Help with a Fannie Mae question, house value plumeted.

[Anonymous]

I will try to be short and to the point any help or suggestion greatly appreciated.  K- bought our house in 03 for 147000. seller didn't disclose material defects, inspector didn't find them, will cost over 70k to fix. After problems found house is worth only 92k!  Took sellers and inspectors to crt and lost because of bad lawyer, and bad IL laws.  So in the mean time hubby goes to war, gets injured, now 100% disabled, I lost one of my jobs, (had 2 full time for 9 years) so income greatly reduced, we arent behind in mort, just can't do any  repairs, and house is almost condemable.  Don't want to bail, bk, or live like a pauper. 

I called lender about Pres, Obamas new programs, Don't q for anything because I haven't stopped paying and not in the red, so only option is to hope the mort. co can come up with something, said reduced int. rate. also could possibly Loan modify what should I know that they won't tell me.  ?

We need to be able to build a new house in the near future, then fix this one (we have to gut it) and sell, or rent it out.  OR build new foundation move the house and rehab it. (big mess)

Anyone know if options warnings caveats?   

Thanks so much  oh hhi is 54k dti is less than 31%

[Anonymous]

when did the defects come to be known, you are talking 6 years ago and I would assume that defects taht "appear" 6 years later (or even 4-5) would not be previous owners fault unless you can prove they had advanced knowledge of them.

What is the balance on your mortgage?

What is total gross monthly income?

FICO scores?

[Anonymous]

No, some ugly issues showed up in less than a year, we promptly sought legal advice, but in illinois, the laws are very lax for things like this, a seller can get away with just about anything, and an inspector doesn't really need to leave his car to inspect your house,  they can put down anything they want, and if your green like we were and believe them you get to eat the defects. Absolutely no presidence has been made in illinois accept, alot of low lifes make money hanging out a shingle for home inspection, so those real estate agents and mortgage lenders can make that comish.  Lawyers are a huge waste of money, we live in a county were the lawyers will eat their young for money. The Baptist minister and his wife that sold us the house made out like theives we got screwed. We finished the court case about 2 years ago minus 10,000.00 poorer than when we started (lawyer made out too)

Anyway the M/I is 4700 ish

Loan is now at 133000 ish

Thank you thank you thank you

[Anonymous]

Last I checked his is 620 but I cleaned up since then have a few minor issues to clear up (medical for his line of duty injury) yes they charged us. fixing that.

mine 540 have a few baddies of my own should be okay in the spring when we want to build - remodel- whatever.  working out the kinks.

[Lel]

Do I understand correctly, that your debt to income ratio is less than 31%?  What is your monthly PITI payment - principal, interest, real estate taxes, and homeowners insurance?  What is your current interest rate?

If this all represents less than 31% of your income, then you won't get any relief from any government plan.  The goal of the Making Home Affordable plan is to get borrowers' DTIs below the 31% threshhold, because this is considered to be an affordable debt burden for a home.  If you're already below 31%, then you won't qualify for the MHA program.

Do you have other debts that are making your financial situation tight?

I realize that you are used to a much higher income that you currently have.  But in theory, your current mortgage, even with your reduced income, would be considered affordable (assuming that your home-related DTI is below 31%).

[Anonymous]

2 things.

if you do a loan modification, it usually will show up on your credit report as modified.  I don't know what the standards are going to be, but I doubt you will be able to get an additional mortgage if youhad to have this one modified in the near term.  (again that is a guess.  But this question is going to come up alot in the near futuer I believe).  It would be very interesting what the mortgage professionals think.

As far as a second mortgage, it will be hard to get $ to get teh second house built.  From what I gather you are negative equity on the first loan and have limited income.  Getting approval for a second mortgage will be tough even without a modification on file.

[ShanetheMortgageMan]

Well honestly with the credit scores, and the existing mortgage, you aren't likely going to be able to finance a new home... however there is a good loan program out there that will help you finance the needed repairs & improvements to the home you are already in.  It's a type of FHA loan called the 203k.  There are two versions of it, the 203k streamline and the regular 203k (normally called the "full 203k"), more lenders offer the 203k streamline but there are still a good chunk of lenders who do the full 203k as well.  The 203k streamline limits repairs up to $35k, whereas the full 203k can finance as much as you need (up to the FHA loan limit in your county).  Most people use it to purchase and rehab a home they will be living in, but it's also applicable if you want to refinance your home as well.  Lenders are really looking for 620 scores though, so while your husband looks good your scores are bit under what would be needed... however it sounds like you might be able to hold out until Spring, so if that is the case you'll have enough time in my opinion to get your scores where you need them to be.

You'll find a ton of info on the program at http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm.  The loan amount can go up to about 97% (varies by fractions depending on the state & loan amount), and you can pay off the existing mortgage, your closing costs on the new mortgage, and the cost of the repairs/improvements you want to do... as long as it all fits within the 97% limit of the "to be completed" value on the home.

[Anonymous]

Wow Shane your are the Mortgage Man!  That seems the answer to my prayers, Thanks  !!!!    My baddies are mostly medical at CA's, for which I have the money ready to pay them, the right way (hippa) to have them removed from my CR. Two are paid judgments and have the money for my lawyer to get them vacated, should all be done well before we are ready, my hubby will be retired by the military within this time frame, so our income will increase about 2k pm, the rest is pay cc down to below 50% ( need only 800.00 to do that should have w/i the month) pay on time, we should both be set on FICO by spring.  I'm working for mid 600 for me and 700's for him.  We are willing to wait until then, gives us time to save more. we also have around 50k in equity with the land we own and will build on.  

If you have any other nuggets of wisdom, do share!   Thanks

[ShanetheMortgageMan]

Glad it helped, just work on those scores and as long as lenders haven't shy'd (sp?) away from the 203k program you should have options.

[Anonymous]

Shane, if the house is valued at 92K and the mortgage is at 133K with 70K in repairs needed, would she stand a chance of getting 203K approval?  It seems unlikely the house value is going to appraise for the expected loan amount (closer to 200K if there are 70K in repairs needed)

Jusr curious how that works