Sorry, but not all mortgage companies are so willing to renegotiate. Our mortgage company has not been willing to work with us at all even though we met their qualifying factors! We've tried to refinance, but were turned down because housing values have fallen so low we have negative equity. We tried selling, even willing to take a big loss, but we were not able to sell. We tried negotiating with our lender, but were turned down again. We've been able to stay current on our payments so far, but our adjustable rate will only continue to increase until we can no longer afford to pay and it seems like there is nothing we can do but buy and bail or else we will be left homeless eventually.
You may assume that we just bought a huge house we couldn't afford, but that wasn't the case. We never even intended on staying in this house as long as we have, but the housing market crashed so we were unable to sell. The only reason we took this adjustable rate mortgage was because our mortgage broker assured us that we could just refinance so we would never even face the adjustable rate. Well, it wasn't that easy and we could not refinance! We were completely mislead by the so-called experts that were paid big bucks to guide and advise us. Buying and bailing is not our first option, and I am sorry if it hurts everyone, but it seems like this is our last option if we want to have a home to live in.
If they want to go after someone for fraud, maybe they should go after the mortgage specialist and real estate agent who gave us this bad advise that led us into this situation. We tried to fix this problem in other ways, but have been turned down every step of the way. I'm sorry it has come down to this but now we are left with no choice except to do what is best for us since no one else will work with us to come up with a better solution, despite our best efforts.
It must be nice to have the luxury to sit up on your high horse and preach about how "buying and bailing is WRONG". It was wrong of the so-called experts to give us bad advice, it was wrong of the lenders to increase the payments so much (especially when interest rates have dropped for everyone else), and it's wrong to pass judgement on others and make such a general statement about how bad buying and bailing is when some people don't have any other option left except to become homeless. I don't believe that buying and bailing is wrong if you are being taken advantage of by your current lender or if you have exhausted every other possible solution before having to decide if you should buy and bail or run out of money trying to keep up with their increasing payments until you run out of money, end up in foreclosure, lose you home and ruin your credit so you have no hope of securing another home for your family. If you have other options to reconsider, PLEASE let me know because I would prefer a better option I just don't have one.
I would be happy to discuss your options with you or if you are in need of a agent to sell your home, I would be very happy to help !
Did you end up meeting with a Realtor or Attorney?
Let us know how things are going.
Rocky G.H. Hawrysz
Prudential California Realty
(209) 444-6610 - Direct Office Line
(209) 433-2000 - Direct Fax Line
(209) 915-6209 - Mobile
License # 01468373
But yeah, the lenders have made the buy-and-bail more difficult.
The trend I'm seeing around here (and likely all other bubble areas) is buy and bail via a third party. Mostly younger couples who bought in 2003 or later and are now horribly upside down. They simply stop paying their mortgage and begin accumulate some capital.
In the meantime their parents, who aren't saddled by underwater debt, begin looking for an "investment home". Parents pick up a new 45% off-peak home and then "rent' to the kids for -- not surprisingly -- the equivalent of roughly PITI less any tax deduction. Kids can typically kick back 6-8 months worth of their old bloated mortgage and property tax payments to compensate the parents for some of the down payment.
Now the kids have a few years of bad credit, but they don't really need credit for a few years anyhow since they're in the home they actually want (with payments about 1/2 of what they were paying). Whenever it's convenient the parents and kids consult with a tax adviser to figure out how and when down the road to transfer title at the least expense.
Please be very careful as some of what I am seeing is fraud. For a very possible and very legal solution, give me a call. I will connect you with a lender who has an extremly good solution to your current situation.
I fear that we have high-jacked Lindaâ€™s question post but nonetheless, here are some potential resources for you:
Avoiding Foreclosure: New Hampshire-
Help for New Hampshire Homeowners:
Loan Mod Contact that I trust who may be able to refer in your state:
Aside from these links to help you in the loan modification process here are some questions to ask BEFORE thinking of buying another home and bailing on your current property:
Did you file joint tax returns? If yes and you claimed mortgage interest deduction as a couple, you will not qualify for a new loan under your husband.
If no, proceed to next question,
Do you have joint bank accounts? If yes, an underwriter may scrutinize for mortgage payments. If no then proceed to next question.
Where will you say your husband is living? Whatever address he lists, he will be asked if he owns or rents. Naturally he would say rent since you donâ€™t want the bank to know you currently own, correct? If so he will be asked to provide proof of rental history at the current address. So let me seeâ€¦.Fake rental agreement in your husbands name or fake rental receipts from some third party or friend?
Tread lightlyâ€¦remember you are supposed to be stating the truthâ€¦.A little perjury to go along with mortgage fraud perhaps?
If the above questions concern you enough into rethinking your position to where you want to qualify legitimately for another home and then bail, this is what you will need:
You will need 30% equity in your current residence to utilize any rental income you may want to claim you are renting your current home out for (could be fraud). You donâ€™t have that? Hmm, then you will need to include both the current mortgage and your NEW mortgage into your ratios. Carrying two mortgages is hard for someone with only one income unless they are highly compensated or the mortgages are small enough.
The way I see it you donâ€™t have too many options. If you want to stay in your current home, talk to a LEGITIMATE loan mod specialist or a loss mitigation attorney to help you work with your lender. The deals I have seen people getting when taking this route absolutely astound me- I wish I had them!
Mrs. Mita, as I stated last night, I donâ€™t want people to be homeless. I want people to STAY in their homes. This is good for everyone- except perhaps the lenders who take the loss- but it is much better for them than a foreclosure. So working with the homeowner is in their best interest. While not everyone will be successful in modifying there are still better options than buying and bailing. If you simply canâ€™t modify, short sale and buy again sooner when your situation has improved (3 yrs.)
My interest as an agent lies in helping current and future homeowners make the best decisions for them and their current situation-but the right way. I understand the frustration you have regarding your mortgage better than you may think. But that is a discussion for another time
While my position on buying and bailing differs from yours, I think we can agree that I am not some high-horse agent looking to pass judgment on others. I simply see the market for what it is, and what factors have helped to contribute to these problems. I wish that I could make banks and investors do the right thing to help clean up this mess and that I could put in jail those people out there scamming the system to the detriment of others, but alas, I simply cannot. I am but a resource to those seeking my guidance, knowledge and expertise in my chosen profession.
I hope that I was able to somehow provide some insight for you that will help you in your situation. Please feel free to rebut or ask more questions and if I can be of further assistance I will gladly help.
However, saying buying and bailing is wrong is passing judgement. Saying something is wrong is making a judgement but I guess everyone makes judgements and we just disagree.
I am not angry towards you, it's just that a lot of people are making judgement about people who buy and bail, or have to make other difficult choices. I do not agree that "buying and bailing IS wrong" so I wanted to share my opinion and explain how there can circumstances in which it is justified, or at least is not as black and white. That is my opinion. It's not always black and white, people are sometimes faced with tough choices and hardships that force them to make difficult decisions that lead to less then ideal choices. I am not angry at you, I just wanted to share my point of view and was hoping to convince you and others that sometimes buying and bailing is justified and not everyone is buying and bailing just to improve their lot in life at the expense of others. It is widely assumed that people who buy and bail are doing so for the reasons you stated and there is a lot of criticism towards people who buy and bail (which could be me soon) so I wanted to put it out there that there are other reasons people buy and bail, which are justified in my opinion. Some people may disagree.
As for my personal situation I think we might be able to buy and bail even though we can afford our current mortgage - right now at least. The mortgage is only in my name. My husband isn't on the mortgage at all. When we bought our place I had better credit so the mortgage is only in my name but we used our household income. I don't know if that is a questionable way of doing things, but that is just another example of how the mortgage companies were sneaky and got people into mortgages they couldn't afford or shouldn't have been allowed to get. Anyways, since then I have lost my job and my husbands credit score has gone up so my husband is now the sole breadwinner and has good credit. This would probably enable him to buy a new house while I bailed out on this one. We own now. I am the only one on the mortgage but we did add him to the title. We can take him off though. Since we are married, I don't know if this can somehow tie him to the mortgage but the mortgage was not on his credit at all last time we checked which was February and we have been married for almost 3 years. We can afford our current payments with only my husbands salary (since I have no income) and are current on our payments - for now. The problem is that we will not be able to continue making payments if our mortgage keeps going up, which it will every six months. This is why we wanted to buy another house and bail on this one - because we cannot afford to continue to make payments as our mortgage keeps climbing. If we were able to buy another house we could have lower monthly payments that would not keep increasing so we would know that this is something we could afford long term (unless some huge unforeseen circumstances arose of course). I would like to stay in our current house but we haven't been able to solve the problem of our adjustable rate. Our rental history is also good, we've always paid on time. I don't think this is a sure thing which is why we would not bail on this place until we closed and moved into our new place. I'm not saying this is a foolproof plan or something I take lightly, it is a last resort. If you have more information on what lenders look at or why we would not be able to buy a more affordable home please share. You seem very knowledgable and I'd like to learn more before I ruin my credit and good name.
I also appreciate our opinion and all the information you gave. If you have more information about the consequences of buying and bailing or how to save your home I would really appreciate it.
If you are not behind in your payments nor have you been late in the past year, it's worth your time and effort to talk with a qualified mortgage broker in your area to determine if you can refinance your home to a lower, fixed rate loan. If you feel that your home has lost value and is now worth less than your current loan balance, before undertaking what you suggest, you might consider talking with a loan modification company, and as Micki (below) suggested, many of these companies have startlingly high success rates in helping clients. One of my clients was behind in his mortgage, and the Debt Advisory service here in San Jose was able to get both his home payments reduced as well as his principal on the loan. In the end, he will keep his home, AND reap the benefits of a reduced overall loan value too!
Because the lending requirements have changed even in the past five months to close the "loophole" that may have previously allowed some owners to buy a home while simultaneously defaulting on a home that they currently own--a practice called "buy and bail"--asking for a loan to purchase another or second principal residence will require the buyer to provide information and proof of equity in the other home of record before proceeding with a loan. Again, if you owe more on the home than it is worth at fair market values, then the lack of equity will make another loan almost an impossibility.
I hope this answers your question. I know it's frustrating for you, and for many others, such as Mrs. Mita, below, but Micki did correctly point out that there are other options available to those in need, and if you cannot find help now, please consult your local area real estate professional for assistance. You'll be surprised at how much we might be able to help you--even if you have not been able to get assistance from your lender or on your own in the past.
Good luck to you, Linda, and to Mrs. Mita as well!
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA
I am not on my high horse as you so suggest. And I didn't pass judgement on the the original poster, you or anyone else. I simply stated my opinion and offered a solution that wouldn't result in possible jail time. Your anger while I'm sure justified, should not be directed at me. I see the real life effects of this crisis on a daily basis. I pass no judgement on peoples circumstances as we all have a story to tell. ( I do however dislike it when people try to "scam" the system as that affects me and my family and everyone else) But when people keep doing these things then the market continues to suffer and MORE people will be in your position as they are unable to get out of their house. And they have REAL LIFE situations happening such as injury or loss of a spouse or job.
I never assumed the original poster, you or anyone else bought too much house and I know all to well FIRST HAND that there were and still are CROOKED loan originators. As much as I would like to see them all behind bars, that isn't going to happen but wish it would.
People who have done the buy and bail have mostly done so even though, while they could well afford their home, they didn't want to be "upside down" so bought a similar or bigger house than what they have at a lower price. You see nothing wrong with this? Perhaps you should be angry at those who went before you and casued YOUR value to decline so that now you can't get out of a bad situation? If people hadn't done this, maybe just maybe, values wouldn't have crashed as bad as they did and YOU wouldn't be in the situation YOU are in.
I'm sorry your lender won't work with you as 90% WILL especially now. Since yours hasn't, I suggested to the Original poster that they get in touch with a LEGITIMATE DRE sanctioned loan mod company so they can keep their home. If you haven't sought that avenue,PLEASE DO SO. The loan mod company I refer people to has a 86% success rate. There are even government non-profits to help with this. Try: http://www.hud.gov/foreclosure/index.cfm
With that in mind, here is some food for thought for you if you should choose to "BUY and BAIL".
Are you able to afford both the current mortgage and the mortgage on a new home? If not then you won't be able to buy and bail either. The guidelines now require that you have a minimum 30% equity in your current residence if you want to "say" you are renting it out and are buying another home. If you don't then you are going to be qualified with both mortgages. Or perhaps you are going to say that you aren't on title to the current house and you make sufficent income to qualify for a new home on your own. Great. Where do you live? Do you rent or own ? You need to get a verification of rental history....and on and on. Your file WILL be scrutinized for inconsistencies. I say this not to change your mind, but so you understand you are far better off trying to work out a way to stay in your CURRENT home.
I don't want to see anyone homeless Mrs. Mita. And while YOU may be a victim of circumstances beyond your control, not everyone is. It is these people who are not helping the situation and have definately contributed to the current problem.
I apprecite you opinion and we can agree to disagree on this subject.
Fortunately the lenders have gotten wise to this former practice. Why don't you go through a loan modification instead? Since there is a big push for loan mods now, you may be pleasantly surprised by the terms you could get. Of course there are qualifying factors so I suggest you contact a DRE sanctioned specialist in your area. Buing and bailing hurts EVERYONE and could be considered fraud so please reconsider.