topic Re: Desperately Need Help Finding A Creative Solution in Mortgage Loans

Desperately Need Help Finding A Creative Solution

Anonymous — Sat, 23 Mar 2013 18:47:48 GMT

I am a 64 yr old in TN. I am living soley on social security benefits only. My monthly expenses exceed my income. I have about $6K left in savings from my lump sump retirement payout. I am trying to figure out a way to stay in my home. I have been here over 30 years. I don't think I could afford to rent anywhere cheaper than what I pay now. I tried to refinance through my local bank to consolidate but was denied due to DTI. Here is my situation:

Income: 1541/mo

1st Mtg - 457/mo (Balance of 19500 with a 5.25% rate)

HELOC - 125/mo (paying interest only with a balance of $38500)

Credit Card Debt - 350/month (3 open accounts/2 closed for a total of ~15K)

Cosigned on private student loans = $15K. All in deferrment except 1 with payment of $90 made by grandchild.

Credit Score - 759

My home is apprasied at 154K on my property assessors notice. However, it was built in 1982 and has fallen into disrepair. It needs some major work which I cannot afford. Even if I could qualify for a refinance, I am assuming these repairs would have to be made before a loan could close.

I'd like to stay in my home if I can. I'm trying to figure out a way out of this. I read the Making Homes Affordable website but it seems like I may not qualify for assistance as my first mortgage is already within 31% of my income. And, it doesn't seem as though anything can be done about my HELOC. There is a list of lenders that participate in the 2MP program but mine is not on that list. I will be completely out of my savings in the next 3-4 months. To top that off, I will turn 65 in November and my income will be reduced by another $100 to pay the Part B premium for Medicare. Apparently $1541 is over the income guidelines to qualify for any government assistance like SLMB or Food Stamps.

My daughter has offered to try and buy my property and keep me in it but she is limited in her availability for down payment. Plus, I do not have the funds to make the necessary repairs in order for the home to qualify for FHA financing. She checked into getting an FHA 203K streamline rehab loan but was told that this program excludes you from purchasing a home from a relative - even if the relative is going to stay in the home.

I just don't know what to do. I know there are people with expertise and creative minds in this forum. Any suggestions would be greatly appreciated.

Re: Desperately Need Help Finding A Creative Solution

Gunnar419 — Sat, 23 Mar 2013 19:00:06 GMT

Is there any possibility of you getting a part-time job or doing some type of freelance work to increase your income, even by a few hundred dollars a month?

No doubt about it; you are heavily in debt for a person of your age and income. It seems as if simply earning more money would be a more straightforward solution (and in the long term, a more productive solution) than seeking new ways to juggle/consolidate/get creative with debt.

Re: Desperately Need Help Finding A Creative Solution

Anonymous — Sat, 23 Mar 2013 19:11:56 GMT

This really isn't a "solution", but if your'e nearing 65 and don't forsee applying for anything huge in the future, filing chapter 7 would eliminate that crefit card debt you have-which is a big chunk of your monthly payments. Not suggesting this by any means, just throwing it out there. Best of luck.

Re: Desperately Need Help Finding A Creative Solution

Anonymous — Sat, 23 Mar 2013 19:27:36 GMT

Thanks for the responses. I am not able to work. I had a massive heart attack/open heart surgery 5 years ago which has left me disable for all intents and purposes. Part of the reason I have so much credit card debt is I used them to pay for medical expenses not covered by insurance. 20% of 250k is a lot of co-pay. I spoke with a bankruptcy attorney about filing Chapter 7. In doing this, he said the trustee would sell my home because I have about 12k in equity. Selling my home is an option but I don't think I could find anywhere to live any cheaper than I am now. I am an old woman with very little to look forward to - the thoughts of moving 30 years of accumulation not to mention the cost of moving, is overwhelming. It seems like there has to be a solution. I have worked hard all my life and have always paid my bills on time and had a stellar credit rating. I don't care about my credit rating anymore. I just want to live out what is left of my life in my own home. I feel hopeless.

Re: Desperately Need Help Finding A Creative Solution

Anonymous — Sat, 23 Mar 2013 19:37:45 GMT

Interesting. In Florida and I'm sure alot of states, you can file chapter 7 but keep your home as long as you are living in it (not rental property or additional land) My best friend did exactly this back in 2007.

Re: Desperately Need Help Finding A Creative Solution

Anonymous — Sun, 24 Mar 2013 01:21:48 GMT

You can look into a streamline refinance, most will not require you to have an appraisal. But other things would have to be looked at such as your DTI.

Re: Desperately Need Help Finding A Creative Solution

rebroker212 — Sun, 24 Mar 2013 01:31:24 GMT

Have you looked into a reverse mortgage

Re: Desperately Need Help Finding A Creative Solution

Anonymous — Sun, 24 Mar 2013 03:03:40 GMT

+1, Reverse Mortgage. Your equity in the home pays for your living expenses and the note isn't due until you permanently leave the home. You have a ton of equity in your home. The downside to this is it is likely the home will never be paid off, which means it won't be passed down in your estate unless your living family purchases it for the balance due by the lender at time of permanent departure.

If you are that close to losing your home, then I would definitely consider this option. Chapter 7 BK won't help unless you can continue making the current payments on your home. Through a reverse mortgage, you get a monthly check each month, which can be used for repairs on the home and other living expenses.

You sound like such a sweet lady. If I had the extra money, I would send it to you.

So please contact someone about a reverse mortgage. You've worked hard to keep your home for over 30 years...it is time to make the house work for you. :-)

Re: Desperately Need Help Finding A Creative Solution

Anonymous — Sun, 24 Mar 2013 03:12:27 GMT

A Reverse Mortgage is an option, but may not be doable.

Poster stated equity of 12K, isnt very much. The home needs major renovations which means it may not appraise high enough.

While it is an option, I am not sure it will be approvable.

Re: Desperately Need Help Finding A Creative Solution

Anonymous — Sun, 24 Mar 2013 03:16:52 GMT

I'm not seeing the 12% in equity. I see 5 digit balances with an appraisal value in the 6 digits. That seems like a lot more in equity than 12%. What am I missing?

Re: Desperately Need Help Finding A Creative Solution

Anonymous — Sun, 24 Mar 2013 03:20:52 GMT

Your missing the repairs that need to be made most likely.

From the numbers she posted it looks like she has just under 100K in equity, but if needs repairs, the cost of repairs would have to come off the value also.

The 12K in equity I took from her post from BK Lawyer.

Re: Desperately Need Help Finding A Creative Solution

Anonymous — Sun, 24 Mar 2013 04:16:29 GMT

Okay. That makes sense. Thanks.

I would still look into it to see what they say. Try every possible avenue before bankruptcy.

Re: Desperately Need Help Finding A Creative Solution

Anonymous — Sun, 24 Mar 2013 04:29:16 GMT

Make a space in your home for a roommate, family member or otherwise, who can help with the bills. You'd be surprised, a lot of people don't want anything special. Just a safe place with a clean area they can make their own and a relaxed house-mate. Just a thought.

Re: Desperately Need Help Finding A Creative Solution

Nettieinva — Sun, 24 Mar 2013 04:34:41 GMT

Is it possible for your daughter to help you out with a $200 a month towards your bills so you aren't so tight? Can you watch her children if she has any in exchange? That might help with some extra money.

Re: Desperately Need Help Finding A Creative Solution

Anonymous — Sun, 24 Mar 2013 12:56:03 GMT

I'm so sorry you're in that situation. My mother was in almost the same situation couple of years ago, except she had almost no equity in her house. She was also disabled and on SSDI. I tried to help her out, but ultimately, we came to the conclusion that she had to give up the house. She wound up filing Chapter 7, and was relieved of every debt she had. I got her on waiting lists for every subsidized senior housing building in the areas she preferred to live in. Within a few months, she had a nice new apartment, that was subsidized, so that she only pays 30% of her income each month for rent and utilities. Honestly, it was such a blessing in disguise. No more worrying about sudden repairs, or property tax increases, or hiring someone to mow the lawn or shovel the snow. She's debt free now, and able to relax and not constantly worry about money now.

Now, I'm not saying you should just give up your home. Definitely look into the refinancing, reverse mortgage, and Chapter 7 with a professional and see if they might be good options for your situation. I definitely don't understand why you wouldn't be able to keep your house if you filed Chapter 7, so I'd say you should get a second opinion. But, if you can't come up with a solution, hope isn't all lost. Check into subsidized senior housing in your area. When I called around, I was told the waiting lists were two years long. I put my mom on them anyway, and she had two places with openings within a few months. She's been in her new place for about a year now, and the bank actually still hasn't foreclosed on her old home yet either.

It looks like all you owe on your home is $58,000? Can your daughter go conventional to buy your home? That's only $2,900 down. Or can you and she refinance it together? Maybe her income would help offset your debt? Have your talked to a mortgage broker? They tend to be more creative than banks, so that might be a good idea.

Good luck, I hope you find a solution. Please keep us updated.