Hindsight

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subprimer_IHB

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Isnt it great to be in a situation where failure is the only option. So I am one of those people who bought a house with 100% financing the whole 80/20 fixed for 5 blah blah. Now that rates are pretty darn low we figured hey lets refi out of this crappy loan into a conventional fixed rate mort. and not even worry about the reset in 3 years. Every broker I spoke with says I have lost over $100k in value so even though we have great credit never been in trouble payment wise we cant refi and our value may never get back to what we owe, the loan will reset to an adjustable in 3 years and we lose the house due to a much higher payment. Why pay on a house for 3 years knowing bad news is coming why shouldnt we walk now? If we could get a refi all would be well we would be here for 20 or more years both us and the bank would be happy but the LTV is forcing a bad situation now or three years from now. Should have kept on renting.
 
are you saying you aren't going to be able to afford the payments in 3 years? Get a higher-paying job, get a second job, cut on your other expenses, it is still better than ruining your credit and chances to buy a better house for about 7-10 years.

oh, and if your refinance, you won't be able to walk anymore, since the bank can sue you for the entire unpaid mortagage balance, so foreclosure won't help you get a clean start.
 
That is a sad story. Thank you for coming here and being so honest. If you wouldn't mind sharing further, perhaps you can shed some light on the mindset of buyers in your circumstances.





1. Did you realize there was a risk of not being able to refinance? Did your mortgage broker tell you it would not be a problem, and did you believe them?





2. Did you compare the cost of ownership to the cost of renting? Was it cheaper to own based on the initial payments?





3. Did you buy because you planned to stay in the house for more than 10 years? Would you stay there if you could?





4. Did you think house prices were going to continue to rise after you purchased? If so, why?





5. Could you afford the payments on a 30-year fixed if you were able to refinance the full loan amount?





6. If you have not refinanced, your purchase money loans are non-recourse, and the lender cannot seek a deficiency in a default. Are you now considering stopping payment on the mortgage and allowing the bank to foreclose?
 
<p>My initial thought is, walk now so you can take the ding to your credit immediately. In four or five years, after the foreclosure, you'll probably be able to buy another home. Why wait 3 more years to start that 4 to 5 year period?</p>

<p>BUT, who knows what the guvmint might dream up for another bailout.....</p>

<p>Also, is your monthly PITI, HOA, etc. comparable to rent in any way, shape or form? </p>
 
Bounce. It will take you at least 6 months to get evicted. You'll basically be able to live rent free for the next six months. Keep all your other accounts current and the foreclosure will be the only derogatory account on your credit.





I have no problem suggesting you do this. If the Federal govn't repeals the debt forgiveness tax, then it there should be no shame in it. I think having poor credit will help you save money. You will be less apt to use credit cards and other debt. One, you may not be able to qualify for a CC. Two, even if you do qualify it will be a $500 limit @ 18% interest. Three, you can rent for cheaper than your mortgage payment and this will alleviate the need for as much credit on a monthly basis.
 
<p>Too bad there is no one with brains at his lender/servicer who could understand this fellow and work with him.</p>

<p>He would be perfect for a cramdown if it existed, and EVERYBODY, including the bank would lose less money.</p>

<p>He might hang on for a while in the hopes of the cramdown legislation happening.</p>
 
<p>lendingmaestro,</p>

<p>Wouldn't having a foreclosure on your record be problematic in securing a rental since landlords and apt. management companies run credit checks on prospective tenants?</p>

<p> </p>
 
BethN, You have a valid point.....but there will be so many of these tainted renters in the future, landlords will have no choice. If you can spin it as a "business decision", you'll have a shot.
 
Not necessarily. If for instance you want to rent from an Irvine community, they will do a renter's credit check. This report shows no FICOS. I am not sure what statistical model is used but it is not the Fair & Isaac model (hence the term FICO) which your tri-merge credit report uses. They (the apt community) come up with a rental score. The lower your score, the higher your deposit.





The Irvine company will ask you for a W2 and/or copy of pay stub. That is much more important to them. There are so many vacancies I highly doubt you will have a problem. Income should be most important. It's funny how you could've been unemployed and bought a home in the last 3 years when you probably couldn't qualify to rent!
 
I think you should be nice and give the bank the 20% down payment that they should have asked you for when you purchased your home. I personally think you should make double payments on your loan so you will have more equity in three years and then you might be able to refinance then.
 
cash advance all your money from the credit card and gather all your money and go red or black in vegas. that way if you win you can refi with the money. if you lose..... oh well... credit is shot anyways.
 
Just be aware that you will take a ding on your credit that is real. After doing a short sale, I have watched my ability to get credit turn embarassingly bad. I used to have over 720 score and never have any problem getting a card with 0%. Since i was carrying some high balances and had the short sale, I have watched my ability to get low APRs go steadily down. I have gone in order of balance transfers on cards (slowly paying them down...) of 0, then 1.9%, then 3.9%, then 5.9%, then no offer on 2 existing cards and 1 denials. Still not bad rates while I got em, but slowly getting worse. I also got denyed for a Fry's credit card, while trying for 0% for 9 months, on a TV purchase over Xmas. I won't even try to get a car for a while and basically our goal is to get the credit cards paid of so our scores will creep back up.



As far as walking away, if you are going to be severly stricken for a few years and definately can't afford your new payments, just say FYM (F#ck Ya'll MotherF#ckers!!) to the bank and build yourself back up.
 
<p>Subprimer</p>

<p>These are the <a href="http://finance.yahoo.com/expert/article/moneymatters/63481">new guidlines passed along with the "refunds</a>". It will be interesting to see if any apply to help your situation or are they another example of political chest thumping. </p>

<p>screwrealestate</p>

<p>Has it affected your auto insurance?</p>

<p>Regards</p>

<p> </p>

<p> </p>

<p> </p>
 
<p>I say start hoarding cash and walk in with a tremendous pile of money. Get your loan down to what is reasonable, but savings starts now. Once you get the reserves built up then you have some options. Even if you eventually walk away you might still have cash and cash opens up alot of opportunities for you.</p>

<p>Now the hard part of saving is ... saving! </p>

<p>good luck</p>

<p>-bix</p>
 
Blackacre, I am told by friends in RE that the adjustable rate in 3 yrs will probably be considerably higher but I have no clue what it would be. If I could get a higher paying job I would have already, thats like telling me to go win the lottery. Expenses are cut we are pretty much house poor.

Irvinerenter

1.No, everyone was refi-ing at the time and our broker told us that a refi would be no problem once you own and pay for a couple of years its easy and yep I beleived him.

2.Yes and no we were renting a 2bdrm for $1650 with 4 of us it was getting old we looked at renting a house or town home but at that time it was around $2500 for those. The theroy was if we are going to throw that much into housing then why not try to build on our lives with a purchase. We doubled our rent.

3. Yes and yes but we kinda want to leave CA but 10 years is pretty realistic.

4.Not really but we bought the place about $50k below "market" and broker,parents,everyone said to expect about 3-5%increase in 2-3 years didnt think it would tank, dont really care about worth or equity it is our home just want to live here.

5.Yes can afford it now, but a lower rate would give a little breathing room any higher and we could get behind pretty fast.

6. No just kinda feeling screwed. Why pay on a house for 3 years if there is a 90% chance I will not be able to afford it then. Where are rates going to be then? Doubt my value will be back it may never hit the price we paid but it may get close as we bought from a distressed seller so we were on the low end of the price range.

I dont want to walk just that if we could refi the full loan amount with no forgiveness to a much lower rate (we have great credit and good income) we would be happy the bank would be happy and it would head off trouble now or 3 yrs. from now but the LTV is the problem. Heck I would even take a 5 year prepay penalty if they would forget the LTV.
 
Abc123,

We had some money for a down and the broker said save it dont need it and it would not lower the payment any so i put it into business where it was desperatly needed. Make double payments, if I could afford that I would not be in this situation.
 
Am I subprime? Our scores are high 6 low 7's just being self employed and 100% financing was the reason we got this crappy loan? I dont think the Hope now thing is for us. Thanks for all the comments didnt think I would get this many and thanks for not jumping on me, I already feel kinda bumbed about it and negativity never helps.
 
Subprimer





I haven't seen anyone suggest this yet and I personally think this should be your first resort trying to solve your problem...Short Sell.





Try listing the house on the market below the comps and selling it. This way if you can get approved for the short sell you will not take a ding on your credit and you can walk away knowing that you did everything you could possibly do to live up to the contract you signed. I know you don't want to get rid of your home, however this is a question about affordability and even if they can freeze the rate for 10yrs you are only paying interest and still keeping your fingers crossed that the value exceeds the principal amount.
 
Subprimer,



You stated your loan will adjusted in 3 years rights? I mean honestly, who can predict what the market will be in three years? I know it is easier said than done, but I do feel your stress. Can you just live in your home now and worry about the adjusted interest in three years when it adjusted?
 
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