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Answers (17)
- Hamp Yonce, "Zilluminati"
- Contributions:3463
Self manipulation and spum. Stop it Ted!
- Ted Mackel, "tmackel"
- Contributions:189
I write about the market conditions in Simi Valley on my real estate blog. I don't sugarcoat the market stats to hype buyers. The handwriting is on the wall that if any recovery is even happening at this point, it could be very long and drawn out. We're closing out March with another slow month in sales which is actually going to pull fewer single-family detached homes sold than in March of 2009. Our February sales were lower, our January sales were lower. This market has many issues holding it back and none of the issues have any immediate fixes.
While all this sounds pessimistic and negative it's actually a positive. We need people to get back in the business of owning homes as a place to raise a family and have a shelter. The idea that home ownership is some microwave investment opportunity is what got us in this trouble. The only thing that needs to be flipped is hamburgers.
Interest rates are low, affordability is at a 40 year record, the banking industry is in trouble and has a long way to go before recovers. The government is scared to death of any further collapse in the markets and is doing all kinds of things to help prop up our fragile markets. They will continue this for the next several years. So my forecast is homes will be affordable for a while, Buyers now should plan on staying for 7 to 10 years before they will see any appreciation price that'll make sense to sell.
As a young person again, you're starting out, you're not to miss the market, but you don't want to be saddled with all the problems of distressed real estate. We have enough people try to climb out of this hole, I'd hate to see one more added to that list.
Good luck, if you ever need to just talk about the situation I'd be happy to meet you for a cup of coffee over at Panera or Starbucks. Please check out my blog and especially the market update section. You can subscribe to either receive as an RSS feed or email feed.
-Ted Mackel
While all this sounds pessimistic and negative it's actually a positive. We need people to get back in the business of owning homes as a place to raise a family and have a shelter. The idea that home ownership is some microwave investment opportunity is what got us in this trouble. The only thing that needs to be flipped is hamburgers.
Interest rates are low, affordability is at a 40 year record, the banking industry is in trouble and has a long way to go before recovers. The government is scared to death of any further collapse in the markets and is doing all kinds of things to help prop up our fragile markets. They will continue this for the next several years. So my forecast is homes will be affordable for a while, Buyers now should plan on staying for 7 to 10 years before they will see any appreciation price that'll make sense to sell.
As a young person again, you're starting out, you're not to miss the market, but you don't want to be saddled with all the problems of distressed real estate. We have enough people try to climb out of this hole, I'd hate to see one more added to that list.
Good luck, if you ever need to just talk about the situation I'd be happy to meet you for a cup of coffee over at Panera or Starbucks. Please check out my blog and especially the market update section. You can subscribe to either receive as an RSS feed or email feed.
-Ted Mackel
- Ted Mackel, "tmackel"
- Contributions:189
aadams4,
I will probably recap some of what has already been said but here's how I see it.
1. Unless you have the employment history and the income, obtaining a loan without a cosigner will be difficult if not impossible. Not to mention assuming a loan on an upside down property or getting added to obligation in a modification program.
2. Reconsider the importance of taking on a bad asset. Emotional value connected to family is understandable but not necessarily wise. Better not to start off at your age with a short sale or distressed property.
3. The short sales I have worked on make sure that the purchasers are at arms length. No matter how good a case you can make to the lender, they will not approve these transactions as there are plenty of sellers that would use a relative as a shill buyer. Even if you could figure out a way to make the purchase around the bank, if they ever found out, defrauding a bank with a government-backed loan is serious trouble. All loans going out now are backed by Freddie or Fannie.
4. When you turn 22, if you are deeded a 75% interest in the house and your aunt is on the loan. If your aunt is able to stay in the house and either keep paying on the loan or get a loan modification; you could end up with a positive interest in the house in the future when the market recovers. You can go to college or work or both and as the years pass you still have that 75% interest in the property as long as your aunt keeps the loan current. She will not be able to sell without your consent as you will have a 75% deeded interest.
I will probably recap some of what has already been said but here's how I see it.
1. Unless you have the employment history and the income, obtaining a loan without a cosigner will be difficult if not impossible. Not to mention assuming a loan on an upside down property or getting added to obligation in a modification program.
2. Reconsider the importance of taking on a bad asset. Emotional value connected to family is understandable but not necessarily wise. Better not to start off at your age with a short sale or distressed property.
3. The short sales I have worked on make sure that the purchasers are at arms length. No matter how good a case you can make to the lender, they will not approve these transactions as there are plenty of sellers that would use a relative as a shill buyer. Even if you could figure out a way to make the purchase around the bank, if they ever found out, defrauding a bank with a government-backed loan is serious trouble. All loans going out now are backed by Freddie or Fannie.
4. When you turn 22, if you are deeded a 75% interest in the house and your aunt is on the loan. If your aunt is able to stay in the house and either keep paying on the loan or get a loan modification; you could end up with a positive interest in the house in the future when the market recovers. You can go to college or work or both and as the years pass you still have that 75% interest in the property as long as your aunt keeps the loan current. She will not be able to sell without your consent as you will have a 75% deeded interest.
- wetdawgs
- Contributions:26851
You wrote: "The reason I want to take over the house is because I don't have any other options, there is no possible way I could afford to purcahse a new home." It sounds like you can't afford this one either. The mortgage amount is more than the possible sales price, so this is not a gift to you, it is tremendous financial burden.
- Rudi Hofmann, "LUXURY HOME LOANS CA"
- Contributions:7435
I would double-check. Aunt Judy may be on Title, but did not assume the loan.
If you wouldn't qualify for a loan on a new purchase, you probably won't qualify for a loan assumption either. In my opinion this is a blessing. Sometimes when you get what you want you, find you made a big mistake later on. .... Best wishes, Rudi
If you wouldn't qualify for a loan on a new purchase, you probably won't qualify for a loan assumption either. In my opinion this is a blessing. Sometimes when you get what you want you, find you made a big mistake later on. .... Best wishes, Rudi
- Manuel Prado, "Manuel Prado"
- Contributions:196
Since the loan is with Aunt Judy, this really muddies tha waters since I do not believe an underwriter will approve a short sale that is not arms length. It will look like you are bailing out Aunt Judy of an upside down loan.
And with no help from a co-signer, you will not be able to qualify for a new loan or even a loan assumption.
Like Rudi indicated, it would be wise to seek the advice of a real estate attorney.
- aadams4
- Contributions:8
The deceased is not on the loan, when they passed away my Aunt Judy became the owner of the house and is the one who holds the loan. The reason I want to take over the house is because I don't have any other options, there is no possible way I could afford to purcahse a new home. If I had the ability to get a new home I would in a heartbeat.
- Rudi Hofmann, "LUXURY HOME LOANS CA"
- Contributions:7435
f I understand this correctly, the deceased is still on the loan. There are no assets, just negative liability.
Why would any of you want to assume the current obligation, when the obligation is more than the property is worth?
I suggest you speak with a real estate attorney for legal advice on this matter. ... Best wishes, Rudi
Why would any of you want to assume the current obligation, when the obligation is more than the property is worth?
I suggest you speak with a real estate attorney for legal advice on this matter. ... Best wishes, Rudi
- SoCal_Engr
- Contributions:5667
Unless there is a sentimental reason for wanting to keep the house in the family, I'm not sure anyone is doing you a favor by letting you inherit 75% of a $50K-$80K debt...never mind the existing payments.
As far as Aunt #2 is concerned, right now she owns 25% of that $50K-$80K debt. In "real dollars", that works out to $12.5K-$20K of debt. When thinking of "buying her out", you all should take this into account (i.e., just like you, she is in a neg-equity situation - so how much is negative equity worth in a buy-out scenario?). Assuming a current value of $360K, her 25% would work out to $90K. However, there's more than $100K of mortgage on her $90K slice of the pie, so she's also underwater. Depending on how the local market is projected to rebound, she may be better off quit-claiming her 25% to you.
As far as "where to live", you should also do a rent-v-buy analysis. It may actually be cheaper for you to short-sell the house and rent elsewhere than to attempt to maintain the payments. In the long run, the market may come back, but...
As far as Aunt #2 is concerned, right now she owns 25% of that $50K-$80K debt. In "real dollars", that works out to $12.5K-$20K of debt. When thinking of "buying her out", you all should take this into account (i.e., just like you, she is in a neg-equity situation - so how much is negative equity worth in a buy-out scenario?). Assuming a current value of $360K, her 25% would work out to $90K. However, there's more than $100K of mortgage on her $90K slice of the pie, so she's also underwater. Depending on how the local market is projected to rebound, she may be better off quit-claiming her 25% to you.
As far as "where to live", you should also do a rent-v-buy analysis. It may actually be cheaper for you to short-sell the house and rent elsewhere than to attempt to maintain the payments. In the long run, the market may come back, but...
- Hamp Yonce, "Zilluminati"
- Contributions:3463
Is your Mom Aunt2? Is Judy Aunt2?
Anyway, you need to see if the current Lender will give you and your Mom a refi like Manuel suggests, or find a comparable place to live, and leave Aunt Judy and/or Aunt2 with the negative equity problem.
I guess the fight over the house started before it went underwater. Dam shame, it is.
Anyway, you need to see if the current Lender will give you and your Mom a refi like Manuel suggests, or find a comparable place to live, and leave Aunt Judy and/or Aunt2 with the negative equity problem.
I guess the fight over the house started before it went underwater. Dam shame, it is.
- aadams4
- Contributions:8
To Manual, no my other aunt would not be willing to help out no one has spoken to her since this was all started back in 2001 the situation between the family was very ugly, which is why the house is left to me.
- aadams4
- Contributions:8
Who's name is on the current mortgage loan? Currently the name on the mortage is my aunt Judy.
Who makes the current payments, you, I guess? My mother has been paying rent to Judy for the past few years
How much are they? The current mortgage balance is $406,000
Could you rent, or potentially buy, another place for the same, or less? No I couldn't buy another place at the moment since I don't make enough money.
How far underwater are you? Where are you? We havent had the house appraised but we are anywhere from $50,000 to $80,000 upside down. The house is in Simi Valley/
Who makes the current payments, you, I guess? My mother has been paying rent to Judy for the past few years
How much are they? The current mortgage balance is $406,000
Could you rent, or potentially buy, another place for the same, or less? No I couldn't buy another place at the moment since I don't make enough money.
How far underwater are you? Where are you? We havent had the house appraised but we are anywhere from $50,000 to $80,000 upside down. The house is in Simi Valley/
- Manuel Prado, "Manuel Prado"
- Contributions:196
aadams4,
From the information posted I gather you are currently not an owener of the property until August of this year. If you can wait until August to purchase the home (technically you will be 75% owner), you can negotiate with the current lender to see if they will take less than what is due (called a short pay refi using an FHA loan). The current loan was under your grand parents name so you should not have any liability due to any shortage. I am not sure if Aunt1 is willing to share her share today. FHA allows maximum financing when the seller is a relative and the buyer is purchasing the home as their primary residence. You mentioned that you are currently living in the property. You have a good chance of receiving and exception to the short sale since is was due to the death of the owner. You will just need the death certificate and old deed of trust.
The current lender can always "call" the loan since the "due on sale" clause will be triggered. If the lender is currently working with you and Aunt 2, maybe they can wait until August to be paid off.
With an assumption, purchase or refi, it sounds like you will need a co-signer to help you purchase the home. Is Aunt2 willing to help out, if she can? You can have up to 4 co-signers. You will need to talk to a loan agent and they will be able to tell you rather quickly the new monthly payment. It might be doable, it will just take a lot of work. Hope this helps.
- Hamp Yonce, "Zilluminati"
- Contributions:3463
Who's name is on the current mortgage loan?
Who makes the current payments, you, I guess?
How much are they?
Could you rent, or potentially buy, another place for the same, or less?
How far underwater are you? Where are you?
This is a mess!
Who makes the current payments, you, I guess?
How much are they?
Could you rent, or potentially buy, another place for the same, or less?
How far underwater are you? Where are you?
This is a mess!
- BarhiteAndHolzinger
- Contributions:31
aadams 4 - The next step is to find if you can get a loan and the amount for which you can qualify given your current situation. Talk with a lender. Knowledge is needed to negotiate successfully.
Short sale is a nonstarter.
Taylor
Short sale is a nonstarter.
Taylor
- aadams4
- Contributions:8
If we sold the house we wouldnt get any money out of it then I would be without a house and I cant qualify for anything as it is so that is completely out of the question.
- wetdawgs
- Contributions:26851
Assuming the loan, if you qualify, is probably the best approach.
Option 2: "aunt short sales to me" is probably breaking all rules about short sales. There are many qualifications for short sales, including hardship of the owner. in addition, the short sale must be an arm's length transaction, i.e. not selling it within family.
If there is no equity at all in the home, I'd work with the aunt to get the house on the market and get the millstone off your neck. If there is great emotional attachment to the property, then perhaps your relatives will work with you to help you get a loan.
Option 2: "aunt short sales to me" is probably breaking all rules about short sales. There are many qualifications for short sales, including hardship of the owner. in addition, the short sale must be an arm's length transaction, i.e. not selling it within family.
If there is no equity at all in the home, I'd work with the aunt to get the house on the market and get the millstone off your neck. If there is great emotional attachment to the property, then perhaps your relatives will work with you to help you get a loan.
What can I do to take over the exisiting loan or qualify for a new loan?
The problem with the situation is that due to the market falling we are now technically upside down on the existing loan even though there has been now problems with the payments being made. Unfortunately we have only come up with two possiblities for me to obtain a loan for the house. Option 1 would be for me to assume the existing loan, there is a clause that it is assumable, however that may pose a problem with the lender allowing me to assume an upside down loan. Option 2 would be for my aunt who currently owns the house to short sale it to me so that way the loan I would have would not be upside down.
The biggest issue is that I know I will have a very hard time qualifying for a loan either way due to the circumstances plus my annual income not being high enough since I am only 22.
Are there any other options that we are missing here that would make it easier for me to qualify for that loan?
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