Foundation Issues and Mortgage Reduction...

[Faust]

What are anyone's thoughts on trying to get BoA to reduce mtg principal due to foundation problems on a house that could cost $35,000.00 to repair? It could possibly be more than that. About a year after we bought our split level house we noticed the linolium in the lower level bar area tended to buckle in hot weather. After a while the linolium cracked and reavealed a HUGE crack in the concrete slab that runs from one side of the house to the other. The upper level of the house also slopes noticably in that area where the concrete has sunk about 1/2 inch. The lower level is totally finished and the foundation repair company we called said without tearing everything out (drywall, carpet, paneling) there is no way to know the extent of the damage but the min would be $10,000.00 and they would have to install a piering system about 35 below the surface to reach bedrock and prop up the house.

There is no way you could sell this house but we do like living there. Even though there is an abandoned house with no siding in our back yard. No water is getting in but eventually this will need to get fixed. If we abandonded the house the bank would be screwed trying to sell it.

Is there any possibility of "forcing" them into lowering our principal by $35k if we threaten to just walk away?

It's just a thought.

[HHM]

Well, you can't "force" them to do it.

I suppose anything is possible, but I wouldn't be counting on them doing it. Before they would even consider it, you would probably need to start missing payments.

I suppose you can put together all the info and send a request, no harm in asking, but I doubt they would do anything.

[SunshineGal]

Faust,

It sounds like you need to dig out your homeowner's insurance policy and read through it. I'm not familiar with WI properties as I'm in FL, but generally speaking for this state, structural damage is either caused by sinkholes, or by construction debris.

Chances are the bank will not give you a principle reduction; however, your Homeowners policy should cover the expenses of fixing it.

Keep us posted.

[AngelinaCatHub]

Faust did you get what is called Title insurance? It mostly insures tainted Titles after they search for clear Titles. however I don't think the Mortgage company has any responsibility to make you whole. All they did was give you a loan.

If the house goes under in repo, they will sell it to someone as-is. If that foundation is settling, you may have a VERY big problem.

As a bit of an engineer, here is how I would fix the house (if codes agreed): Cut floor of basement to earth at piling locations and sink a four to six foundation for a steel column down the sinking side. Column up with an I beam and shim with steel shims to level. Re-bare and fabric the floor and cover with #8 hard concrete. If you know how to do this it won't cost you 35K. 'Hub

[SunshineGal]

Title insurance only insures a clear title, it has nothing to do with structural issues. Since there's a mortgage, the lender would have required both Title insurance and Homeowner's insurance prior to funding the loan.

One more thing... you want to make sure you use a licensed contractor who will supply engineering reports. One, your lender will probably require this as they will be named as an insured on your policy, and two, when you go to sell, the buyers lender will want to see them.

[Faust]

Thanks everyone!

I work at a title company and this is not a title issue.

The lower level is totally finished, top to bottom. In order to fix this issue, everything would have to be torn out and the problem addressed. The cost would be extremely high. The cost of the piering system alone was quoted @ $9k without being able to see behind the drywall and paneling. The cost to redo the finished lower level....who knows.

In WI we have clay and a lot of foundation issues. Which of course are NOT covered by insurance. Sorry to say.

I should take some photos and mail them in. Tell them lower the principal or we walk and they can deal with it. Under normal conditions, and probably this one, they would probably laugh it off but with an ever growing # of REO's, there's a tiny possibility they might take the bait.