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Underwater, new HARP refi went through. Just found out the foundation rotten. I'm in such a jam.

The day after my 3 day waiting period was up from the title company I went out to my car and the garage door fell down. After looking deeper into this I find out my foundation sill is rotted out around the house and the studs are sitting on air. I would of have done a short sale or something else had I known just 24 hours earlyer. I have put in over 30k into this house, roof, windows, furnace, hot water.... My house has lost almost 50% value. Good thing I had good credit. But now I regret it. I start my new mortgage in September. But I am disabled and am mostly home bound. I am losing my mind on what to do. The refi was to cover upkeep that I can no longer do, not in lifting the house and putting a new foundation on. I still have electical and plumbing that I planed on bringing up to code. On top of that we had a tornado and hail come through in June and some of the damage to the outside of the house will be fixed by insurance but why even make the clame if It does nothing but put on a new coat of paint. I need advice, I have spoke with many lawers and unless I have 35k to spend on legal fees they wont talk to me. Yes I will pay $200 bucks an hour for good sound advice but the lawers I have spoken with are rude and mean. I am underwater, I did what I could to try to stay here but I don't think I can make it. The money I saved on the loan is just going to be a wash. And to top it off the broker I picked out came from Zillow and was supposed to be a no cost refi, just the escrow and title. Funny I paid over 4000 dollars rolled in for points. Where do I start before I lose it and walk out. I live in mid michigan. House is 1100sq' 1950. Now owe 112.500, worth almost 90. Please some one give me some sound advise. I know it is complicated, but I have had enough.
Thank you
Sorry for sounding so pathetic. I know many people worse off then me. But if will not be long before I am living under a bridge in Detroit.
  • August 13 2013 - Clio
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Answers (3)

Douglas,

To be sure, I am NOT recommending that you default on your mortgage.  First, equity positions are improving and there is a good chance you will not be upside down in the future.  And, you have worked hard for your credit standing....it may help you in the long run.

I was just indicating that contacting the broker MIGHT be a good idea because he/she may have enough motivation to come up some resolution and/or ideas.

Your personal credit is excellent.  Could you qualify for a unsecured loan for the repairs?  Again, check first to see if grants are available.  Also, contact Habitat for Humanity...they are a fantastic non-profit and they may have a platform that can help you.

Another option that you MIGHT be able to utilize is refinancing with a FHA 203K loan and use the renovation/remodel as a way to increase the value of the home so the repairs can be rolled into the loan.  This is an excellent loan program and there MAY be success for you in its' utilization.

Hope I have given you some insights that will give you some relief.  If you want to contact me directly I can explain the FHA 203K loan in more detail, but do so here is quite impossible.  Far too much detail.

All my best,

Deborah
  • August 13 2013
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Profile picture for DFettinger

Greetings Deborah  
   Thank you for your reply. I was up front with my broker about the use of the money saved was to maintain the house because I can no longer do it my self. I had a home inspection many years ago. No one could of knows the sill on the foundation was rotted out for it is under the drywall and showing no wear. I only found out because the next day after the 3 day waiting period my garage door came falling down almost on top of me. When I got back from my doctors I removed some of the wall and to my shock I found the studs were sitting on air. I have two payments, September and October with this broker I found on Zillow. They said that Fith3rd bank will take the mortgage payments at that time. The broker didn't do me much good either for it was a no or low closing cost that just went up and up and up till I was paying thousands to keep the rate locked at 4.25, they had to extend it because of the underwriter and added on the fees then. Funny you mention the storm for we were writing and calling back and forth between me and the broker when the storm's happened. So they knew, it was in my email and phone conversations. But no mention of the storm. The storm did not do the damage to the foundation. Only to some of the siding, gutters and windows. Insurance will pay for some but you know how that goes. please explain about the worst situation for a broker for I have not sent in my first of two payments to them. Though I will. I have been on time with all my bills for decades and had a score over 800. Is what you saying the worst thing for me to do is not to make a payment? Any closing cost were rolled in. I did pay for the title and upfront escro. Thank you again for the reply. Not many people including HUD gave me as much time as you did in your reply.
Thank you
Douglas

  • August 13 2013
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DFettinger,

So sorry to hear about your situation.  This is one of the HUGE downsides of many HARP loans not requiring an appraisal...there is no way your home would have passed the muster of underwriting if an appraisal had been performed.  

Were you upfront about the condition of your property with the broker?  One thing that does not make sense to me is the fact you were in the path of a tornado in June and the lender did not require a post disaster inspection.  Every lender I have ever worked with has required a final inspection after a natural disaster.

I would recommend you try to contact a HUD housing counselor in your area for some good, and non-partial advice.  There may well be some grants and/or low cost community/state loans that will help bring your property up to code and repair the defects.

I can tell you this:  The absolute worst situation for a broker/mortgage professional is a first payment default.  Except, perhaps a Early Pay Off (within 90 days).  This is simply because the lender/investor will "claw back", or require repayment of all sums paid to the broker/loan consultant.

Wish you the best of luck.

Deborah
NMLS 279125
  • August 13 2013
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