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Refinance jumbo - underwater (NOT Freddie/Fannie owned loan)

Bad situation.
Underwater mortgage:
1st loan - $532,000 6.75% APR 30 year fixed
2nd loan - $100,000 7.5% 15 year balloon

House value - $500,000 :-(

Credit Score - 780+

Income - is really good. Have been paying off monthly dues easily - and can continue to do so.
The problem is - not enough savings to bring a large amount of money to pay off some of the loan.

Is there a way to refinance? NOTE again - not a fannie/freddie owned loan. I already checked.
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May 03 2012 - Santa Teresa
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Answers (24)

Profile picture for user58093329
Similar Jumbo loan situation. No help from any government mortgage relief programs because of amount of loan exceeding $500K. Currently under water about $200K, values in AZ are just starting to come up but not as effective in the Jumbo loan arena. Need to know any program that can help us get put from under the water with the negative equity. 
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August 20 2013
There are several loan programs that you can choose from. It is best to work with a professional so you can have your best choice. You should be able to find someone who is willing to work with you in obtaining a new loan.
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August 10 2013
Profile picture for SteadyState
My post is not in time to help the questioner but I would like to use the original post to raise some interesting issues. As I see things there are four options:

1) Continue paying roughly $54K/year and hope prices rise and the owner can lower the losses when selling in the future.
2) Take the loss now (sell for $500K - receive $465K after commission/closing costs). Keep good credit. Loose money.
3)Stop paying and wait 2/3 years for the bank to foreclose (i.e., recoup $54K in losses each year the foreclosure is dragged out). Credit is damaged and can be recovered by 2018 (2015 is foreclosure year; 3 years to rebuild credit); thus $54 * 2 = $100K can be used as down payment in 2018)
4) Mail keys to bank now (i.e.,  immediate strategic default) and rebuild credit by 2016.

It looks like (3) is the best option. But I do not know how difficult is both the process to drag the bank nor do I know how easy/difficult it is to rebuild credit.
Please chime in if you have some insights or have missed options.
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June 20 2013
Profile picture for user2522273
I used a credit facility to do a cash in refinance with no liquidation of assets. Might work for you. I found the solution at cashinrefi.com
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June 19 2013
This can be done yes depends on a few factors!


Best Regards

Gino meixel
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February 03 2013
[Promotion removed by Zillow moderator. Please see our Good Neighbor Policy for more information.]
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January 29 2013
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What bank is the 1st and 2nd Mortgage with?
[phone number removed by Zillow due to spam.  Please refer to our Good Neighbor Policy for details.]
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December 29 2012
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[Promotion removed by Zillow moderator. Please see our Good Neighbor Policy for more information.]
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December 29 2012
Profile picture for NWNRS
Did you ever get your mortgage refinanced? We have a solution if you did not.

Cathy Lewis
NWNRS
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September 25 2012
Since my last post we have experimented with and found that we can work with some second lenders. This is a new service that started in May of 2012 and we are constantly working to prefect it to help as many people as possible. 
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August 02 2012
We would like to help but from past experience we have found that if the second lender is not the same as the first we can not help you.
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July 16 2012
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The two loans are NOT from the same lender.
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July 16 2012
Your situation is one that we see all the time. The first question that we will need to know are both loans with the same lender?
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July 16 2012
I believe I may be able to help you.  Please contact me for further information.
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July 16 2012

There is a solution to your underwater Jumbo... If the 1st Jumbo loan and the juniors are from the SAME bank. If not then you will need to have some kind of collateral to cover the juniors. People like Dale King and me are investors that buy the notes from the bank at a discount then turn around and get you a conventional loan, saving you thousands of dollars off your mortgage. This is not considered a bank short sale nor loan modification, which means you may not have to pay the IRS with a 1099 Debt Forbearance depending how we structure the deals. There are qualifications that need to be met, since not everyone can be helped. First you must want the home back, 2) Your Jumbo loan must be underwater by 10-20% depending on the current price of the home, 3) Your credit must be good or repairable within a year's time. This also goes for Commercial Loans too. If you need to seek out help, please contact me.

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June 07 2012
My mistake I apologise for putting my website on the post. If anyone wants help with this problem contact me.
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May 14 2012
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We are in a similar situation.... Any luck?
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May 13 2012
Actually the problem is less and less of an issue for this area (SJ, CA).
Last year 14% of local mortagators owned more than the value.  With the recent home appreciation, we are working out of a problem soon. Be patient.
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May 04 2012
Your problem is common in the US today. Do you know that over 50% of the Jumbo loans are underwater today! 
Yes, there is a way to solve the problem. We work with people like you that took out a Jumbo loan at origination and now their property is worth less than the mortgage. We buy the loan and then refinance the property giving you the benefit of the our discounted price.

[content removed by Zillow due to spam.  Please refer to our Good Neighbor Policy for details.]

 Do not confuse this with a short sale, we only work with people that want to keep their home or business property.
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May 04 2012

Another non Fannie or Freddie upside down, rock and a hard place story...   
 

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May 04 2012

My numbers are similar.  I'm also ~15% upside down in pre-2009 time-of-purchase 1st(5.75%) & 2nd(6.99%) mortgages that are not Freddie/Fannie/FHA/VA/USDA.  I'm VA eligible with excellent credit, but the numbers just don't work.  I put 20+% down and have made continuous improvements hoping to increase the value, with virtually no result.  The appraisals(3) are just coming in too low – the home could not be built for the appraised value.  BTW, the appraisals vary so widely that it's difficult to believe they actually mean anything.  But, there are obvious market reasons for the low appraisals and there are also not so obvious reasons. The home is in an "almost" rural area with virtually no sales comparables and the FHA has artificially put the county loan limits too low for a DC suburb.  This last point will negate any possibility of taking advantage of BHO's newest mortgage relief proposal because I owe more than the county loan limit AND it makes all properties in my part of the county impossible to sell without a significant loss.  Additionally, most of the relief proposals I've seen involve principal reduction – this is not my preference because someone, somewhere has to pay for that.  I'm simply looking to refinance the entire amount I owe into a single mortgage at the available lower rate.  My current lender (Fulton), who holds both loans, will not negotiate or subordinate.  I don't get it – all things being equal, except the appraised value, the risk is actually and realistically less if I'm paying less on the same money with the same physical collateral.   I've called and written agencies, I've called lenders, I've called realtors – there is no help if you pay your bills.  I'm now posting online – so I'm getting to the end of my rope. Any suggestions or help is appreciated.

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May 04 2012
There was legislation passed recently to provide relief for borrowers who are underwater and whose loans are not owned by Fannie or Freddie if they are owned by one of these banks:

    Ally/GMAC
    Bank of America
    Citi
    JP Morgan Chase
    Wells Fargo

I don't think it's limited to any loan amount and it's free.  You just need to contact your bank if it's one that I mentioned.

Good luck!
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May 03 2012
nothing you can do but keep paying the mortgage you have.   Unless you decide to sell and try a short sale.
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May 03 2012
No.   Only with cash into closing.  
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May 03 2012
 
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