Profile picture for user7887635

home that is underwater by 230,000.

Live in Ca and wonder if I should let this home go back to the bank. BoA gave me a new loan 2% for 5 years, then it goes up to 4% in 8 years with a deferred amount of 99,000( loan is for 40 years) so will never pay it off.  Will I be responsible for the amount owed if I stop paying on both loans?  2nd, 7.5%  was taken to pay for dental work.
Disabled, low income and over 60.
  • March 05 2013 - Plano
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Answers (12)

Best Answer

Profile picture for sunnyview
It is a personal financial decision, but if I were over 60, disabled and 230K underwater, I would NOT keep paying the bank. The bank is using you to keep paying as long as you will at a higher rate than they could get if they foreclosed. They are in business so that is the smart choice for them.

You need to make your own smart choice. Before you decide what to do you need to get legal advice. Your main options are to walk away, try a deed in lieu or get the bank to agree to short sale. Do not rely on an agent to give you that advice, they can be helpful, but are not attorneys.

Attorneys will consult often for the first meeting at a discounted rate or you can get a referral to your local legal aid office which offers help on a sliding scale based on your income. You need to think about your expenses in retirement not pay too much to carry an underwater house that you will never pay off. Please get legal advice now.
  • March 06 2013
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I am very surprised that your house is under water by 230K.  The market is so hot right now, the inventory is low and homes are flying off the market.

Have you had someone really look at the home and tell you what your house might be worth.  Even if it needs work, you are in Plano and if you are in Plano school district, you may be surprised at how desirable it is.

Naima
  • March 20 2013
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Profile picture for user7887635
With the second I pay about 55% towards the house.  If I rented it out, I could not get enough to pay the insurance or property tax.  Will have to think about letting the 2nd go and only pay the first.  My child does not want to live in this house, so it would go back to the bank when I die.
  • March 19 2013
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Profile picture for pfinleyz
I know someone in a similar situation and, loan will never be paid off. But do you need it to be paid off? You don't state that you can't afford the payments. In my friend's situation he is considering renting out the property, since the new payment is much less than the rent that he can get. Also he was told that if he doesn't pay the 2nd they cannot do much, so is considering just not paying it and holding onto the property forever just not paying it off, I guess after death it goes back to the bank. Can anyone else comment on this plan?
  • March 19 2013
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Dawn

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  • March 06 2013
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Hi  

I would first consult an attorney. 

If your home is underwater by that much you may qualify for the new Tier 2 Mod where the servicer may be able to reduce your principal to get your payment to 25 - 31% of your income. 

You may have a few options and may be able to get the national settlement. 

Before you short sale I would call your lender and see if your loan qualifies for a loan mod. 

If you decide to call an attorney to help you the new laws in CA are: 

1 the attorney can not charge you for advanced fees. 
2 the attorney can charge you when the file is done weather or not you have been approved.  Which is this were not the case, no attorneys in Ca would help anyone.   Can not work for free. 

I would call attorneys in the state you live in to see who has succesfully done loan modifications, who has succesfully reduced principal. 

You may actually qualify for free help if your low income.  

I know some of the large law schools are offering help to low income families.  they cant do it for the homeonwer who has income but they may help a homeowner who is elderly and low income. 

I would call Stanford  or large law schools in your area to get a referral if your low income 
  • March 06 2013
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Profile picture for user7887635
I hate dealing with attorney's, but will consult one in the near future.  Have been staying here because it was cheaper than renting an apartment but now the back fence has fallen down, the foundation is iffy at best and I am getting in worse shape can't deal with all the mess.
Was only planning on staying in the home for 5 years but then the decline in property values started and I am stuck here.  Want to leave Ca.
  • March 06 2013
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Profile picture for user7887635
Home like mine sold for 107,000  I owe 345,000
  • March 05 2013
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So my best option is to take bankruptcy?

No  (this is not legal advice).
  • March 05 2013
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Yes, unfortunately you could be liable.  Foreclosure should never be an option.  It is best to do a shortsale, especially with two loans involve.  Once the banks approve your shortsale then your debt will be forgiven plus you also take advantage of the mortgage debt tax relief act (discuss further wirh your cpa) up to end of 2013.  I would be happy to forward more details and information regarding shortsale vs. Foreclosure.  


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  • March 05 2013
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So my best option is to take bankruptcy?
  • March 05 2013
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Yes you willl be responsible for paying both loans, however the 2nd loan is the smaller of the two monkey's on your back...not just because of $ amount but because of position and evolution.

Wonder what are you basing $230K under water on?

A Fixed rate of 2% and then a 4% rate sounds reasonable and conservative...even at 40 years...that is until the $99,000 deferred loan detail floats into the picture. 

  • March 05 2013
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