Question by InvestorM: What should I do about my condo which is under water big time regarding the mortgage?
Due to foreclosures in my condominium complex, the price of my place went from around $ 245,000 to $ 118,000 in the past 2 years or so. My mortgage is around $ 185,000. My interest rate is 5.76%. I had refinanced it when it was valued at around $ 245,000. What can I do about this? What should I do about this?
Best answer:
Answer by gardenoflia
Get a loan modification. If the lender won’t work with you, join pre-paid legal and get one of their lawyers to write a letter to the lender. Or join me in FHTM and make enough money to pay it, and be able to refi at 4.2%
Add your own answer in the comments!
A lot of this going around unfortunately.
Housing prices are cyclical. it goes up and down. When ever there is a downturn in the market, there are people who feel ripped off or jilted.
Legally you are required to honor your contractual agreement and continue to pay on your mortgage. You bought it, the bank lent you the money………who fault is it that property value dropped? Ultimately it was your decision to buy or not buy the condo.
This last housing bubble was so huge and catastrophic, it forced most lenders to go out of business, brought the financial system to the brink of collapse and the government has stepped in and forcing banks to assist those “who are having difficulty making their payments”.
For people who are not having difficulties making their payments, there are no government subsidies or a benevolent banker that will step in and give you a break.
Many home owners have started resorting to “strategic foreclosure”. Just walk away and take the hit of a foreclosure on your credit and hope that in 5 years your credit is back to normal but you saved a ton of money by dumping the home on the bank.
While in “normal times” the bank would just foreclose and send you a 1099 for the difference, there are many in the banking community who agree that they can go after individuals who intentionally dumped their mortgages. This means going after individuals with assets and income to recover their losses. While this is still unprecedented, it may happen.
I would wait it out a bit longer before doing anything drastic.
There are a few things that you might consider in your situation.
#1. Stay there as you would have to pay either rent or mortgage some place. Property values will probably go back up, the question is when?
#2. Find a competent real estate agent that is well versed in the short sale procedures, have this real estate agent assist you in filing a request for a short sale of your condo through your lender.
#3. Allow the foreclosure procedure to go through until completion.
#4. Request of your lender a deed in lieu of foreclosure. This procedure would relive you of the responsibility of paying your monthly mortgage if approved by your lender.
In most of the solutions outlined your credit report would be affected for several years.
The real decision would depend on your financial situation and your personal desires.
I hope this has been of some benefit to you, good luck.
“FIGHT ON”
You’re barely underwater. Don’t worry about it.