Thursday, 2. December 2010
The situation
We bought a condo in 2005 at the height of the housing boom for 8,000. Our loan was financed by Wells Fargo, and the type of loan that we qualified for consisted of an 80%/20%, hence it was 100% financed. Both loans were called Smartfit Home Equity accounts and were fixed Interest Only for the first 3 yrs . We were ofcourse told by the loan officer that we should be able to refinance by or before the 3 yrs and get into a regular fixed loan.
Forward 2 yrs later and with the bust of the economy, deep decline in housing values, and unemployment, we are just one number among the millions of people facing default on their mortgage loan.
One of us lost our job last year in 9/2007, and that is when we started contacting Wells Fargo trying to be proactive with our situation because we knew in 2008 the loan accounts were becoming variable, and we wanted to be ahead of the ball. At that time, Wells Fargo said they couldn’t help us because we were not in a hardship and we were not past due. All they were offering us was to modify the loans for 1 yr. However, we didnt want a temporaty modification cause we knew 1 yr later we would be in the same situation again, facing variable unpredictable loan payments (needless to say it is 1 yr later and the economy is worse than it was in 9/07). We decided to keep making payments until early 2008 when the payment on the 80% loan converted to variable and we saw that we could not afford it. Again, Wells Fargo could not offer us any assistance because supposedly we could still afford the variable payments. We were told we could not refinance since the value of our property was not there (duh!). That left us with upside loans and variable rates.
So here we are in 11/2008 we tried getting assistance from Wells Fargo one year ago and currently STILL trying. It has been several months since we have stopped paying and still no notice of forclosure and currently waiting on a representative from Wells Fargo to call us in regards to HUD’s HOPE for homeowners program.
To top it all off we were never informed that our 20% loan became due and payable after the 3 years expired.
We recently found out both of our loans might not be considered regular mortgage loans. Since we have a Smartfit loans which are Home Equity accounts and possibly recourse loans. Meaning they can come after us after the difference opposed to a regular mortgage loan.
We strongly feel we were painted a pretty picture and since we were young and eager into getting our own place we took the Wells Fargo information as face value and belived what they had to say and not knowing we would not be able to afford our monthly house payments if this was a principal/interest and taxes regular 30 year loan. I guess you can called it stupid or naive but this loan was basically a bad loan to start with, not a Smartfit……..
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Monday, 22. November 2010
I, like many others, have had financial issues and defaulted on my mortgage, 120 days+. I now am back to normal servicing, but have a higher payment than originally. When I went into default the mtg. co. said they raised my interest rate because of the default, increasing my pmts. 0.00 a month. I keep getting letters that I can streamline my mtg. or reduce the interest rate because it is an FHA loan, even if you defaulted, but when I inquire and someone say’s they will get back to me, I never hear from them. So, again I now struggle with a 1,900.00 pmt., horrible credit, and wonder how I can reduce the interest which I believe is at 6.7 or 6.5 when it originally was 6.35. My husband and I work and are stable and we have a good amount of equity in the home. It’s sad that the only people who benefit by lower rates are those with excellent credit and no past or present issues, but people like me who need a lower rate to not have bad credit or build it up, and avoid issues, are the ones who cannot even get considered. With everything we need to survive and get to work so expensive how can there be a balance of some sort? Can someone help?
PLEASE KNOW THAT I DO NOT FEEL THAT PEOPLE WITH EXCELLENT CREDIT SHOULD PAY MORE LIKE ONE OF THOSE WHO ANSWERED MY QUESTION IMPLIED I DID. THE POINT IS HELPING THOSE WHO DO NOT HAVE GOOD CREDIT REDUCE THEIR PAYMENTS AND IF THE ONE WHO ANSWERED AND IMPLIED THAT DOESN’T UNDERSTAND THE ISSUES TODAY WITH THE ECONOMY OR DON’T CARE BECAUSE THEY DON’T AFFECT YOU THEN DON’T COMMENT.
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Sunday, 7. November 2010
That’s what I’m nervous about. My interest rate is right now at 6.5%, and because the economy is so bad that’s most likely why.
However as the economy rebounds, which it eventually will, I’m sure my interest rate will jump. However that worries me because I’m not sure how much I’m then going to end up paying.
How high or low do they usually go?
I mean I just don’t want to worry.
I can lock it in if i wanted to, but then my line of credit would turn into a loan, and I wouldn’t have the option of taking more money out, which would honestly defeat the purpose of taking out this line of credit in the first place.
Anyways, any advice is greatly appreciated, thanks.
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Thursday, 28. October 2010
Historically, home prices are super high compared to the average earnings even though the huge drop has already happened. People are angry that they are losing equity, are underwater on their loans, and some just walk away from their loan because they are paying a lot more than their worth. So I don’t see TARP or anything like that helping or protecting people’s home equity.
I bought a SUV last year and the deal was either ,000 off (and have 10% financing) or no rebate and offer 2.99% interest rate. To me, those who took the 2.99% deal paid 00 more for the same SUV. For the dealership though, they were able to sell it for more than what others thought it might be worth.
I think housing prices still need to go down a lot more. I am wondering if the government can offer incentives or interest free loans to banks so that they can offer super low rates in the 3% range to get people to buy at these higher prices. Then the economy awakens again. Yes there will still be foreclosures but then a turnaround will be coming quicker.
I have talked to realtors over the past few years and it is always the same. "There is no way rates will go lower than now.
So is my idea correct or is there pretty much no way we can have 3% mortgages. If not 3%, how far down can they go?
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Wednesday, 6. October 2010
So tell me if this is right: With lower interest rates, this is a good time to take out a loan for a car or mortgage or anything, but bad for investments in stocks, etc. Also bad for people who own homes because their equity is decreased, right? And one more thing, good for the bondholders who have locked in at a higher rate? Oh and why are people scared about inflation: is it because the Fed lowering rates puts more money into the economy?
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Sunday, 29. August 2010
My mother made a personal loan to m 6 years ago for ,000 from an equity line of credit. I used it for school and to purchase a condo. Now that the market has crashed, my homes’ value has fallen 50% and I will likely opt to liquidate the property for a loss. (I am a licensed real estate agent.)
A financial planner told her that it is in her best interest that I pay off this loan ASAP because the the bank could demand immediate payment in full at any time and if I didn’t have the money then she would have to pay it from her own savings.
As a result she has rallied all my brothers and sisters to pressure me into returning home to live there until I can pay off the ,000 by basically giving her all my earnings until the loan is paid down.
As much as I want to pay the loan off fast, I am 29 years old and I do not want to move home with my 2 younger brothers and parents. In a 2 bedroom house, I would basically be living in a tool shed until I’m in my early 30s.
I do not think it is fair that I should be made to feel guilty for what has happened to me due to the economy, or what could potentially happen to her for making this loan to me. She tells me, "I feel I will never get that money back" It saddens me to think that she doesn’t trust me but I do not think it is fair for her to put such a huge responsibility on me and expect me, a single, 29 year old, to move home for a few years and give her most of my earnings.
What should I do?
The reason I haven’t paid the loan down is because I have paid off my high interest credit cards first, and then real estate market has crashed leaving me with just enough money to make interest payments and live on. Now I intend to find a stable job in the next two months unless I can start to make money.
She is trying to accelerate the loan. There was never any agreement to do this. If a bank tried to do this it would be called "loan sharking."
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Friday, 27. August 2010
So, I am in a situation where I had a good job for years w/o a degree, bought a condo, got laid off and now working again, but I think the real solution is to go back and finish my bachelor’s degree. In order to do this, I would like to quit my job this fall or sometime next year to finish my junior and senior year full time instead of just going part time. One thing is for sure and that is I start my junior year of college this fall, I just don’t know if it will be full time or part time. The college is night classes which makes it good for the part time option. The problem with not working and going to school full time is making my mortgage payment. My condo is worth 240K from the bad economy and have a 190K loan against it. (I had a good down payment from a previous house sale). My current APR on the condo is 5.875%. I got a GFE on a basic refinance (5.125% w/o points or fees) and it came back I would pay 10 per month w/ taxes instead of the 15 per month I’m paying now. I’m also considering not refinancing because it is only a 5 savings per month and I plan to sell in 3 years after I get my degree. If I don’t refinance, I am thinking of going with a line of credit (home equity loan) with the bank I have the home loan with and then quit my job when school starts. I would then use the money from the line of credit to pay my mortgage while I’m in school. I think the percentage rate was around 6.5%. I wouldn’t need to use the home equity loan until my senior year of college though. I currently have ,000 severance from the lay off I plan to use during my junior year to pay my mortgage. Then when that money is gone, I would plan to use the line of credit during my senior year. I like the line of credit because I only pay interest on what has been taking out. Second option instead of the line of credit: Instead of the home equity loan for my senior year of college, I could refinance the condo and "take cash out". I have not looked into this option. If I take ,000 out, I could put it in a CD for a year and then it would be used for my senior year of college to pay my mortgage. I know it is not a good situation for me, but I’m trying to make the best of it. Does the home equity loan sound better or the refinance?
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Sunday, 8. August 2010
I have been divorced for 2 years. As part of the settlement agreement, my ex received 2 rental houses. Both of our names were and still are on the mortgages. Settlement agreement stated that she must refinance or sell properties within 24 months to remove my name from mortgages. This has not happened and she is saying that she can not qualify to refinance the loans. After expressing dissatifaction with situation many times, she has offered to sign the deeds of 2 rental houses over to me at no cost and will give me 6 months to either sell or refinance out of her name.
Neither house has very much, if any, equity in it. One is vacant and one is currently rented. I think both will rent pretty easily, even in this economy. I do not really want to be a landlord again. One mortgage has a balance of k and the other is k. Since our divorce she has taken a k 2nd mortgage on the k house. This is in her name only.
What should I do? I just want my name off the mortgages!
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