Foreclosure in Seattle>Question Details

Velingkar, Home Owner in Seattle, WA

Can I get Firsttech Credit union to modify my loan if my house value is way underwater? I cannot seem to refi since my loan is not sold to Fannie/Fred

Asked by Velingkar, Seattle, WA Sun Jan 23, 2011

I have called their mortgage officer and he was very nice but generally really unhelpful. Also someone at the bank just asked us to walk away from the house! We are current on our payments but frustrated that we are not allowed to take advantage of the low interest rates, simply because we are continue to make payments. We do not want to walk away from our home but it just does not seem to make sense to pay so much money on a modest house that is worth so little.
The HOA recently did a 4mil restoration project. The HOA provided loan is $40k at 7.5%.

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16
Here is a great link to the Washington State Department of Financial Institutions that explains the short sale process and gives you helpful information on WHO (meaning which appropriately licensed people) is/are legally qualified to help with loan modifications and/or short sale negotiations. It will help you avoid scams and less than scrupulous people. Whoever does this type of business in our state must comply with these regulations.
1 vote Thank Flag Link Mon Jan 24, 2011
Outside our scope to render an opinion for another professional. If you walk away you have tanked your credit scores by approx. 50 points, you won't be able to lease unless you paid double triple deposits on rental AND you won't be able purchase for at least 2 or more years.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Mon Jan 24, 2011
The problem with walking away, short sales <b>and</b> loan modifications is that you're still likely to owe most if not all of the two junior loans. Also I would note that many people who need loan modifications also have other debt, like credit card debt. I'm not certain that Chapter 13 could provide the same relief on the HOA loan, because I don't know it's form, but I again would strongly suggest talking to a bankruptcy attorney about Chapter 13. Given the 2nd and 3rd position loans, some form of bankruptcy might be necessary in any event, and Chapter 13 could be the only means of actually keeping the house.
0 votes Thank Flag Link Mon Jan 24, 2011
Only the lender can modify your loan. I don't know who told you to walk away but that's probably poor advce. There may be other options for you, including a short sale. Walking away means you won't qualify for another mortgage for 7 years...short sale is 2 years. Talk to your lender again and find out what your options are. Don't fall victim to scam artists and don't pay any money to anyone to help you. Also don't sign over your deed to any 'investors.'. Check out makinghomeaffordable.gov and let me know if you want to explore a short sale.
0 votes Thank Flag Link Sun Jan 23, 2011
You can try to do a loan modification. If that doesn't work out and you are still unhappy, you can short sale your house. There is no reason to just walk away and put foreclosure on your credit. We are a professional short sale service. Please call us directly to discuss your specific situation. Our services are FREE to homeowners. We look forward to hearing from you.

Eli Givoni, Director
Short Sale Department, LLC
561-361-1909
info@shortsaledept.com
http://www.shortsaledepartment.com
Serving all 50 states
0 votes Thank Flag Link Sun Jan 23, 2011
Loan modifications are nearly impossible even with simple situations.

In my opinion your condo is a bad asset. If keeping your credit good for now is important then you should keep making the payments. It sounds like your condo will need much more time to recoup its value than your credit will need to repair itself. You owe nearly three times what the condo is currently worth. A normal housing market will increase at around 3-5% annually. You do the math! At some point it has to be a business decision. Your future financial picture my look a bit brighter with your home not in it.

You have a hardship only if the bank finds you to be insolvent. If your able to make all your obligations with ease you will most likely be denied on hardship. The bank looks at all your obligations including child care, food, cell phone, private schools, entertainment, etc. You'd be surprised what they find to be a hardship.

short sales do damage your credit. Usually you'll have to stop making your payment. Your credit score will drop an average of 30 points every month you do not pay. You also cannot buy a home for two years.

There is good news too. Many of my clients have reported a speedy credit recovery. Once the two year ban from purchasing a home was lifted many were able to buy another home immediately. All situations are unique. I found this news to be good and worth sharing.

Your first loan should write off with minimal issues. Your second (if it was purchase money only) should write off and release you from liability with 10-20% cash at closing. Since this is your primary home you should have no tax implications.

Now for the disclaimer I need to make. All this information is based on my experience only. I am not an attorney or an accountant. I recommend you speak to both. If you'd like to speak with an attorney I'd be happy to refer one to you. It will be the best $325 you've spent. I have sat in on over 50 attorney/client consultations. It's likely they'll tell you to try the short sale route if you are having trouble making ends meet. If not it may still make since to get rid of that asset.

Speak with a lawyer. NOT A BANKRUPTCY ATTORNEY. They'll recommend you just bankrupt. (that is how they make there money!)

I'm not a great writer, sorry for the terrible grammar. :-)

-Matt
0 votes Thank Flag Link Sun Jan 23, 2011
Hi, Velingkar,

The answers, below, are all good; but I'd like to add one more thought. You mention that you are current on your payments, but it doesn't make sence to continue paying because the house is worth so little. I've been a full-time Realtor since 1973, and even the 80's recession was not as bad as this! Prices came back then, and continued to increase year-after-year. Prices have never gone back to those levels! We will come back this time, as well. Perhaps quicker than some people think!

The HOA obligation goes with the property, and your investment is the monthly fee. Eventually, if/when you sell the home, the remaining balance will pass along to the next owner. These modifications that do get approved (few and far between) are something to put out of your mind, as "unatainable". So technically, you may have a 'zero" equity, for now.

As long as you have the income to keep up the payments, then it would be good to put it out of your mind for a year, and re-evaluate the situation. You are one of the more fortunate in this recession!

Good luck,
Jean Bradford, ABR,GRI,CRB,CRS
John L. Scott RE
Silverdale, Wa 98383
0 votes Thank Flag Link Sun Jan 23, 2011
Velingkar,
First, let me say I'm sorry about your circumstances. Have you tried taking your case directly to the credit union's Mitigation Department if there is such a thing and bypass your loan officer. Call their customer service line to get a direct phone number. If they can't/won't help you, then you might consider a short-sale if you need to get out. It sounds like your increased payments due to the special assessment may help you prove a 'Hardship' situation that is required by most lenders. But be forewarned that a short-sale while helping to avoid foreclosure may still leave you with the debt of the 2nd and/or the special assessment. This is a complicated path so do consult a real estate lawyer who specializes in these matters.
Good luck,
Steve
0 votes Thank Flag Link Sun Jan 23, 2011
I may have a person who can help you. He can do no cost refi's up to 125% of the property value. Contact me if you want more details.
0 votes Thank Flag Link Sun Jan 23, 2011
If the special assesment is causing you to have trouble making your mortgage payments, then there MAY be a hardship element that would allow for loan mod. Ask more questions, dig deeper. Part of the brokerage services I provide to my homeowner clients in distress is to aid in communications with the bank. When I am talking to a bank, I will typically ask the same question in three different ways and I repeat back their answers to make sure the person I am talking to is understanding my question correctly. I agree with Leslie below. Everyone's situation is different. Real estate brokers are not attorneys and cannot provide legal advice, so you should consult with an attorney (caveat: an attorney that is versed in this type of situation). One local attorney that is well versed in this area of law is Lynn Arends. As you will need to discuss sensitive financial information, you need to sit down with an attorney one on one to review your options in a private setting.
Web Reference: http://www.lynnarends.com
0 votes Thank Flag Link Sun Jan 23, 2011
When I wrote my post I had not noticed that you'd followed up. I would talk to a bankruptcy attorney that does Chapter 13 on those facts.
0 votes Thank Flag Link Sun Jan 23, 2011
Unfortunately only 4 out over ever 100 loan mods get approved. I have even seen several people get put on trial payment plans, have them end and owe the back difference in payment along with the normal payment. It's a crazy situation than more and more people are gfinding themselves in.
0 votes Thank Flag Link Sun Jan 23, 2011
I'm not sure what you mean by a HOA provided loan, but if you have a second mortgage, or any junior lien, and that lien is totally underwater (e.g. the first is owed $300 and your house is only worth $270), then you should talk to a bankruptcy attorney about Chapter 13 and whether they think they can wipe out the second/junior lien(s).
0 votes Thank Flag Link Sun Jan 23, 2011
With what I have read online seems like most banks will consider Loan Modification only when there is a drop in income level. What if that is not the case?

These are our Approximate Current Loan Balance:
184,139.57 (1'st mortgage - 30 year fixed @ 6.50%)
35,850.00 (2'nd Mortgage - 30 year fixed @ 7.625%)
39,000 (Special Assesment - 15 year fixed @ 7.875%)

Value when we purchased in May 2007 = $240,000
Current Annual taxes = $1,645.00

The main issue we have is that even though our income has not dropped, due to the special assesment, our payments have gone way up per month. In addition to that, there have been 3 people in our complex who have walked away from their homes and their foreclosures/short sales have negatively impacted our home value.

The same house that we bought for $240,000 now sold for $110,000 (It is listed in Zillow for $170,000) The issue with us is the drop in house value in addition to the new payments of special assesment, not a drop in income. Can we still be helped? and how can we make the case for the same?
0 votes Thank Flag Link Sun Jan 23, 2011
The HARP program under the Obama administration is a program for Fannie and Freddie loans only so unfortunately people with other types of loans are often in a situation where they aren't eligible to refi or modify their loans due to diminishing income, low credit scores and/or lack of sufficient equity. It would probably be worth speaking with an attorney who specializes in these situations. I am happy to refer you to some. Just call or email me if you would like the names. Good luck. You are definitely not alone.
0 votes Thank Flag Link Sun Jan 23, 2011
The answer to whether you can get your loan modified depends on a number of factors including current income level, amount owed, debt to income ratios, type of loan program and so on. It sounds like you may not have been talking to the right person at the bank as the mortgage officer is not the same as talking to someone in the bank's loss mitigation/short sale or home retention department. Many banks now have information on their websites for homeowners having trouble making their mortgage payments. You can also check my website below for more information on the many options that may be available to you. You may have more options that you think!
0 votes Thank Flag Link Sun Jan 23, 2011
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