topic Re: Foreclosure? Can anyone shed some light on this? in Mortgage Loans

Foreclosure? Can anyone shed some light on this?

Anonymous — Tue, 14 Oct 2008 03:02:19 GMT

I need some advice. I have had my condo on the market now here in Florida for 13 months and counting, I have dropped it over $35,000 in price to where now if I sold it I would just break even with what I owe and walk away with nothing. And yet I am still not even getting any showings, never had an offer. I feel trapped in this thing and want out of it. My wife and I are planning on expanding our family and need an actual house with more room and better school district, I have been toying with the idea of foreclosure, even though making payments is not a problem but trying to sell it is.

I still need to be able to get a loan though for our new house if we did foreclose on this condo. Can this be done or should I attempt to get the loan now for the new home, close on it and let the condo go into foreclosure? I know its not ethical but we are desperate to get out of this place.

If anyone can shine some light on this I would appreciate it. Also I am self employed and have been doing nothing but NINA loans on my last few home purchases.

Re: Foreclosure? Can anyone shed some light on this?

Anonymous — Tue, 14 Oct 2008 03:07:48 GMT

If you can qualify for the house + your condo PITI, then yes you probably could get a loan.

...Pretending you don't have the condo and applying that way would be fraud and of course caught by the lenders in their due diligence....

A foreclosure would put you on a 2 year wait list to qualify for a new mortgage.

At this point in time bite your nails (and I absolutely understand how this feels) and continue to pay the Condo costs and wait. Time will get better.......

Message Edited by 1111mel on 10-13-2008 10:07 PM

Re: Foreclosure? Can anyone shed some light on this?

cgmiller63 — Tue, 14 Oct 2008 03:12:15 GMT

My sister and her husband did this back in 1999. The were upside down on their one bedroom condo and were wanting to start a family. The market was horrible and they could not sell. They got the loan for their new house and let the condo go into forclosure. They took a ding on their credit, but their credit recovered in a couple of years since that was the only ding on their report. Before the bank would give them a loan on their new house, they had to have a "renter" for their condo. I'm not sure how they pulled that one off.

Re: Foreclosure? Can anyone shed some light on this?

Anonymous — Tue, 14 Oct 2008 03:21:47 GMT

I have been pre approved already for a new home loan based on the fact that I provide a lease agreement for a renter of my condo.

If I did this and lets say my renter moves out after a few months and it falls to foreclosure, the foreclosure will only affect my credit for 2 years correct? And will I be able to purchase a new vehicle with that on there before the two years is up? Any other credit problems it may give me?

Also the condo is in both my wife and my names but the loan itself is solely in my name, would the foreclosure affect her credit or just mine?>

Thanks

Re: Foreclosure? Can anyone shed some light on this?

Anonymous — Tue, 14 Oct 2008 03:28:30 GMT

I have been pre approved already for a new home loan based on the fact that I provide a lease agreement for a renter of my condo.

Also the condo is in both my wife and my names but the loan itself is solely in my name, would the foreclosure affect her credit or just mine?>

_________________________

Foreclosure is bad debt & reports for 7 to 7.5 years. (to qualify for FHA is a min of 2 years for a new mortgage).

Auto loans will always be available with a decent down payment and probably the not so perfect interest rate.

If you tell the lender everything for truth "to date" then it is what it is.

Re: Foreclosure? Can anyone shed some light on this?

Junejer — Tue, 14 Oct 2008 03:45:40 GMT

Mark, the foreclosure will affect both of your credit files.

Re: Foreclosure? Can anyone shed some light on this?

MattH — Tue, 14 Oct 2008 11:41:37 GMT

@Anonymous wrote:
I need some advice. I have had my condo on the market now here in Florida for 13 months and counting, I have dropped it over $35,000 in price to where now if I sold it I would just break even with what I owe and walk away with nothing. And yet I am still not even getting any showings, never had an offer. I feel trapped in this thing and want out of it. My wife and I are planning on expanding our family and need an actual house with more room and better school district, I have been toying with the idea of foreclosure, even though making payments is not a problem but trying to sell it is.
I still need to be able to get a loan though for our new house if we did foreclose on this condo. Can this be done or should I attempt to get the loan now for the new home, close on it and let the condo go into foreclosure? I know its not ethical but we are desperate to get out of this place.
If anyone can shine some light on this I would appreciate it. Also I am self employed and have been doing nothing but NINA loans on my last few home purchases.

Don't even think about defaulting, especially now. Credit ratings are gonna matter more than ever in the next few years in all sorts of ways. Can you afford to make extra principal payments for a year or two? If so, that might be the fastest way you can get your loan balance down to where you can afford to sell. And absolutely do not try to play any games with lenders, everybody is checking details much more than they did in boom when they mostly required proof of breathing.

Re: Foreclosure? Can anyone shed some light on this?

Anonymous — Tue, 14 Oct 2008 16:12:10 GMT

I agree with MATTH. Are you pre-approved, or just pre-quailified. Alot of LO's call a pre-qual a pre-approval and their is a huge difference, especially in this market. The LO's are desparate for business and will push to get any loan into the process that they can hoping that they can convince the UW to look the other way. From what I have heard, to be able to do an investment property loan you will need 20%+ down, high fico (probably 680 or so minimum), and at least 12 months rental history with rental agreement and tax forms (claimed income) to prove it. They do not accept just a rental agreement anymore. Otherwise you will need to be approved on just your regular income.

Also, due to this type of mortgage fraud (and make no mistake, this is mortgage fraud) there is alot of talk of banks being able to go after people who have the means to stay in their homes and try to play the system to buy a new house while the market is down and then walk away from the house that is underwater.

What I don't understand is I know there is no second home financing right now that is zero down payment and since PMI is very hard to get right now for investment homes (unless FHA does these loan which I am not sure), you are going to need 20% down. If you have the 20% down on the new purchase, why would you not just use it to get the home sold and the debt paid off, and then do a FHA loan with minimum down (3.5%). Then you get out of the old home, into the one you are buying, and do not take a credit hit.

Also, why not Actually rent it out for the time being. You may loose a little money month to month but you would be paying off the equity. In the end, when the market settles down you can then sell it maybe even for enough to make back the money in it.

Re: Foreclosure? Can anyone shed some light on this?

MattH — Wed, 15 Oct 2008 01:12:43 GMT

In the meantime, while waiting for some combination of scheduled amortization, extra principal payments, and at SOME point the market turning around, perhaps the original poster can find imaginative ways to maximize the space s/he already has. Think outside the box. For instance, buy some lumber and build a loft like I had in my college dorm room. Get a restaurant-style dining booth (which seats four people in much less space than a standard table). Read design publications for tips to maximize space. I realize these sorts of tricks won't be the same as a bigger place, but they can be done now.

Also, I have a problem with the sentence "...need an actual house with more room..." as it betrays an all-too-common problem that's part of the reason our country is in trouble: confusing WANTS with NEEDS. Most of humanity manages to raise families in far less space than we in the USA think we need, even most of the developed world does.

Message Edited by MattH on 10-14-2008 09:12 PM

Re: Foreclosure? Can anyone shed some light on this?

Junejer — Wed, 15 Oct 2008 04:14:49 GMT

MattH wrote:
In the meantime, while waiting for some combination of scheduled amortization, extra principal payments, and at SOME point the market turning around, perhaps the original poster can find imaginative ways to maximize the space s/he already has. Think outside the box. For instance, buy some lumber and build a loft like I had in my college dorm room. Get a restaurant-style dining booth (which seats four people in much less space than a standard table). Read design publications for tips to maximize space. I realize these sorts of tricks won't be the same as a bigger place, but they can be done now.

Also, I have a problem with the sentence "...need an actual house with more room..." as it betrays an all-too-common problem that's part of the reason our country is in trouble: confusing WANTS with NEEDS. Most of humanity manages to raise families in far less space than we in the USA think we need, even most of the developed world does.

Message Edited by MattH on 10-14-2008 09:12 PM

I would agree with you, Matt, if it were your money and your life. If it were YOUR situation we are discussing, it would be cool. But, the poster needs/wants whatever, more space. It's up to him to decide that, not the myFico mortgage board members. Now, he shouldn't default, as it will cause all kinds of problems that he is not bargaining for.

Re: Foreclosure? Can anyone shed some light on this?

MattH — Wed, 15 Oct 2008 09:35:01 GMT

@Junejer wrote:
@MattH wrote:
In the meantime, while waiting for some combination of scheduled amortization, extra principal payments, and at SOME point the market turning around, perhaps the original poster can find imaginative ways to maximize the space s/he already has. Think outside the box. For instance, buy some lumber and build a loft like I had in my college dorm room. Get a restaurant-style dining booth (which seats four people in much less space than a standard table). Read design publications for tips to maximize space. I realize these sorts of tricks won't be the same as a bigger place, but they can be done now.

Also, I have a problem with the sentence "...need an actual house with more room..." as it betrays an all-too-common problem that's part of the reason our country is in trouble: confusing WANTS with NEEDS. Most of humanity manages to raise families in far less space than we in the USA think we need, even most of the developed world does.

Message Edited by MattH on 10-14-2008 09:12 PM
I would agree with you, Matt, if it were your money and your life. If it were YOUR situation we are discussing, it would be cool. But, the poster needs/wants whatever, more space. It's up to him to decide that, not the myFico mortgage board members. Now, he shouldn't default, as it will cause all kinds of problems that he is not bargaining for.

You make a valid point, and I would be the first to admit right now my wife and I choose to buy lots of things we want but do not need, because at the moment we are doing as well as we ever have done financially and also have a reasonable cushion against surprises in the near future. But when we got married 17 years ago money was a great deal tighter than it is now, and at that time we had to distinguish correctly between wants and needs. Reality-based personal finance requires knowing when it is prudent to satisfy a want and when it is not.

Right now I am extremely glad we bought our condo the old-fashioned way: stayed in a tiny rental saving up until we could afford a substantial down payment. In the early 1990s my wife and knew people who were upside-down and so we were determined to avoid being upside-down. With the benefit of hindsight, now I know that if we had bought a few years sooner than we did, we would have got away with it, because the market kept going up during the period when we were saving for a down payment and for some years after we bought. But I still think we took the prudent course by waiting, because we could not have known buying sooner would have been safe at the time we were making those decisions.

Re: Foreclosure? Can anyone shed some light on this?

Junejer — Thu, 16 Oct 2008 01:54:33 GMT

MattH wrote:

@Junejer wrote:
@MattH wrote:
In the meantime, while waiting for some combination of scheduled amortization, extra principal payments, and at SOME point the market turning around, perhaps the original poster can find imaginative ways to maximize the space s/he already has. Think outside the box. For instance, buy some lumber and build a loft like I had in my college dorm room. Get a restaurant-style dining booth (which seats four people in much less space than a standard table). Read design publications for tips to maximize space. I realize these sorts of tricks won't be the same as a bigger place, but they can be done now.

Also, I have a problem with the sentence "...need an actual house with more room..." as it betrays an all-too-common problem that's part of the reason our country is in trouble: confusing WANTS with NEEDS. Most of humanity manages to raise families in far less space than we in the USA think we need, even most of the developed world does.

Message Edited by MattH on 10-14-2008 09:12 PM
I would agree with you, Matt, if it were your money and your life. If it were YOUR situation we are discussing, it would be cool. But, the poster needs/wants whatever, more space. It's up to him to decide that, not the myFico mortgage board members. Now, he shouldn't default, as it will cause all kinds of problems that he is not bargaining for.

You make a valid point, and I would be the first to admit right now my wife and I choose to buy lots of things we want but do not need, because at the moment we are doing as well as we ever have done financially and also have a reasonable cushion against surprises in the near future. But when we got married 17 years ago money was a great deal tighter than it is now, and at that time we had to distinguish correctly between wants and needs. Reality-based personal finance requires knowing when it is prudent to satisfy a want and when it is not.

Right now I am extremely glad we bought our condo the old-fashioned way: stayed in a tiny rental saving up until we could afford a substantial down payment. In the early 1990s my wife and knew people who were upside-down and so we were determined to avoid being upside-down. With the benefit of hindsight, now I know that if we had bought a few years sooner than we did, we would have got away with it, because the market kept going up during the period when we were saving for a down payment and for some years after we bought. But I still think we took the prudent course by waiting, because we could not have known buying sooner would have been safe at the time we were making those decisions.

Kudos to you MattH. I took a very similar route, as did you and your wife.

I just don't think that we can dictate what others should do with their $ or determine what they want or need.

All good though.

Re: Foreclosure? Can anyone shed some light on this?

Anonymous — Thu, 16 Oct 2008 16:25:33 GMT

"I just don't think that we can dictate what others should do with their $ or determine what they want or need."

The problem with this remark is that it's NOT their money...it's the bank's money. The man originally posting is asking for advice on how to borrow from one bank while letting the first bank hold the bag on a mortgage he finds too inconvenient to pay anymore. Does no one here see a problem with this?

Buy what you like with your cash, that's your business. But please show some integrity by paying the obligations you've agreed to pay and not sticking it to someone who trusted you enough to loan you money in the first place.

Re: Foreclosure? Can anyone shed some light on this?

Junejer — Thu, 16 Oct 2008 21:06:02 GMT

Uborrow-Upay wrote:

"I just don't think that we can dictate what others should do with their $ or determine what they want or need."

The problem with this remark is that it's NOT their money...it's the bank's money. The man originally posting is asking for advice on how to borrow from one bank while letting the first bank hold the bag on a mortgage he finds too inconvenient to pay anymore. Does no one here see a problem with this?

Buy what you like with your cash, that's your business. But please show some integrity by paying the obligations you've agreed to pay and not sticking it to someone who trusted you enough to loan you money in the first place.

Not the argument UBUP. The argument was that the man wanted/needed a bigger house. Nobody is advocating that he walk away from his current obligation. You won't see that anywhere in my posts or this thread in general. So, how he spends HIS $ (his monthly payments) IS his business.

Re: Foreclosure? Can anyone shed some light on this?

Anonymous — Fri, 17 Oct 2008 14:51:56 GMT

With all due respect, Byrdman, the OP's question is as follows:

"I have been toying with the idea of foreclosure, even though making payments is not a problem but trying to sell it is.
I still need to be able to get a loan though for our new house if we did foreclose on this condo. Can this be done or should I attempt to get the loan now for the new home, close on it and let the condo go into foreclosure? I know its not ethical but we are desperate to get out of this place." - markinflorida

That's pretty clear to me. He wants what he wants when he wants it, and to hell with his obligations to pay the bank its money. Yeah, that's right...THE BANK'S money, the monthly payments that it is due legally, ethically and morally.

Another poster in this thread relates a relative's experience with successfully pulling off this same fraud by using a "renter" (the poster's quotes, not mine). Here's what was written:

"Before the bank would give them a loan on their new house, they had to have a "renter" for their condo. I'm not sure how they pulled that one off."- cgmiller63

The OP has already gotten that part figured out for his planned foreclosure (read the first line, wink wink) but he just needs to know how this will affect him when borrowing again for a new car, on top of the loan for his new house:

"If I did this and lets say my renter moves out after a few months and it falls to foreclosure, the foreclosure will only affect my credit for 2 years correct? And will I be able to purchase a new vehicle with that on there before the two years is up? Any other credit problems it may give me?" - markinflorida

Mickie08 called it like it is: "Also, due to this type of mortgage fraud (and make no mistake, this is mortgage fraud) there is alot of talk of banks being able to go after people who have the means to stay in their homes and try to play the system to buy a new house while the market is down and then walk away from the house that is underwater."

Byrdman, all I'm saying is that this guy has no intention of repaying his obligation because there's nothing in it for him anymore. He's quite willing to let the bank have the headache and expense of unloading a property he bought with their money, not his money. And he's looking for another sucker he can lie to in order to get even more money he'll probably be unwilling to repay if things don't go his way (as in he just doesn't like where he lives anymore).

If, in fact, he was spending his own money, he wouldn't be on this board with his question. He could just walk away from his condo and leave it to the rats...he wouldn't have to worry about his credit, because it was HIS money in the first place, right? But he wants to renege on an existing obligation to the first bank, and use those already allocated funds to pay bank two for the new home.

I don't see HIS MONEY in any of this, and I stand by my original statement.

By the way, I'm not attacking you or anyone else here, and I realize you are NOT advocating that the OP default or commit this fraud. I've read these Forum posts for years, and have learned quite a bit from you, Byrdman, and many, many others on these boards. I posted here yesterday for the first time because I felt compelled to urge this man to live up to his financial responsibilities and not stick the bank (and me, as a taxpayer) with another foreclosed property, just 'cause he doesn't want it anymore. It's an attitude that seems to be the norm, and it's wrong.

The OP should follow the very advice you give in your signature:
"Do what is true in spite of the consequences--your future is only as true as you are."

I agree wholeheartedly.

Re: Foreclosure? Can anyone shed some light on this?

Junejer — Fri, 17 Oct 2008 20:49:32 GMT

Here, here UBUP. I didn't mean to get you stirred up. That said, I agree with what you said. It's absolutely unethical for anyone to stiff an organization, because he/she feels like it.

My original response (to all who will read now and 10 years from now) is that we don't get to choose what a person decides is a want vs need. My post was in response to MattH who stated that he had a problem with people confusing wants with needs.

And I quote MattH--"Also, I have a problem with the sentence "...need an actual house with more room..." as it betrays an all-too-common problem that's part of the reason our country is in trouble: confusing WANTS with NEEDS."

This has never been and will never be any of our place to decide that for anyone else but you and your own family.

Re: Foreclosure? Can anyone shed some light on this?

Anonymous — Fri, 17 Oct 2008 21:43:59 GMT

I'm just flabbergasted that someone can come and post about casually allowing a home to go into foreclosure when there are desperate people who are losing their homes, even though they've paid all their bills and just can't make the dollar stretch any further.

OP-sit tight and wait. Don't make your problem into someone else's. Find a new agent that is more active in showings. Improve your condo so it is more inticing to buyers. Learn to work with the space you have. Rent it out and find a rental place that will work for you until the house sells. There are MANY other options!