theroguescho…, Home Buyer in Charlotte, NC

So when it is under water what are we supposed to do?

Asked by theroguescholar, Charlotte, NC Mon Feb 27, 2012

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Boulder Suz’s answer
Check out this story and keep an eye on these developments.

BofA will reduce loans for 200,000 underwater mortgages…
0 votes Thank Flag Link Tue Mar 13, 2012
Plaza Midwood is a great neighborhood.

Are you saying you owe more on your home than it is worth? Then a Short Sale is the answer. The bank will allow you to sell the home for less than you owe to the bank, and you will walk away without owing the bank the difference.

This will, however, mean you may not qualify for a new mortgage for a few years. You will have to rent.

If you can afford it, you should consider buying a home BEFORE you short sale-- at a reduced rate and payment based on today's market. Then you should seek a short sale of your house in Plaza Midwood... that way you will not be negatively affected by a Short Sale because you will have already bought a new place.

There are OPTIONS. If you'd like to discuss them, call me 9a to 9p any day. I live nearby and can help answer your questions more fully. 704-858-2345.

If this answered your question, please give me a "THUMBS UP" or "BEST ANSWER"-- thanks!
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0 votes Thank Flag Link Tue Feb 28, 2012
Upside ~ Down

We get a lot of questions about Homeowners being Upside-Down on their house.
I will try to cover the field on this topic:
1.) Just being Upside-Down is not sufficient reason for the Bank to do anything for you:
2.) The Bank did not create the Recession and the bank has it’s own problems.
3.) For some RELIEF, you need a dire Financial Hardship to exist; such as you lost your job, or you had a Medical Catastrophe.
4.) If you want to do a Shortsale, you will have to prove to the Bank that they must help you, now or later. Most Banks will not even talk to you if you are CURRENT; so you will have to go past the Point-of-no-Return before they will do anything.
5.) The first step would be to find a Realtor, well versed in Shortsales, who will help you.
6.) This is not as simple as it sounds; many Agents have “sworn off shortsales” because of what is involved in them.
7.) It will make a very big difference if you have ONE LOAN as opposed to having a SECOND. The chances of succeeding in your Shortsale are greatly reduced by having a SECOND loan.
8.) You will have to sit down and compose a letter to your Lender; telling them exactly why you have a hardship and what you plan to do. It is my experience that you have to do this, personally; your Realtor cannot do it, and your Attorney cannot do it for you. You should be OPEN and HONEST, don’t try to B.S: This is about the only thing in the whole process that is PERSONAL. (If you really want to be PERSONAL, do it on a lined pad in your own LEGIBLE handwriting or printing.)
9.) If successful, you now can say (in the Listing) that your Shortsale is pre-approved by your bank.
10.) Now, you can List the house with your Realtor and the MLS. Your Realtor will do a CMA, (Comparative Market Analysis) to determine the Listing Price. The Bank may order a BPO, (Broker Price Opinion) to determine the Listing Price. In many cases, you will be on your own; the Bank will not communicate with you.
11.) If you get an Offer, you will probably “rubber stamp” it and your Realtor will forward it to the Bank.
12.) There is no set time for the Bank to respond; we have heard of three weeks, and we have heard of a year or more. This is not fair, not reasonable, and in fact, it is rude and ridiculous. But it is a fact; so do not get impatient or upset with your Realtor, it is not their fault and they have no control over it. They will gently try to push it along, calling every week or two; but they understand that the person who has that file on their desk, probably has 100 to 300 other files, (they could accidently take a file and move it to the bottom of the pile; things like that have been know to happen.)
13.) You must understand that the Bank is there to make money; they are not a social service organization. It is possible that they believe that they might be able to make more money by letting the property go through Foreclosure. Or, they might believe that next year (or six months from now) the Market will be stronger and they can either COUNTER your offer, or, let it go through Foreclosure.
14.) Now, it is seven months later, and you get a Letter of Acceptance from the Bank: It will probably delineate the terms that they deem acceptable: For example; it may say that the Escrow is to be 45 days, that XYZ is going to be the Title Company, that they are not going to pay for any Inspections, that they will pay a maximum of [$750] for Schedule A(1) repairs due to Pest Inspection, and that if you are not ready to close on time, you will be charged [$50] per day for each and every day.
15.) If you are still in the game, your Buyers will do their Inspections, and set up their Loan. The Bank will order the Appraisal.
16.) Follow your Realtor’s guide and in 45 days, you will be moving.
17.) That would cover a SHORTSALE: But what about a Foreclosure; that would be a separate topic.
18.) You’re not out of the woods yet. If the Bank accepted [$100,000] less than the amount of the loan, they might come after you with a Deficiency Judgment. The list of Non-Recourse States is changing fast. Please consult an Attorney at this point; I am not equipped to answer Legal Questions. But,
19.) I will say that it looks like Deficiency Judgments are like an ice berg sitting out there, waiting for your ship to come along. If you Google “non-recourse states” you can get an idea.
20.) There are still other considerations: Are you behind on your Property Taxes, (if you have IMPOUNDS, you may be? HOA fees? Insurance?
21.) You need to do your Diligence.
0 votes Thank Flag Link Tue Feb 28, 2012

Stay. Continue paying your mortgage.

You need to live somewhere, right? So you've got a place.

Every month, some of the mortgage you pay goes toward paying off the principle. Over time, that builds up.

Plus, housing prices probably will recover. So what's underwater today may not be 2, 3, or 4 years from now.

Look: When you buy a new car and drive it off the lot, you're immediately underwater. The car, now used, is worth less than you owe on it. But that doesn't matter. You need a car, and it's doing what it's supposed to do. You know that in 3-5 years it'll be paid off.

Same with a house that's underwater.

Hope that helps.
0 votes Thank Flag Link Tue Feb 28, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
I can imagine it is very stressful to be at the place you are at. The recession has left a number of people wondering the same thing. However, you're asking for advice that agents are not qualified to answer.

I can point you in some general directions. Do a Google search for information regarding underwater mortgages. You might look up NACA to speak with a counselor. There is no charge. And, information is available from HUD. There are programs for unemployed and there was a recent legal settlement announced in which the attorneys general for most states had sued major lenders. HUD, or the attorney general's office, is the place to inquire if you qualify for mortgage relief.

Hope you find the information you require.

0 votes Thank Flag Link Tue Feb 28, 2012
Hello theroguescholar,
If your home is worth less than what you owe on your mortgage then you have some options.
1. Speak with your lender about a loan modification.
2. If you must move; consider renting vs. selling at this time as perhaps your home will lease for an amount to cover your loan, taxes, and insurance payments.
3. Sell your home as a "short sale". If you can prove some type of financial hardship then your lender may be agreeable to selling your home for less than what you owe.

I suggest that you speak with your lender and a local real estate agent to determine what your best options are.

Best of luck to you!

Laura Feghali
Prudential Connecticut Realty
0 votes Thank Flag Link Tue Feb 28, 2012
Rogue Scholar,
Literally under water or financially under water? Please contact me if you have in depth questions about current market conditions, I'd love to help you with your situation!

John Siddons
0 votes Thank Flag Link Tue Feb 28, 2012
As I see it, the only thing you are "supposed" to do is keep paying the mortgage, which is a contract between you and the bank,"for better or worse". A surprising number of people decide to walk away from their payments when this happens. Most of course are having difficulty making them and that is an understandable reason. But there are others who are not that way and just want to walk. Do this very cautiously as you'll wreck your chances of getting a mortgage on another property.

If you have a relationship with your banker (and so few do these days as so many of the larger banks buy and sell mortgages), talk it over with him. I would be circumspect about what I say and how I say it. A real estate attorney can give you excellent advice, though you'll have to pay for it.
0 votes Thank Flag Link Tue Feb 28, 2012
Good morning Thero:
If your home values are below market values and you own the home, you can stay and pay the mortgage down until you have equity again. If your property is in a FEMA flood zone, you can purchase flood insurance, but you should hire County Surveying to do land survey for the specific purpose of certifying if your finished floor elevation is above the FEMA flood line. If the finished floor of your home is above the floodline, you may not need flood insurance. If you appreciate an answer, please give "thumbs up". For the most helpful answer, please say thanks with a "best answer" click.
0 votes Thank Flag Link Tue Feb 28, 2012
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