Can you modify an upside down loan on your fmaily, owner-occupied home when you own other properties? Do you?

Asked by More Month Than Money, Rio Rancho, NM Mon May 11, 2009

have to be delinquent on your payments to modify or do a walk-awy?

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*, , Rio Rancho, NM
Tue Jul 21, 2009
You may want to contact a good lender that is welling to look at the whole picture. They might be able to come up with a program that will meet your needs since you own other properties.

Best of luck
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Terrell Will…, , Wheat Ridge, CO
Mon May 11, 2009
Unfortunately there's no easy answer to this other than " depends...".

It does feel like only those folks who have gotten in trouble - late payments, over-extended, etc., are getting breaks, doesn't it? I guess the idea was that folks in your situation would be able to "ride out" the downturn, continue making timely payments, and eventually be ok again in terms of equity. But meanwhile you'd be paying a higher interest loan, and losing twice, right?

There is no harm in contacting your lender and talking through the issue. Many loans are now eligible for renegotiation based just on the fact that you're upside down, and - this is important - based on the fact that you've encountered "financial hardship". In your case, maybe that means you can't get the rents you used to get on the rental properties (if that's what they are), or maybe it means something else... but surely you've experienced some sort of financial hardship, right?

That's what they're looking for - along with your desire to keep the property, and an ability to continue to make payments. If those three criteria are met, then (theoretically at least) you should be able to get them to discuss the issue of modifying your loan, at least in terms of the interest rate. Asking the bank to reduce the balance of the loan is probably much less likely though.

Good luck, and actually, if you do have this conversation with your lender (and especially if you succeed) I'd appreciate hearing from you to find out what happened.

Good luck!

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