topic Re: Underwater mortgage & seeking advice. in Mortgage Loans

Underwater mortgage & seeking advice.

toshapethefuture — Fri, 28 Sep 2012 19:53:06 GMT

At the recommendation of my fiancee, I am posting in hopes of getting some insight on what I should do in regards to my mortgage.

Some quick info:

Monthly mortgage payment: $1365
Mortgage balance: $179,500
Mortgage terms: 30 year fixed rate loan at 5.50% through JPMorgan Chase
Mortgage is not backed by Fannie Mae or Freddie Mac
Condo fee: $515 a month
Credit score: in the 790~815 range

Details:

I fall under the "Borrowers who are current, but underwater" category of the settlement information. I originally bought the condo nearly seven years ago, paying $227,000 with a $3000 sellers assistance from the previous owners. I put 20% down to avoid a PMI, and my mortgage was a 5/1 ARM at 8% interest. Four years ago I refinanced, borrowing $190,000 on a 30 year fixed rate mortgage with a 5.50% interest rate, and the unit was appraised for $199,000. The property is a condo unit in Greenbelt, in Prince George's County, Maryland, which has received some national press for the poor status of the housing market in the county, and the number of foreclosures and underwater properties. About three & a half years ago several condo units in my building and surrounding area were foreclosed, selling at a fraction of what I paid, devaluing my property to the point that my mortgage principal was more than what my property was worth.   

Earlier this year, in doing research on refinancing my mortgage I was made aware of just how much this has affected the value of my property, I have contacted JPMorgan Chase by email twice, and received responses, but their response is for me to apply for mortgage modification assistance, a system that was in place before the federal settlement in February 2012, and assistance that I do not seem to qualify for when reading through the details. I am hoping the settlement can help me by reducing my principal, and lowering my mortgage payment. When I look at estimates for the property (using Zillow, the Washington Post real estate guide, looking at P.G. County taxes, looking at other recent sales in the development), the value of the property looks to be in the $100,000 to $140,000 range, and based on what I still owe that means the loan-to-value is 128% to 180% less than what I originally paid. About 39% of my annual income after taxes goes towards my current mortgage; I have not missed any payments, but with so much of my income going to the mortgage, then about 15% just going to condo fees, and then 12% going to other debts (student loan, car loan) I am finding it difficult to build savings. On top of this, my condo fee (which covers everything except cable & internet, and my condo insurance).

My fiancee & I want to move in a year, and we have talked about different possibilities for the condo, either refinancing & continuing to make payments and renting it out (we are five miles from a large, public university), or selling the unit at a major lose. If we sold the unit, I don't know if we try to default on the current mortgage and force a short sale. I am stressed out about all of this, and I am hoping this is a good first step to figuring out what I should do.

If there is additional information that is needed from me, please let me know.

Re: Underwater mortgage & seeking advice.

Walt_K — Fri, 28 Sep 2012 13:58:48 GMT

Best of luck to you. I can't answer most of your questions, but I'm sure you'll get some good advice here. I realize you looked at other sources as well, but I just wanted to say that I would put little to no stock in what Zillow has to say. I had a condo in DC and Zillow was nowhere near correct. At the best of times, condos in my building were selling for around $410K. When we sold earlier this year, we had to sell for $367K. However, Zillow gave me estimates over the years anywhere from around $200K to upwards of $600K. Hopefully you're not as underwater as you think.

Re: Underwater mortgage & seeking advice.

Chbraswell — Fri, 28 Sep 2012 15:37:10 GMT

For modifications those my have adverse affects to your credit so i would definitely make sure you seek all other options because you try those. Especially if you can afford the loan or very credit orientated. Depending on your loan you qualify for the government refinance program called harp for fannie and freddie loans.

Re: Underwater mortgage & seeking advice.

toshapethefuture — Fri, 28 Sep 2012 15:39:33 GMT

Walt_K wrote:
Best of luck to you. I can't answer most of your questions, but I'm sure you'll get some good advice here. I realize you looked at other sources as well, but I just wanted to say that I would put little to no stock in what Zillow has to say. I had a condo in DC and Zillow was nowhere near correct. At the best of times, condos in my building were selling for around $410K. When we sold earlier this year, we had to sell for $367K. However, Zillow gave me estimates over the years anywhere from around $200K to upwards of $600K. Hopefully you're not as underwater as you think.

Thanks Walt_K, I'm hoping this does lead to some good advice. Just curious, what part of DC was your condo?

Re: Underwater mortgage & seeking advice.

toshapethefuture — Fri, 28 Sep 2012 15:44:50 GMT

Chbraswell wrote:
For modifications those my have adverse affects to your credit so i would definitely make sure you seek all other options because you try those. Especially if you can afford the loan or very credit orientated. Depending on your loan you qualify for the government refinance program called harp for fannie and freddie loans.

15 years ago I had very poor credit (college age w/ a $11k limit and no realy concept of credit). I have since repaired that, and the past three years I have kept credit usage to a minimum (no balance on my two credit cards, and then one purchase with no interest for 18 months, paid it off in half the time).

For the federal refinance program, my mortgage is not backed by Fannie or Freddie Mac. I have contacted my lender, as well as looked at Maryland state information. I was referred to the Maryland Hope Organization, which then referred me to a local housing organization, but I do not think I meet their required qualifications, in part because I am current on payments.

Re: Underwater mortgage & seeking advice.

Chbraswell — Fri, 28 Sep 2012 15:57:48 GMT

Unfortunately there are not a lot of programs to help people who are looking for a lower payment and principal reduction if you are current and can afford your loan. The only other thing I could possibly think of is if you qualify to be reviewed under the department of Justice settlement that happend a few months back. However, I do not believe you would qualify if they have not already contacted you.

Re: Underwater mortgage & seeking advice.

webhopper — Fri, 28 Sep 2012 18:54:21 GMT

toshapethefuture wrote:
At the recommendation of my fiancee, I am posting in hopes of getting some insight on what I should do in regards to my mortgage.

Some quick info:
Monthly mortgage payment: $1365
Mortgage balance: $179,500
Mortgage terms: 30 year fixed rate loan at 5.50% through JPMorgan Chase
Condo fee: $515 a month
Credit score: in the 790~815 range
Details:

I fall under the "Borrowers who are current, but underwater" category of the settlement information. I originally bought the condo nearly seven years ago, paying $227,000 with a $3000 sellers assistance from the previous owners. I put 20% down to avoid a PMI, and my mortgage was a 5/1 ARM at 8% interest. Four years ago I refinanced, borrowing $190,000 on a 30 year fixed rate mortgage with a 5.50% interest rate, and the unit was appraised for $199,000. The property is a condo unit in Greenbelt, in Prince George's County, Maryland, which has received some national press for the poor status of the housing market in the county, and the number of foreclosures and underwater properties. About three & a half years ago several condo units in my building and surrounding area were foreclosed, selling at a fraction of what I paid, devaluing my property to the point that my mortgage principal was more than what my property was worth.   

Earlier this year, in doing research on refinancing my mortgage I was made aware of just how much this has affected the value of my property, I have contacted JPMorgan Chase by email twice, and received responses, but their response is for me to apply for mortgage modification assistance, a system that was in place before the federal settlement in February 2012, and assistance that I do not seem to qualify for when reading through the details. I am hoping the settlement can help me by reducing my principal, and lowering my mortgage payment. When I look at estimates for the property (using Zillow, the Washington Post real estate guide, looking at P.G. County taxes, looking at other recent sales in the development), the value of the property looks to be in the $100,000 to $140,000 range, and based on what I still owe that means the loan-to-value is 128% to 180% less than what I originally paid. About 39% of my annual income after taxes goes towards my current mortgage; I have not missed any payments, but with so much of my income going to the mortgage, then about 15% just going to condo fees, and then 12% going to other debts (student loan, car loan) I am finding it difficult to build savings. On top of this, my condo fee (which covers everything except cable & internet, and my condo insurance).

My fiancee & I want to move in a year, and we have talked about different possibilities for the condo, either refinancing & continuing to make payments and renting it out (we are five miles from a large, public university), or selling the unit at a major lose. If we sold the unit, I don't know if we try to default on the current mortgage and force a short sale. I am stressed out about all of this, and I am hoping this is a good first step to figuring out what I should do.

If there is additional information that is needed from me, please let me know.

Look at doing a HARP refinance... if you are current on your mortgage, and your mortgage is backed by Fannie Mae or Freddie Mac, you should be able to refinance to a lower interest rate. Keeping the condo and renting it out seems like a good option, if the rents in the area are comparable or more than what your note will be after the refi. If you rent it out, you can sell it later on, or just keep it as an investment property. Maybe even let your kids stay there if they go to that university for school.

I would start looking at a HARP Refi immediately.

Re: Underwater mortgage & seeking advice.

webhopper — Fri, 28 Sep 2012 18:57:24 GMT

http://www.zillow.com/mortgage-calculator/harp-eligibility/

Look at the HARP 2.0 program... it seems taylor made for your situation.

Re: Underwater mortgage & seeking advice.

toshapethefuture — Fri, 28 Sep 2012 19:52:25 GMT

webhopper wrote:
Look at doing a HARP refinance... if you are current on your mortgage, and your mortgage is backed by Fannie Mae or Freddie Mac, you should be able to refinance to a lower interest rate. Keeping the condo and renting it out seems like a good option, if the rents in the area are comparable or more than what your note will be after the refi. If you rent it out, you can sell it later on, or just keep it as an investment property. Maybe even let your kids stay there if they go to that university for school.
I would start looking at a HARP Refi immediately.

Unfortunately my loan is not backed by Fannie Mae or Freddie Mac. Checked in to that when I contacted Chase, and they confirmed that information.

Going to update my OP with that info.

Thank you for the suggestion though.

Re: Underwater mortgage & seeking advice.

webhopper — Fri, 28 Sep 2012 21:43:23 GMT

You could take out a personal loan to pay down the balance in oder to refinance. Not sure this will help.

I would recommend that you pay to have the house appraised at this point.

Re: Underwater mortgage & seeking advice.

StartingOver10 — Sun, 30 Sep 2012 17:15:52 GMT

webhopper wrote:
You could take out a personal loan to pay down the balance in oder to refinance. Not sure this will help.

I would recommend that you pay to have the house appraised at this point.

Zillow and the other automated valuation models (AVM's) are not really a viable way to determine real value.

An appraiser is worth their fee if they are local and experienced with your area. The market is rapidly changing now: increased demand and very low supply, at least in my area of the country. This makes a market for increasing prices. If you want to feel out your price, have an agent come over and give you a CMA for your neighborhood, then make your decision about the appraiser. After all, the CMA is free.

Re: Underwater mortgage & seeking advice.

toshapethefuture — Mon, 01 Oct 2012 12:45:44 GMT

StartingOver10 wrote:
webhopper wrote:
You could take out a personal loan to pay down the balance in oder to refinance. Not sure this will help.

I would recommend that you pay to have the house appraised at this point.

+1
Zillow and the other automated valuation models (AVM's) are not really a viable way to determine real value.
An appraiser is worth their fee if they are local and experienced with your area. The market is rapidly changing now: increased demand and very low supply, at least in my area of the country. This makes a market for increasing prices. If you want to feel out your price, have an agent come over and give you a CMA for your neighborhood, then make your decision about the appraiser. After all, the CMA is free.

Thanks StartingOver10. Looking in to finding a local appraiser and a reputable realtor for a CMA.

There are some some factors that may increase demand in my area, namely the FBI headquarters moving to the county I am in, and possibly to the town my condo is in.

Re: Underwater mortgage & seeking advice.

maryd2929 — Fri, 05 Oct 2012 04:42:11 GMT

You might be eligible for the FHA refinance program since you don't have a fannie or freddie loan.

Re: Underwater mortgage & seeking advice.

Elcid89 — Fri, 05 Oct 2012 04:47:16 GMT

It's somewhat of a nuclear option, but you are allowed to borrow from your 401(k) for a home purchase, and at a very low rate (my 401k offers loans at 1.25%). That may give you the cushion you need to buy your way out of the current mess.