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Banks not willing to re-fi

Our mortgages:
Mortgage #1 for Home #1 (pri-residence): 6.25%, owe $660k, valued $594k

Mortgage #1 Home #2: 6.5% ARM, owe $193K
Mortgage #2 Home #2: 9.875% ARM w/ BLN, owe $40K
Home #2 assessed value: $150K

We recognized a long time ago that we really needed to get out from under these loans, but the homes value has never held against what was owed, so no one would re-fi.  Balloon payments are coming due in 2020 on the $40k, and an adjustment on the first mortgage is coming in 2015.  With the banks not willing to re-fi anything, I'm afraid that  they will ask for everything in one lump sum, and we will loose everything.  What shoudl we do? Note: Loans are not held by Fannie Mae, or Freddie Mac.
  • July 05 2012 - Mukilteo
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Answers (2)

Profile picture for ABBAUSA
The rock and hard place.............not comfortable at all.

2020 is 8 years off............2015 is about 3............

If you are current and that is not stressing your monthly funds then stay current, but you must make your long term decision now.

Keep one, Keep two, Dump one, dump both.

Let me tell what I have seen when the loans are held by a bank and are not government insured.

Ask them to set aside a portion if you are able to move one to another lender.

Don't be shy with this request.

Ask them to set aside on the second home $100,000 and take $133,000 to clear this loan from their portfolio. (note: you will receive a 1099 for $100,000) and it will be treated as income, but you decide what is best.

If they agree to the first the second will be easy.
On the Home #1 ask them to restructure it as well and request a lower rate to about 4% and set aside $50,000 and refi the $610,000 for 20 years fixed full amortization. That should put you in great shape.
I am assuming you have good steady income to service these loans and believe me this is not all that unusual, but you must make sure that all of this works for you, because you will receive a 1099 on the $50,000 as well. You move one and you keep one with the same lender.

Good Luck!
James Callas - Realtor®  
  • July 05 2012
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short sell the second home.   You are so far upside down, what is the point of even owning it anymore?
  • July 05 2012
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