Profile picture for smokymountaindreamin

upside down mortgage

we are upside down in our mortgage, we have an 'ARM, and we have asked the mortgage lender several times to re-fi into a fixed mortgage but the will not do it, we have never been late on our payments but if the interest rate should go up we would not be able to afford it and now we have a unique situation to where we have another home to move into where we would basically be the caretakers of it and it would be willed to us however we cannot afford to rent that one and pay the mortgage of the one that we a currently in what can we do?
  • December 26 2009 - Miamisburg
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Answers (4)

Profile picture for Blue Nile
Different states have different rules.  Some are "non-recourse" states meaning that the collateral meets the entire debt obligation and they can't go after more after you hand over the collateral.  Others are not, but even in those, often the lenders do not try to go after more than the collateral.  I don't know about Ohio, but the loan officers in that area will.

A mortgage modification that converts the loan to an unsecured loan could make you libel though, even in a non-recourse state.

Your best bet is probably a short sale; but you really need to talk with people that have experience with those.
  • December 29 2009
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Profile picture for smokymountaindreamin
to pasadenan well for one this is my very first post and i had no idea that there were different places to post. secondly our adj. rate is nowhere near what the fixed rates are we are at 8.375%  and it can max at 14.375% interest and it raises twice a year this is why we wanted a fixed rate. thirdly you sound just like the bank our mortgage holder if we had the 20,000 to bring to the table we would have done it a long time ago but like most other average americans we live paycheck to paycheck with hardly any savings at all. yes we were victims in 2004 of the preditory lending...we knew nothing about real estate or anything to that matter, but boy do we know now it has been a very hard lesson the only thing that we are wanting to know is if we should walk away which we will be forced to do if the interest rate continues to go up what would happen all that we want to know is will they come after us for what they dont get on the sherrifs sale, will they garnish our wages?, will they go after our other assets such as our vechicles or pop up camper. now that i know about being able to post under the mortgage i will do so.
  • December 29 2009
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Profile picture for Blue Nile
Why post under "suggestions" for Zillow?  Why not post under "mortgages" and get some input from the loan officers?

By the way, many adjustable rate mortgages still have lower interest rates than the fixed rate mortgages available, even after the resets.  And changing it to a "fixed rate" will not address the underwater condition.

Yes, at some point in the future, adjustable rates will exceed the fixed rate, and it would be best to be locked in prior to that if not liquidating, but it looks as if you still have a few years for that, and it sounds like you would rather liquidate anyway.  If your credit is good and you bring enough money to the table, you can refinance, but you would still need to pay the loan initiation fees and the recording fees.

You also need to be cautious of "mortgage modifications" as many will change the terms from a collateralized loan to an "unsecured loan", making you liable for the full amount of the loan even if you hand over the collateral.
  • December 28 2009
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This is not advice.

If you lender will not modify/refi your loan you have few options at this time. You can try and sell it short of what is owed (short sale), rent it or walk away. Renting it, if possible, will not hurt your credit while the other options will. A short sale is difficult, time consuming and dependant on the lender for cooperation. It also can be just as bad on your credit as a foreclosure. Walking away will make it tough to get any financing for several years. Not impossible, but difficult and not likely at reasonable terms. Read as much as you can about "strategic default" before choosing this option. Pay special attention to "recourse" options in your state. There is plenty of discussion on this subject on Zillow and often the morality of default is introduced tot he subject. You absolutely must do what is best for you and your family and if taking a little 5-7 year credit spank will better serve you later, then so be it. There is no shame in protecting yourself.

  • December 27 2009
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