help with 2 mortgages

[Anonymous]

We bought a home about a year ago never thinking it would take so long to sell ours and are now bogged down with 2 house payments. Now on top of this my husband has been laid off indefinitely.

Where do we turn??

Calls to the "for sale" original home mortgage company tell me to refinance. Can't do that, too much credit outstanding now with both house payments plus husbands situation. Plus, will they refinance when they realize we have two homes??

We have tried to rent out original house but no success yet, many homes in area for rent. We live in the metro Detroit area.

Also, our bridge loan is due in one year, we've already gotten the one year extension.

Any ideas of who to turn to for help?

[Lel]

Have you considered trying to sell one of your homes?

Having two homes in and of itself is not a barrier to refinancing, as long as you have sufficient equity to do so.  Of course, in many cases homes have lost a lot of value, and that could be a major obstacle to your refinancing efforts.

Also, if your current income is not enough to pay the loan even if refinanced, this probably will also lead to a denial.

[Anonymous]

I'm sorry...I guess I wasn't very clear on this.

We originally put our house up for sale in April of 2007. It has not sold yet. In August of 2007 we found a home we liked and went to a mortgage lender to discuss our options. Since our house had not sold yet we were very leary of buying another one and taking a chance on 2 house payments.

Our lender assured us that we could qualify for both homes although it would be very difficult. He could arrange the financing through balloon and bridge loans. It was our decision to make but the market was not real bad yet, according to several sources and our 1st home should sell quickly. We shouldn't be strapped for too long. My husband still had his job at this point and we were very optimistic about the market.

Well it has been 1 1/2 years that our 1st house has been up for sale. It has been a year that we have been making double house payments. Now, my husband has been hit with the layoff. We have tried renting our 1st home but no luck.

Calls to the mortage company for our 1st (original) home have not helped. They would like us to refinance to a lower interest rate.

Obviously with not enough income and no equity in either home ( 1st home home equity to the hilt!! ), we can't re-fi.

Any suggestions, anyone? Thanks!!

[Anonymous]

No equity.. No income.. No renters, and tons of outstanding debt.. on TWO homes.

To be perfectly honest, I think you should file bankruptcy and clean this mess up.

I don't really see any other way out, and a bankruptcy filing isn't as bad as you think, it's much better then trying to drag this headache out until you inevitably go bust anyway. 

[marty56]

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@Anonymous wrote:

I don't really see any other way out, and a bankruptcy filing isn't as bad as you think, it's much better then trying to drag this headache out until you inevitably go bust anyway. 

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You've got to be kidding.  First 2009 FICO Darwin award post I've seen.

BK is never a good option and should only be done as a final last resort and only with the advice of a good FP and lawyer.  I would be way better to have a forclosure then a BK.  Also a BK would probably not save your home unless you have enough income to cover the house payments after BK. 

Have you looked into a short-sale?

[Anonymous]

Well, if there's no other debt involved and the OP lives in a non-recourse or single-action state, then yes, foreclosures would be the better option. But if there's other debt involved (like any credit cards), this is a good opportunity to get that discharged as well. (DON'T run up credit cards right before a bankruptcy filing though, only keep using them as you normally would. If there's suddenly huge charges 2 days before a filing the card company can prevent it from being discharged).

2 foreclosures is going to trash your credit, might as well get all your other debt discharged as well (And as soon as you have a foreclosure all your card companies are going to pretty much reduce your LOC to your balance and try to hit you with universal default rates). 

[Anonymous]

Oh, and I disagree with BK being a final last resort.

You have to weigh the cost of bankruptcy versus it's benefits.

Your cost of bankruptcy is

- Trashing your credit

- Potentially any taxes owed due to forgiveness of loans

Benefits are:

- Discharging debts

Figure out what your credit is worth to you (and that's a number that's not terribly hard to quantify. Figure out the NPV of the additional % you have to pay on your loan rates for the next 7 years until the BK drops off). Then add on any other costs of filing (lawyers, time spent in court, etc)

If that # is < the debts you can get discharged, then bankruptcy is the smart thing to do.

[Anonymous]

Yes, we have talked short sale but that is not really the problem. We only owe 40k on the 1st home.Except that it is money in and nothing out. Lots of interest $$$

The problem is the bridge which has a lien on the new home.

And that is not really the problem, it's just the combination of all three.

We have the new home payment, the bridge loan payment, and the first house payment.

I'm not so sure bankrupcy is in the cards yet. I would really like to get out of this some way although I know that must sound crazy. 

[Anonymous]

We do not have much credit card debt at all, no car loans but also no savings, no 401K

We owe about $1K on Mastercard and $1K on gas card. That's it.

We are co-signers on son's student loan of $17K

Husband has had history of layoffs so we never get ahead. 

[Anonymous]

What state do you live in?