Upside on house and getting more favorable mortgage?

[saddebbie]

Good afternoon all,

I have heard people talking about getting a more favorable mortgage when upside on their house?

My situation is as follows:

I filed for Bakruptcy more then one year ago and it has been discharged.

I let one house go in my bankruptcy and I kept the other.

On the house that I let go, I was the only one on the house as my spouse was not on the deed nor the loan.

On the house that I kept, me and my spouse are both on the deed and the loan.

My spouse did not file for bankruptcy.

We are current on the house that I kept through the bankruptcy and this is the house that we live in as well.

I am wondering if a mortgage company can help us get a new and reduced mortgage? We bought the house 2 years ago and we paid 325,000 and its nonly worth about 265,000 currently. Would another mortgage company give us a loan for 265,000 and pay off our loan which is for about $320,000? We are current on our loan payments but we are struggling.

Any thoughts or advice?

Thanks a bunch!

[fltoo]

How can a new mtg company pay off a 320k loan with 265k?

You need to negotiate, if possible, with the present mtg company to modify the loan. I don't know many people having success with loan mods though even when they are in default for months.

Only success I have seen so far, is an interest rate mod. Lately, I am also seeing second lien holders take less money in negotiating on pay in full terms.
This would be the same as settling with a cc company.

[Flamingo]

Your mortgage company is not going to wipe away a mortgage because your house value went down. Millions of Americans are in the same boat. What they might do is as fltoo suggested; adjust your interest rate to make the payment lower for you. There are some programs in effect via the government (depends on your mortgage lender) where the mortgage can be reduced to a lower amount but when you go to sell the house, any profits realized from that reduction by you to modify your payment will be turned over to the lending agency/government. As you well realize, they are not very popular. No one is going to hand you free equity on your house at least not at the present time. If/when that should ever pass, mortgage holders everywhere that are in good standing with their mortgages and struggling to remain so will raise such a stink I would not want to imagine the downfall out of that...

Home values will again rise...when you make a mortgage payment you are still paying down principle in your home. It's the interest that comprises most of the mortgage payment.