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Stuck with an underwater mortgage, searching for options.....

My wife bought her condo in 2006, with a 10year I/O @ 6.25% before we were married. Obviously, the downturn happened any the property is anywhere between 20-30% underwater. After our marriage, I purchased a property in my name only (quitclaim), using my separately titled assets. We now live in the house in my name and rent out the condo in her name. We're very fortunate and our combined income/assets exceed the thresholds for any of the loan modification / HARP / HAMP programs. We're able to rent the property out to offset some of the loss, but we're still burning about $1,000 a month. However, she's about to have a baby and won't be returning to work. Are there any viable options for refinancing the property into a lower rate, modifying the loan or receiving some kind of consideration from the lender (BofA)? Short sales and not paying the rent aren't really options for us from a morality standpoint, but we need to do something with this property, especially with a baby on the way. Thoughts? by bruinb_586_274 from Manhattan Beach, California. Mar 3rd 2013 Reply


Patrick McCarthy (PatrickM)
#25 ranked lender in Ohio - 196 contributions

As mentioned previously, you need to see if the condo loan is HARP eligible, meaning it is a Fannie Mae or Freddie MAC owned loan. If not, you may have some leverage with BofA to modify the loan regardless of income/assets. Most of the I/O loans BofA services were originated by Countrywide. If you have been following the media as of late, BofA has incurred a HUGE settlement to resolve many of the Countrywide loans issued during that time frame. My suggestion would be to locate an atty or someone that does a complete audit of the securitization of your loan and also audits the appraisal. I have seen many folks get modifications from BofA using this tactic. Hope this helps.Pat

Mar 4th 2013
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Bert Carpenter (BertCarpenter)
#38 ranked lender in Arizona - 1,819 contributions

If your loan is not HARP eligible, your only real option is to work with BofA. Expect to be laughed at, but don't let it discourage you. Before you start though, you need to re-think your position. Making the statement that you are going to continue to let this property suck $1,000 per month out of your life because the alternative isn't as moral, is kind of like taking a knife to a gun fight. If a Bank can make a decision to abandon a project, or jettison thousand's of loyal employees because it is "just a business decision", then as a consumer, you have to look at abandoning the property and giving up your investment in the same light. "It's a business decision". First and foremost, you have a moral responsibility to do what is right for the safety and well being of your family. The bank comes after that. A short sale should never be off the table. That said, don't let the prospect of being laughed at be an impediment for trying. I have seen people get some strange results. Strange, because based on their "Story", it would appear NOTHING could be accomplished and in the end, the bank blinked. You could be told "NO" five or six times before they finally say yes. Good luck to you. ~ 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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Sergio de Alba (downpaymentassistance)
#680 ranked lender in California - 20 contributions

If all her mortgage payments have been on time , I highly suggest to short sale and immediately get her into a different property. That way you can continue with renting out a property it will all be at a profit every month. That is what I would do. South Bay lender here to help. Call me at 310-713-2488

Mar 3rd 2013
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Joe Metzler (JoeMetzler)
#19 ranked lender in Minnesota - 3,852 contributions

You don't mention if you've checked to see if the loan is Fannie Mae or Freddie Mac so you can do a HARP refinance - there is no income limit on a HARP refinance. 20-30% underwater is also OK. The property is now a rental, which is also OK under HARP. Contact a local California mortgage broker. Give them a full application, and they can zero in on all your options. www.HARP-Refinance-MN.com

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

A simple HARP refinance will work for the condo if your current loan is backed by Fannie or Freddie. Check these websites: https://ww3.freddiemac.com/corporate/https://www.knowyouroptions.com/loanlookupContact me if you have any questions. We also lend in CA. barb.lanis@1amllc.com

Mar 4th 2013
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,237 contributions

I agree, if you haven't checked yet find out if the property is eligible for a HARP refinance. Or, once she is no longer working you could go back to BOA for a modification. Short sale is a last resort, it will hurt her options for a long time but that may end up being your best bet. Prices area starting to come back but it will be a while before you'll be back to even.

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

Harp doesn't have the same HAMP income requirements. Get with a lender411 loan officer and talk about your situation

Mar 4th 2013
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Loan isnt owned by Fannie or Freddie, sorry for not clarifying that up front. I think it's still at Bank of America. Just afraid of being laughed off the phone when we show our income. Since it's titled in her name, was hoping that the baby would trigger some kind of eligibility, but not sure about that.

Mar 4th 2013
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Ralph Richard Guertin (ralph@absolutelowrates.com)
#1 ranked lender in Florida - 782 contributions

HARP and HAMP are to totally different programs, If you loan is on by Fannie/Freddie before June 1st of 2009, then you income/asset profile will not matter. We work with the BEST wholesale lenders in the country and service California. The word on the street is "if Ralph can't do it nobody can"Call me 954-274-7725 or email me the address(ralph@absolutelowrates.com) and name and I will look it up for you, a lot of people do it on their own and get a NO as a response, I have turned those NO's to Yes's by going the extra mile ...Ralph Guertin

Mar 4th 2013
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Patrick McCarthy (PatrickM)
#25 ranked lender in Ohio - 196 contributions

The HAMP (Home Affordable Modification Program) guidelines do take into consideration the income of the entire household regardless of who is on the Note. I will be adimant in stating that you have a GREAT chance of using the securitization audit and BofA settlement to your advantage. I talked to a past loan client of mine who just received $34k from them. You may be able to use any amount owed you to help negotiate for a principal reduction AND modification. :)Pat

Mar 4th 2013
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Ralph Richard Guertin (ralph@absolutelowrates.com)
#1 ranked lender in Florida - 782 contributions

Just because Bank of America services the loan doesn't mean back in 2006 its wasn't a Fannie/Freddie unless you specially called and asked that question the B of A. As far as the baby, congratulation, but unfortunately is doesn't trigger any lending policy to kick in (pardon the pun) :)Ralph Guertin 954-274-7725 ralph@absolutelowrates.com

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

I know you mention that your income exceeds thresholds for HAMP and HARP. Their are no income thresholds for Harp! You need to see if your property is HARP eligible, that is what matters first for HARP. Here are the links to check, you need to check Fannie Mae and Freddie Mac, 2 different sites. https://www.knowyouroptions.com/loanlookup and https://ww3.freddiemac.com/corporate/Call us or email us at 201-962-3555 or Team@BestMortgageOption.com for ano cost no obligation analysis of your situation.Ask for Michelle or Benny We will find the Best Mortgage Option to suit your needs!You can check us out at www.BestMortgageOption.com

Mar 4th 2013
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That's so helpful Patrick, thank you. Any great recommendations as to how to find an attorney or specialist in that area? It's so cloudly, what's a scam and what's legitimate......do you know of any websites or sources to find trustworthy people?

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

If you checked the Fannie and Freddie sites and your property isn't eligible, you will then need to most likely seek the help of an attorney who is experienced in getting loan Mods. Good luck and if you have any questions we are glad to help!

Mar 4th 2013
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Jason Wood (jasonwood)
#708 ranked lender in California - 15 contributions

I have witnessed so many loan mod attempts through friends and family go no where with BofA that it is a bit of a gamble. Certainly one worth pursuing, but I would only give it until the middle of this year and if nothing has happened then short sale it. Your credit doesn't get impacted as bad as you'd think and will recover fairly quick. Short selling this year is important to consider due to the tax relief legislation the President implemented which is set to expire by year's end. If you short sell in 2014 (assuming this relief isn't extended) then you'll have pay taxes on the amount you shorted the bank as ordinary income.If it were me I'd short sell immediately so that the time clock for credit rebound starts sooner. Who knows, you may be able to purchase another rental property fairly soon with a better equity position and interest rate than what the loan mod outcome will provide, which will translate into cash flow. Cash flow is the fundamental reason behind having a rental property.

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

After reading this thread, I agree with Patrick's advice.

Mar 4th 2013
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