topic Dumping a mortgage in Mortgage Loans

Dumping a mortgage

tleventer — Mon, 30 Oct 2017 18:33:52 GMT

FYI... I don't care about my FICO score on all this. I'm out of savings (except for my 401K) and have zero time/patience/effort/or money to deal with this place anymore! Fact is that I should have been a statistic in 2008/9 as I bought this house pre-bubble, with zero down on a 585 credit score. Now I just need to be done with it and move on with my life!!

I contacted my mortgage company today to see about putting a house up for short sale. It doesn't look like that will be possible for a variety of factors, but she's still looking into it. This is NOT my primary residence and hasn't been for 8 years since the first time I put it up for sale. It didn't sell (2009... duh) and my then family of 5 needed to move out of the 2 bedroom 1 bath home. So in 2010 I bought another home (4 bed, 2 bath) and put the other up for rent. Since then, the family of 5 has been reduced to just me and I live in a different 2 bed, 2 bath home that I love (it is also where I conduct some business). In the meantime, the original house has been through several tenants -- you know the routine... clean it up, put it up for sale, doesn't sell quickly, carrying 2 mortgages, EEK! - panic ensues, rent... renters move out, wash rinse repeat. The last tenants, under a 2 year land contract, trashed the place and left me with over $9,000 in back payments/damages. It's been vacant since mid January and needs several thousand in repairs. I've had 1 offer - which amounted to me coughing up $30,000 to clear the mortgage (can you say no?)... 4 interested in land contract/buying but didn't follow through (1 was highly concerned about the neighborhood, 1 had finance issues, 1 just up and changed her mind that she didn't want to leave Michigan to be 2 blocks from her newest grandkid, and 1... he just started ghosting me). I still have several thousand in repairs to accomplish to come anywhere close to the $60,000 mortgage... to which I don't have it because I sunk it into repairs, etc. on my home.

The mortgage company is currently checking on the origination paperwork of a refinance on this place that I did in 2012. It was a no-brainer -- going from 6% interest to 3.75%. But the timing and "occupation" is suspect. It's an FHA loan and I guess they're concerned with the paperwork and the rental vs occupation at the time of the loan origination. A comment about liquidating my other assets (aka my current HOME) to cover this loan was made. Can they do that? I thought short sale would be the way to go since it gets them at least SOME $$. I know probably whatever I do, I'll owe something in taxes. After doing a little bit more reading it doesn't sound like my idea of a short sale will fly since other than being unable to continue paying on THAT loan (due to having others) or to get the repairs to be completed in order to get the **bleep** place sold, there isn't a huge hardship case to be made.

not sure why I'm posting except to vent. No one to talk to on this end. If any one has any suggestions, I'd love to hear them. Thanks for listening.

Re: Dumping a mortgage

Anonymous — Mon, 30 Oct 2017 18:42:46 GMT

A lender is under no obligation to approve a short sale.

If they think you have equity in your current home, they may feel there is more value in telling you to sell the home to cash out the equity to put towards making your other loan current. They don't have to short sale, and they have their own internal measures to figure out the value of not just the home under loan but the borrower. Maybe they see you're more valuable in foreclosure than you'd be in short selling. Only you know your value there and only the lender knows how they value your home and you as a borrower or potential foreclosure recipient.

Not much you can do but try to sell the house, or try to find new renters. Maybe try AirBNB for short term rentals? I make a killing on AirBNB and the tenants so far haven't done any damage whatsoever to the properties I list on AirBNB (including my primary home when I travel).

My main AirBNB property earns about $2600/month in peak season versus $1100 in rent -- since peak season is about 6 months long, it makes more money renting out for just 6 months than if I got some infestation tenants for an entire year.

Re: Dumping a mortgage

tleventer — Mon, 30 Oct 2017 18:58:22 GMT

Thank you ABCD2199. Renting right now though (or AirBnB) would require the several thousand in repairs. But there is NO WAY i'm going to sell my current home. I've had to put a lot of work into it, but have a couple loans on it in addition to the mortgage... and it still needs more work. Heck, if I had any money, think I'd be driving a 2004 Saturn with 176K miles on it? LOL

I have someone looking at the place tonight as a land contract. Under ANY other circumstances I would say no (she's 20, would have to get a loan to get me the $1500 I'm asking down), but she is willing to do the repair work. Sounds like I may not have any other choice though.

Re: Dumping a mortgage

Anonymous — Mon, 30 Oct 2017 19:10:23 GMT

A land contract is an option and maybe it'll work. Hard to say but why not look at it (I was going to suggest it).

As for driving a beater -- I've owned my homes mortgage-free since I was a teenager but for the past 6+ years I didn't even have a car because it didn't make financial sense when bus/train/uber was hella cheaper! So there's no shame in driving a beater until you have a ton of cash in the bank!

You can always "jingle mail" your keys to the bank and let them foreclosure, but chances are if the house is far upside down they might even fight that. Plus the past housing crash has made the banks a bit more difficult to deal with when it comes to voluntary foreclosure.

I'd say look into the land contract option -- just for enough time to get them the option to finance direct. Depending on your jurisidiction you may be able to write up the land contract payments as a form of escrow towards a preapproved loan but if they don't do that, they give up the funds to you.

Re: Dumping a mortgage

tleventer — Mon, 30 Oct 2017 19:19:55 GMT

Oh I have nothing against my beater either. In fact, I really like the silly thing. Paid cash for it (save about $1,000 which I put on a credit card and had paid off in a matter of a couple months) and hope it keeps going!

while i may have other options, it's starting to sound like my SAFEST option (for all the work I've put into my businesses and existing home) is to take a chance on this 20yo. I'm leary because the last land contract is the one that screwed me. I haven't gone after her for the $9k the court says she owes me, but i think it may be blood from a turnip kind of situation... and going after her costs me more money!

some days... the more i deal with people, the more I like my dog. (present company excluded of course). Thank you for the replies.

Re: Dumping a mortgage

Anonymous — Mon, 30 Oct 2017 19:26:23 GMT

Yeah, I hear you. I have been really blessed with tenants for 25 years -- some of it is gut instinct, other things are just simple landlord skills. Such as learning to "violate" the letter of the law using whatever loophole you can -- I would prefer not to rent to "crazy cat ladies" for example. Never had an eviction, never had a damaged property other than the typical holes in the wall or a broken tile or whatever.

I also have been lucky in buying property I could afford, but a lot of times your realtor and mortgage officer don't performance any due diligence to make sure you're getting a home you really can manage and afford. It absolutely infuriates me on Facebook daily seeing some realtors or loan officers commenting on posts I make saying I'm wrong about my financial rules I post about -- mostly because my rules mean those predators make less money (or no money, in my case -- I will never ever use a realtor for a home sale and have never had to get a mortgage before).

Best to see if you can make this land contract work. Make sure to use a good attorney to draft the agreement. Make sure to keep all your "gotchas" in there in case you need to boot this one.

I'm considering doing a land contract on a condo I own -- the tenant has been there 7+ years, never paid late, usually pays a month or two early, and he really just wants to own it but his income isn't as verifiable as banks require. He's willing to pay way more than I personally think the place is worth, so I may do it. We'll see. I do want to liquidate a few properties as the housing market is crazy hot and people are paying insane prices in my regions -- I figure let some properties go at a major profit and maybe buy them back in 4-5 years when and if the market corrects to normal price ranges.

Re: Dumping a mortgage

tleventer — Mon, 30 Oct 2017 20:03:01 GMT

Sounds like the banks, etc. are getting back to what they were pre-crash with the crazy approvals! with zero down, a job in the low 50's, and credit in the high 500s, I was told by the mortgage broker I could qualify for a home in the 200s!! "Thanks but I like to eat" I think was what I told him.

Like your rules. Got my current place at a crazy discount, but it needed a lot of work. just gotten kind of stuck with this old property. Never wanted to be a landlord, but my ex at the time talked me into it as we could move the family of 5 to a bigger place out of town. Now it's biting me.

Good luck to you! Thanks again for letting me discuss this!

Re: Dumping a mortgage

Anonymous — Mon, 30 Oct 2017 21:06:15 GMT

Keep us updated on your progress!

BTW, my rule for buying my home is the same if I am living in it or renting it out: if I can buy it for 80X rent or less, buy buy buy. If I own a property and I can sell it for more than 150X rent, sell sell sell!!!

I've owned since I was 18, but sometimes the place I live in is rented from someone else. For 7 years I rented a 5000 square foot fancy loft on a hip street for $1500/month. Owning would have been $7000 a month! I just bought my current live-in home in 2015 but selling prices have skyrocketed in 2 years (30% at least) so I am now in a position where selling it makes more sense than keeping it and renting it out. And rents are falling again, so maybe it will make sense to sell my "new" home and just rent for a few years.

It's frustrating to fall in love with your home, but I am not going to pay what the average American pays over their lives to love their home -- typical Americans actually pay over $700,000 more for a home they love (over their lives). I just need a roof!

Re: Dumping a mortgage

tleventer — Mon, 30 Oct 2017 21:14:23 GMT

I think my current home is the only one I've lived in that I love... and it has less to do with the 1600 sq ft and more to do with the land and barns. the one in question that I want to get rid of... ZERO love there. Even when I bought it, I never LOVED it. That's what's so frustrating. With the damage that was done (and my fault for not doing enough dilligence on the previous tenants), every time I go over there, I'm angry and annoyed. It needs to be someone else's problem! And I know that sounds selfish, but that's where I am. How many times do I need to go through this when I have a full time job, a fixer-upper living situation, a growing business that requires fixer-upper like attention and a 2nd direct sales business I'm trying to get off the ground. Plus you know... sleep! LOL

Re: Dumping a mortgage

VALoanMaster — Fri, 03 Nov 2017 20:20:34 GMT

The mortgage company is currently checking on the origination paperwork of a refinance on this place that I did in 2012. It was a no-brainer -- going from 6% interest to 3.75%. But the timing and "occupation" is suspect. It's an FHA loan and I guess they're concerned with the paperwork and the rental vs occupation at the time of the loan origination. A comment about liquidating my other assets (aka my current HOME) to cover this loan was made. Can they do that?

The lender is "auditing" your previous loan file to see if you committed mortgage fraud. As long as you did a streamline refi as a non-owner occupied you'll be fine.

The smart thing to do is meet with a bankruptcy attorney asap. Bankruptcy is the only way to protect yourself & your assets while dumping this rental property.