 4th 2013
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Barb Lanis (BarbLanis)
#70 ranked lender in Illinois - 663 contributions

You will need to work with your current lender. Be persistent and give them every piece of information/documents that they request, There really won't be anyone like the loan officers on Lender411 here to guide you, so you will be on your own. It's going to take a while, but if you can show a hardship (you eluded to that), you may be successful. Good luck!

Mar 4th 2013
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