Question by teachingmother: How do I refinance when my mortgage is more than the property value.?
My husband & I purchased our condo with two loans from Bank of America: a 5/1 ARM @ 5.25% and a 2nd mortgage @ 6.75%. I would like to refinance our mortgages before the rates adjust. However, the value of our home has decreased over $ 100K. I have called Bank of America to get a loan modification and the woman I spoke to said we do not qualify. Is anybody else having this problem and how did you get a refinance?
Answer by Gem
Welcome to reality.
There is not really help for you.
When Congress told us they were getting $ 300 BILLION in July to “help the homeowners”, they meant the BANKS, not us.
Because the banks actually own the land, they government is helping them, not you.
Sorry. Yet again Congress has stolen from us and lied to our faces (http://www.VoteTheBumsOut08.com).
The only hope you have is the FHA or HUD. Go to http://www.fha.gov or http://www..hud.gov
Search for loan modification.
And yeah, if you, like me, are making your payments and don’t want to trash our credit, there is NO help for us. Only the ones that do not pay. Sweet.
Give your answer to this question below!
You cannot unless you come up with the cash difference. That is the risk you accept when you agree to one of these dual-loan arrangements.
If you refinance, you would have to bring the $ 100,000 cash to closing to make up the difference in the decline in value. It is doubtful that you have these funds. Go to a local bank and see if you can refinance only the first mortgage and subordinate the 2nd mortgage. Just so you know some lenders will not allow the 2nd to be subordinated now with the way the market has declined. If this is the case, explain how locking into a fixed rate on the first mtg will benefit you and the 2nd mtg holder.
It’s an unfortunate situation, and the people telling you that you have no options are probably not correct.The fact that you pay on time does reduce the urgency that the bank feels towards working with you though.
I’m in the mortgage industry but I recently met a lawyer who deals exclusively with loan modifications all over the country.
Email me if you want, and i will forward his contact information to you. He will give you a free consultation and let you know if he thinks he can help you or not. It’s probably worth your time to explore having a professional help you out of this mess, as the results they get can be a lot better then the results you can get on your own.
Also, just FYI, if you stop paying the 2nd, it will ruin your credit, but they won’t foreclose. Since the first mortgage will get paid first, the second mortgage holder really has no recourse against you except to put the bad marks on your credit report.
The answer is simple. You DON’T get to refinance. Any lender will have the property appraised. Since you owe roughly $ 100K more than the property is now worth, the best you could get is a new loan for about $ 100K less than you owe, and would have to come up with the missing $ 100K out of your pockets.
The reason you don’t qualify for loan modification is that you are apparently still able to make the payments on your original mortgages.
Live and learn.
Stop making payments and you will qualify for modifications.