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Are there any options for refi or modification with fallen home value and no equity as a result?

Here's our story...

Michigan home purchased in 2006

Appraised value (2006) $230K

Purchase prince (2006) $215K

30 Year Fixed Loan @ 7.25% (Fannie Mae backed/serviced by WFHM)

 

Our home value has decreased in excess of 33% since 2006 due to the market and unemployment conditions in Michigan. We survived unemployment in the past without defaulting, but we continue to see our monthly contributions do very little against an interest rate that's double the current rate on a loan that will never be recovered. We owe $207K on principal and barely make a dent each month with so much $ going to interest.

  • August 24 2011 - Waterford
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Answers (2)

Hi,

You may qualify for a loan mod if the following apply:
1: this loan was originated on or before 1/1/09
2: the FIRST loan payment, fully amortized is greater than 31% of your gross income.

Additionally you will need to pass the net present value test.  this is important, however ifyour underwater and your income is at the right point you should qualify.

If your current you may qualify for a streamlined refi or short refi depending on who owns your loan.

Im happy to work any calculations for you.

JoAnna Jensen
Legal Assistant
I work for an attorney  cal attorney
Not legal advice
  • August 31 2011
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I have had realtors pull comps in our area for an estimated price to see if we are near 125% LTV. Zillow's estimate is $129K, and realtors speculate a peak at $150K (without appraisal). I have called our loan servicer to ask for assistance with no help from them, and because we are not currently struggling to make our payments, we don't qualify for any assistance programs that I am aware of. We could pay down on principal, but at this point we would need $50K+ and I don't see us coming up with that very easily! We've recently submitted a relief application through the MSHDA Step Forward program, although I doubt we'll qualify for that either. Our Front-End DTI is 16% and our Back-End DTI is 74%! Our debt is pretty average I would say, with most going toward our home and student loans.
 
We are looking for insight on any options that might be out there. If we had intentions of staying in our home, we would ride it out and pay the high interest knowing we're investing in our future. The reality is we are looking to relocate and the only thing keeping us here is our home which is losing value fast. We feel left out of the equation when it comes to a helping hand. We are not trying to get anyone to pay our loan for us, we would just like to reap the benefits of a lower rate to pay our home off faster and be responsible borrowers. That's all we have wanted to do from the beginning.
  • August 24 2011
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