In a financial nightmare, mortgage?

Question

Help!
We live in flordia and now owe more than the home is worth. we purchase the home 3 and a half years ago for 225k. we got into one of those ARM/intrest only gigs. well the first three years the payments were around 1400 that fit into our income level just fine. Now they inflated to about 2200 in the last six months and now i got notice that it is going up to 2400. I tried to talk to the bank they called for an appraisal 350 bucks out of my pocket and found the value is now 170k. I am stuck.. and i do not have 60k laying around for the diffrence. I went and got a part time job to help but that dosent make a dent, now i am late with cc payments and got them down my throat. My wife is getting a parttime job and we are barely not speaking to eachother due to this mess. Why cant these companies help you, they are the ones that got us this great fantastic program.

GEE SOME RUDE PUNKS IN HERE, POINT OUT SOME RESOLUTION INSTEAD OF INSULTS!!! MOST OF YOU PROBALY GOT IN TO MONEY BIG SO YOU DONT HAVE TO WORRY ABOUT IT. SO F-OFF IF YOU ARE NOT GOING TO SAY ANYTHING NICE.

Answer 1

Don't blame them, it's your fault that you chose the cheapest options of an IO payment, an ARM, and apparently $0 down.

Answer 2

Sadly, you're in the company of many people who got interest only loans. When they were popular, mostly in 2006, I tried to talk most people out of them. They are for a very specific borrower...one who expects his income to increase dramatically in the next few years (like an intern who'll be making a boatload of dough in 5 years) or the person who gets transferred every couple years and doesn't have time to build up any equity anyway...might as well buy a house for interest only as pay rent.

For the average Joe who has a regular job, this is NOT your best choice. In addition to the possibility (that's an understatement) of the rate increasing at the end of the fixed period, you'll have to add the principal payment too. That's why the jump is so huge.

Florida is one of the areas where values increased unrealistically in the past few years...California, Arizona, others...and people bought houses with no downpayment, paid too much for them, and only qualified for the loans at the "teaser" or I/O rates. Now, a few years later, the values have gone down and those borrowers are losing their homes all over the place.

There are lenders who have special money available to get people out of these jams, but if your home's value has dropped that much, this is probably not possible.

It does make me wonder about the original appraisal. Perhaps there was some impropriety there, and you might have some recourse. Unfortunately, that may not be the case, and you'd need a lawyer to find out.

Call around, listen to ads on the radio...maybe there's a lender with some kind of bail out to help you. They're mostly local companies who are able to do this, so the ones I've heard of wouldn't be of any use to you.

Answer 3

You are not going to want to hear this but you are in a mess at least partially of your own making.

As a consumer, you have a responsibility to make certain you can afford what you are getting into before you sign on the dotted line.

A lot of people are going around blaming loan officers for these situations and, yes, I know that there are some unscrupulous ones out there who took advantage of their own and consumer greed to place people into loans that they knew there was at least a possibility that sooner or later would no longer be affordable but consumers demanded loans that would allow them to buy more home than they could afford with vanilla b flat financing and those of us who refused to give the consumer what they wanted due to ethical concerns lost loans to those who would.

I am truly sorry for your situation and wish there was something brilliant I could offer as a solution but there isn't. You can either stick it out and wait for your property to appreciate or the rates to drop or you can cut bait and see if the lender will agree to either a short sale or accept a deed in lieu. Either way your credit is going to be negatively affected for years to come.

One thing you might check on is to see if there is a possiblity of your doing a "Streamline" Fannie Mae refi to a fixed rate. It doesn't require an appraisal and you don't have to requalify so it may be a possibility as long as your mortgage payments haven't been late. My concern with that is that if you can't afford the interest only payments how could you afford the amortized payment. Still, it is worth a look see.

You'll be in my prayers.

Answer 4

The ARM mortgages is a main factor in the foreclosure crisis happening right now. Many consumers did not expect such drastic increases in payment when the ARMS adjust. My concern is your appraisal. Do you believe it is accurate? I would recommend you go to realtor.com and put in your present address under how much is my home worth. You can pull up recent sales in your neighborhood that shows what homes are currently selling for in relation to the year the home was built , mile radius, and sq ft. Appraisers have to list comparables using recent sales to get your current value. If you see higher sales that are similar to your own home purchased recently this may indicate you received a bad appraisal. If this is the case then I would suggest getting another appraisal which I understand would be more costly but if it enables you to refi on a fixed lower rate it would be worth it. You can email me for further help. I have been trying to proactively help customers that have maturing ARMS. If you get a better appraisal the late payments on credit cards could hurt you, but the main thing a lender is going to access is if you have been late in the last 12 mths on your current mortgage. FHA is working on reforms right now to help customers in ARM mortgages. The new programs have not been implemented entirely but I am seeing some current changes currently in the program. I will try to help you if at all possible. Good luck!!

Answer 5

I recommend that you contact an attorney who specializes in real estate law.

Collect all of the closing papers and other documents that you have regarding this transaction.

In many of these cases I have found that the mortgage brokers engaged in some fraudulent behavior that you did not know about.

If you are having trouble making the payments now and your income has not declined, the mortgage broker probably engaged in some fraudulent behavior behind your back.

Even though the payments on these loans start out low, you are supposed to qualify on the loan as if you were making the payments as if you were making the payments based on the fully indexed rate plus the margin.

Sometimes mortgage brokers make up some fraudulent material that you do not know about to get you to qualify.

The mortgage broker is not doing you any favors when they do this. They are just getting you into a loan that you will not be able to afford when it fully adjusts two or three years later.

The mortgage broker, if they engaged in this sort of fraud may be legally liable to you for monetary damages. That is the reason why you need to talk to an attorney.

Answer 6

Ummm...the company (lender) didn't get you into this program alone. I would assume that YOU signed the mortgage papers and agreed to what you now have.

You are expected to read and understand what you sign BEFORE you sign. Apparently you failed to do so, and now find yourself in a very untenable situation.

Your options include asking the lender for a short sale, a deed in lieu, or facing foreclosure. All three will trash your credit seriously. If you wish to avoid these scenarios, both of you will have to keep working multiple jobs to make the payments until the real estate market rebounds in values, which could take several years.

Answer 7

The reason the companies will not help you is because you took a GAMBLE and lost.

You gambled that the interest rates wouldn't increase.

You gambled that your payment would stay the same or be lowered.

You bought the house that you could only afford with interest-only payments, which means you would never, ever own the house.

Unfortunately, that is how the loan program YOU CHOSE worked, and foreclosure, I feel, is going to be the very near end to it.

People have to make responsible financial decisions and buy within their means.

Answer 8

You purchased the home with the hope that it would increase in value unfortunately the market is dropping,the companies that got you that bargain are not to blame, it is more a combination of yourself, your expectations, and primarily the market FL being one of the worst it is expected to drop, an additional 20-27% in value over the next year or two. Unfortunately you only have two choices, pay the bill, or lose the house.

Answer 9

John,

sorry to hear about the trap u got into.
1st do a budget see where the money is going to (written).
u have some hard stones to swallow soon.
pay food 1st , mortgage 2nd, utilities 3rd,
transportation 4th. CrdtCrds come last.
depending on ur income u may have to do a "Repo in lieu of foreclosure - with out recourse". suggest visit daveramsey.com to learn ur hard lessons from others mistakes.

Answer 10

I'm sure you are obligated to make the payments, but are you obligated to come up with 60k for the difference?? Or are you talking about selling?

Answer 11

Why can't the mortgage company help you?

They already have; at your request, they helped you into a house that you could not afford, then or now!

Try: http://www.naca.com They might be able to help you but please understand, where you are is by your own doing.