What do I tell the broker?

[BKchapter13]

I have heard alot of people doing this, is it right??? that is only answered by yourselves, I wouldnt do it only because its not right for me and the fact that many other people are doing this and hearing in bits and pieces that the banks are going to investigate these types of properties and go after the prior home owners for fraud, that is what I heard but I am not an expert just someone trying to pay back my debts and listen and read alot. Of course even if you do walk away and everything is a ok, thier is always the taxes on that property, thiers no better way then the right way if you ask me, I would do alot more reading and learning before you do that. Good luck with your decision.

[Flowers]

gopherman,

a few things, in no particular order -

- are you still paying the mortgage, I thought you were given a 'no go' on the Obama plan , why are you paying?

- I see in the news today Obama wants to try a new program to prevent all foreclosures.

- I went from my original $492k mortgage at 10% rate to the HAMP of a new $592k mortgage at the increasing 2%, 3%, 5% etc.
It was not IIB.
I described the situation to a friend of mine and he suggested I walk away anyway (I am not ready to go that way)

- BUT, I think you can just walk away from your home, if it was IIB

[Ugh07]

it really doesnt matter because you wont be able to get a new loan. The disposition of your current home will kill the deal because there is basically no way to get rid of it and not screw your ability to get a new loan.

[gophermn]

Ethically do you need to report mortgage if IIB

Can anyone respond to my dilemma. I am wanting out of my current home and into a different one closer to work. Obviously the market sucks and I am not expected to sell my current home for what its worth (which is about $80K upsidedown). Even a short sale is weak.

My current mortgage is $2600 and that is indeed holding me up on getting a mortgage on a new home because first, I cant have 2 homesteads and second my debt-to-income is jacked because of the current $2600 mortgage. OBVIOUSLY if I didn't have the $2600 I would be able to get more house.

Here is the kicker - my current home was Included in BK (CH7) and credit reports show a $0 balance. Because the house was IIB and shows $0, do I need to 'legally' tell them that I am paying $2600. In all essence I have been making the payments out of good faith. Yes the title will show my name and yes the underwriter could pull a payment history, but again, I have absolutely no financial obligations because of the CH7.

Saying all that, do I need to disclose the mortgage payment?

Thanks all!!!

FYI - HHM I know I have another post on here and you said I should rent for 3yrs but I really never posted the question of my home IIB and showing $0 balance. Yes the title co will show the deed but with the credit rpt showing $0/balance - I am not sure what is right (i.e. no financial responsibility).

[Ugh07]

Yes.
Take my case as an example (although I'm not 'underwater', that I know of): I bought my house later in life (age 52), and expect it to be my last home, if it outlives me. Thus, its market values is of no actual concern to me. If I have to (or choose to) go buy a new house that costs me as much or more in 'new' interest on a new loan as any amount I am deficient in equity, I can't figure how I am any better off. If I have negative equity of, say, $70,000, or a new mortgage that is going to cost me $70,000 in 'new' interest, I'm out $70,000 either way! The home might gain value in the future and narrow the equity gap, but I'm going to wind up paying all of the interest -- which is, of course, above and beyond the value of the home -- if I go to term on the loan!
Granted, the key here is actually whether or not you can afford to pay your current mortgage payment. If you can, I'm arguing that continuing to pay it might cost you less than taking on a new mortgage, even for a lower amount -- especially if you've already paid a number of years.

Let me try to clarify this. Are you basically saying, "who cares if you are underwater if you arent planning on moving anyway?" If thats what you are saying I agree.

[gophermn]

I do know there are many rental homes with leases to purchase out there - so perhaps I do that.
GMAC has been jacking around my loan mod in a terrible way I am just frustrated and fed up with these dorks. You can see previous posts about that..
Thanks all -

[Logan]

Perhaps I can get the lender to offer my current home as a short sale - then I might have options. Or would I?
However as HHM said, a short sale I believe could be considered a foreclosure which sets me back 3 yrs. Uggggh!

You're not set back 3 years. When you walk away you're ahead by 130K. Rent for 3 years and save up for a down payment and buy in 3 years. Real Estate prices aren't going to be much higher in 3 years.

Logan

[HHM]

You have a major flaw in your math....

You are forgetting to factor in the Interest on the EXISTING MORTGAGE.

Let's take the OP's example
Current Mortgage Balance, $300,000
Current Value, $170,000
Negative Equity: $130,000
Let's assume the person has been living in the home 5 years, remaining term 25 years, and for the sake of example, let's say the original balance (when purchased) was $325,000, 30 year fixed at 6%
P&I Payment $1948

REMAINING INTEREST TO BE PAID ON THAT LOAN: $280,623
(note, they will have already paid $95,000 in interest).
Years to break even (where house is worth what is owed), 15

Purchase same house, 2 years from now
Mortgage, $180,000
Assume same loan terms, 30 year fixed 6%
P&I Payment $1079
TOTAL INTEREST TO BE PAID: $208,508
Years to break even 0.

Total Interest Savings: $72,115

But you are correct, there are "possible" scenarios where it might make sense to stay. But given the nature of the housing bubble, most people that are bit either purchased or refi'd in the last 6 years. But, if you are significantly upside down, I do not see a scenario where it makes sense to stay unless interest rates were significantly higher than they actually are.

[oldhack]

Not sure I follow, are you seriously arguing that a person should try to dig out of $130,000 of negative equity vs. dumping the upside down house and buying a house for current market value.

Yes.
Take my case as an example (although I'm not 'underwater', that I know of): I bought my house later in life (age 52), and expect it to be my last home, if it outlives me. Thus, its market values is of no actual concern to me. If I have to (or choose to) go buy a new house that costs me as much or more in 'new' interest on a new loan as any amount I am deficient in equity, I can't figure how I am any better off. If I have negative equity of, say, $70,000, or a new mortgage that is going to cost me $70,000 in 'new' interest, I'm out $70,000 either way! The home might gain value in the future and narrow the equity gap, but I'm going to wind up paying all of the interest -- which is, of course, above and beyond the value of the home -- if I go to term on the loan!
Granted, the key here is actually whether or not you can afford to pay your current mortgage payment. If you can, I'm arguing that continuing to pay it might cost you less than taking on a new mortgage, even for a lower amount -- especially if you've already paid a number of years.

[HHM]

Just a thought, and a puzzlement:
I realize a lot of folks are "upside down" on current homes, and that must be a frustration to anyone who bought into the cultural fallacy that home prices MUST always go up. But, as in this case, how is it worse to continue paying for say, a $300,000 home that is now valued at $170,000 than going out to buy another house now valued at, (again) say, that same $170,000, on which you're going to pay considerably more than what you're "upside down" in interest on a new, for example, 30-year loan at even 5.5%?
You have a $170,000 home in either case of this example, but your $130,000 loss is in the past in your current home, while a new mortgage puts that cost (and more) into the future.

Not sure I follow, are you seriously arguing that a person should try to dig out of $130,000 of negative equity vs. dumping the upside down house and buying a house for current market value.

[oldhack]

Just a thought, and a puzzlement:
I realize a lot of folks are "upside down" on current homes, and that must be a frustration to anyone who bought into the cultural fallacy that home prices MUST always go up. But, as in this case, how is it worse to continue paying for say, a $300,000 home that is now valued at $170,000 than going out to buy another house now valued at, (again) say, that same $170,000, on which you're going to pay considerably more than what you're "upside down" in interest on a new, for example, 30-year loan at even 5.5%?
You have a $170,000 home in either case of this example, but your $130,000 loss is in the past in your current home, while a new mortgage puts that cost (and more) into the future.

[HHM]

Yep, the only thing you can do is cut the lender out of the deal, either...

1. Pay cash
2. Get the owner to carry and do a land contract/wrap-around mortgage, but this can only be done with assumable mortgages and with interest rates as low as they are, this option is not that attractive (The only way this makes sense for the seller is to charge a higher interest rate than the existing mortgage).

[gophermn]

Perhaps I can get the lender to offer my current home as a short sale - then I might have options. Or would I?
However as HHM said, a short sale I believe could be considered a foreclosure which sets me back 3 yrs. Uggggh!

[NoMoreCards]

The only suggestion I have is a possible land contract. Many people are desperate to sell, so it may be a option.

Best of luck with this. I suspect I will be in the same boat down the river a bit.

[DeadManCrawling]

gopher,

We avoided lenders altogether and bought a place outright with cash. In many markets, houses can be had for less than the price of a used car. Here you can purchase homes that are fine to live in, need minor repairs, and are otherwise sound for less than 20k. You can get a condo for 10k.

If you have the money for any sort of down-payment, this may be a viable option. Instead of trying to use it as money down through FHA (which I agree with the others on-no longer an option) you would buy something outright.

We had a bit over 150k to spend, and did so in October.

Other than that, I cannot conceive any plan that would accomplish what you are trying.

Not sure where you are at, but I guess we were lucky (depending how you look at it) to be in one of the epicenters of the housing crash, Tampa, FL.

Good luck, in any case.


-dmc