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Any refinance option on underwater Wells Fargo 5/1 ARM?

Purchased home Dec 07, 5/1 ARM interest-only option as we were in process of selling another home and would refi into a fixed with proceeds. Unfortunately, sold the other home at loss so we're "stuck" with the ARM.  The home has depreciated every month since we bought it, and is now 90k underwater.  Loan set to adjust Feb 2013. Not a Freddy/Fannie or FHA, VA loan.  According to Wells, we don't qualify for the Attorney General's settlement either (apparently, a subsidiary of Wells owns the loan, so it's technically not eligible).  We don't qualify for the Keep Your Home CA refi either (don't meet income req). Even though I was laid off for a while, we always stayed current, never missed a payment. We want to stay long term to raise our 1 year old.  We're thinking about applying for a loan mod. Any advice or other options?  Please only respond if you have helpful advice, I don't need to hear "you're screwed" one more time...  Thanks in advance.
  • May 21 2012 - Sacramento
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Answers (3)

most ARMS are adjusting to ~3.5%. Your pending Adjustment might not be so bad at least for short term.
  • May 21 2012
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Is your ARM a 10 year IO or does it fully amortize at the reset point?  If your on an Arm tied to the 1 yr LIBOr with a 2.25 margin you're rate would be just over 3.25% and if you are still eligible for the IO payment I can't see how a modification could get you a much lower payment.  I know you aren't likely to see that 90k come back quickly but as far as monthly payments go it seems you are set for the short term as Justin said.
  • May 22 2012
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Have similar situation. 5/1 ARM is going to mature July 1st. We never refinanced so we are still paying 6.35% interest only. We paid $775000 zillow says only worth $508,000  I don't see how thats possible. we owe $618000.  but have totally outgrown the house in 5 years expecting 3rd child in july oldest is child is 6. House is 3 bedroom 1 bath 1000sqft. I've been told to let  loan mature hopefully next year market picks back up where you can get LTV loan refi. We would like to rent out and try to buy a bigger house? Reality is we were stupid for not refinancing earlier but didn't want to put more money into property. Now our payments with principal will be lower then they've been for the last 5 years. Any thoughts on going about juggling and trying to buy another house while trying to rent existing one?
  • May 29 2012
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