Refi/modification/

BOBBYSLOAN

LoanSafe Member
Nov 5, 2012
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Hi all and thanks for the read.

Long story short, I'm trying to help my X with his horrible mortgage and after an afternoon on the phone with Wells Fargo, my head is just spinning. I'm not even sure what direction to go ...

Turns out, he has an interest only mortgage ... 3.25%, the original mortgage was approx $165,000, he's since, in almost 8 years, paid off $1,000, leaving a balance around $164,000. In the meantime, the property has been assessed for $59,000. SO ?!?!? He has amazing credit, not willing to be late or have a missed payment. No matter what program he would qualify for.

One other fact, since he was approved for this loan, his income has gone from approx $90,000 to $40,000.

Where do I even begin ???
Any suggestions .... seems very, very dark to me !

Thanks in advance for any help.
K
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
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48
San Diego, California
www.LoanSafe.org
Turns out, he has an interest only mortgage ... 3.25%, the original mortgage was approx $165,000, he's since, in almost 8 years, paid off $1,000, leaving a balance around $164,000. In the meantime, the property has been assessed for $59,000. SO ?!?!? He has amazing credit, not willing to be late or have a missed payment. No matter what program he would qualify for.

One other fact, since he was approved for this loan, his income has gone from approx $90,000 to $40,000.

Where do I even begin ???
This is the terrible thing about interest-only mortgages, after about 10 years paying on the account you will have only paid off a VERY small portion of the loan unless you pay extra more each month to go towards principle. Is he struggling to afford his payments at this time or is he simply just trying to get out of the interest-only loan?
 

BOBBYSLOAN

LoanSafe Member
Nov 5, 2012
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Thanks for that Evan .... I just can't imagine that this can even be allowed to be had ! Makes zero sense to me .... but I guess it is what it is at this point .... all I can do is keep fighting .... but it seems that because he is trying to do the right thing, and not walk away and loose his credit rating, that he's being penalized. Everything seems to be against him. Wish I had a better understanding of what his actual options are. To make matter worse, Wells Fargo today, the one guy we spoke with, was just out to tell him what a good position he was in, that he was lucky and very fortunate ???
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
Everything seems to be against him. Wish I had a better understanding of what his actual options are. To make matter worse, Wells Fargo today, the one guy we spoke with, was just out to tell him what a good position he was in, that he was lucky and very fortunate ???
I agree with you this is a terrible loan and it benefits the borrower in no way besides the fact they will be paying a much smaller amount for ten years, and at this time they are basically just renting the home with no money going towards the actual balance. You may want to determine whether or not Fannie Mae or Freddie Mac owns his mortgage, if they do he may be eligible for a refinance under HARP which will help him get into a low fixed-rate mortgage.

Home Affordable Refinance Program (HARP)

You may be eligible for HARP if you meet all of the following criteria:


  • The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  • The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
  • The current loan-to-value (LTV) ratio must be greater than 80%.
  • The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.
If your loan is owned by Freddie Mac, you may check your potential eligibility for HARP here.


If your loan is owned by Fannie Mae, you may check your potential eligibility for HARP here.
 

BOBBYSLOAN

LoanSafe Member
Nov 5, 2012
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The problem, or one of many of the problems with all of this, he absolutely refuses to be late with his payments. Thankfully, he's not that far in yet where that is necessary. I believe his mortgage is owned by Freddie Mac .... but again, refuses to be late. His credit is outstanding. I'm thinking his only way at this point is to re fi with fingers crossed of some hope in hell ???
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
The problem, or one of many of the problems with all of this, he absolutely refuses to be late with his payments. Thankfully, he's not that far in yet where that is necessary. I believe his mortgage is owned by Freddie Mac .... but again, refuses to be late. His credit is outstanding. I'm thinking his only way at this point is to re fi with fingers crossed of some hope in hell ???
If his loan is owned by Freddie Mac he may qualify for the refinance program I listed below which requires him to be current on payments. I would recommend looking into this program and having him apply as soon as possibly if Freddie indeed owns the account.
 

BOBBYSLOAN

LoanSafe Member
Nov 5, 2012
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I have since found out it is with Freddie Mac ... so ??? Hopefully ! I will have to further investigate !!!
Thanks so much for the info !!
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
That is great news! If you type in "HARP" in the google search bar at the top of the page you will find a ton of information on the program here in the forum.
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
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San Diego, California
www.loansreduced.com
Looks like I'm a little late responding on this thread but would like to provide some input.

Your ex is severely underwater, you really want to evaluate all options at this point. Listed below are a few things that I would personally consider in your scenario if I was in that position and also things to understand with the HARP Refinance. I have helped hundreds of borrowers refinance under this program since it was released.

1. If you're able to short sell the home without being late, he can apply for another FHA loan immediately. Consider Short Sale as one of your options.
2. Credit will be impacted whether he goes delinquent, receives a modification or does a short sale. All of those actions will impact the credit differently, I wouldn't be the best to advise how it would impact it.
3. Right now he's paying an interest only loan, determine what a HARP refinance payment would be. The new payment would be principal & interest rather than just interest only. If that payment is unaffordable to him, it may not be the best direction and again would want to consider selling the home. If he short sells the home rather than foreclosing, he will be able to buy another home sooner.
4. Will a loan modification help him, they typically modify to 31 percent of his gross income - again is this payment affordable.
5. Are similar properties in the area renting for around what his mortgage payment, taxes & insurance are?

I hate to be negative as you never see me that way here on the forum but he wants to really evaluate all his options and determine which is the best. Weigh out the negatives, positives and go with the direction that suits your/his family the best for his future goals. With how far he is upside down, I doubt the home will recover in value anytime soon. But the home is just a price tag, if he thinks the payment is affordable and doesn't care what his home is really worth - keep it!
 

BOBBYSLOAN

LoanSafe Member
Nov 5, 2012
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Thanks for that ... I ended up getting a loan modification with HARP/HAMP ... whichever one is the one where you don't have to have a late payment.
It finally closed about a month ago and his first payment is in April. I'm just glad it all worked out and it's over. The house actually was appraised higher than we were expecting which was amazing in itself.
It was still over 100% LTV but at least he is now making principal payments and hopefully it only continues to get better !
Thanks for your comment !
K