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I owe more than the house is worth. what can I do?

Divorced early this year!  Modified loan last years..and the end of the year.  But my principles balance was not reduced!  HELP!!
My income is about to change.

 Worried Home owner
  • November 03 2009 - Ontario
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Answers (4)

You many still be able to modify your loan again.  Keep in mind that principal reductions are rare and there is more help today then when you did your first loan modification.

Our Attorneys are still getting principal reductions see article

http://www.callalms.com/blog/2009/wachovia-attorney-loan-modification-success-story-laguna-beach/

and banks are still doing them but you just can't count on them.

You have many options, however, i know some may not be ideal.
  • November 04 2009
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To apply for a loan modification under the Obama Program which is called Home Affordable Modification Program (HAMP), your loan must be owned by either Fannie Mae or Freddie Mac.  This is the program that reduces the principal balance and you can check your eligibility.  However, there are guidelines involved if you qualify. You have stated that you have already been given a loan modification last year.  Currently, banks are really very careful with loan modification since majority of loans modified still went into foreclosure.  Considering that your income is about to change (reduction??), your next option is to just do a short sale.  This will allow you to re-establish your credit in two years and allow you to again get into homeownership after two years.  If you really want to keep your home and you qualify under the HAMP program, give it a shot and call your lender.  But, please do not allow your home go into foreclosure if you don't qualify for a 2nd loan modification.  You will not only be helping yourself but our economy as well.

Hope this helps!
  • November 04 2009
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It depends what you want to do.  If you want to sell the house, a short sale is an option.  If you want to refinance into a lower rate, there are programs from both FHA and conventional that will allow you to refinance even though you owe more than the property is worth.  A would speak to a loan officer.
  • November 04 2009
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Profile picture for P Banks
I'm sorry for your situation. This is way to common these days.

Loan Modifications are getting more difficult. I'm not seeing them reducing the principle anymore. A short sale of your house maybe your best option. That way you will be able to start fresh in a couple of years.

Call me to discuss your options,

Peggy (909)896-5370
  • November 04 2009
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