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My boss wants to foreclose on her house.

J

JimRaynor

Golden Member
She bought a condo 2 years ago.

Her income has increased in that time and she has made all her payments on time.

She has two mortgages. One is like 80% of the loan (fixed) and the rest is variable.

She has $3,000 in equity and has made $36,000 in interest payments (what she told me).

She is currently upside down on the house (she owes more than the house is worth).

She called and threatened foreclosure to try and bait them into reducing her payments or refinancing but they said they wouldn't do anything until she stops paying (big surprise right?). Her parents told her she should sell the home cause it's bleeding her dry and to take the credit hit.

Plan of action? What should she do?


 
She is in negative equity, which is fine as long as you don't need to sell your house. She should sit tight.


Cliffs:

She is a moron.
 
(plays to the tune of Queen) Greed, greed, greed... another one bites the dust... Dun dun greed, greed, greed... another one bites the dust... And another one falls and another one falls, another one bites the dust...

Sorry, I ran out of sympathy.
 
Tell her to shut the hell up and deal with it. I'm upside down on my house also, can afford the payments. Foreclosure would not be an option to cross my mind.
 
A lot of people have been doing this, but if she can afford it and has 10+(or some number) years before Retirement, then I don't see it being much of an advantage. She might be able to renegotiate in a little while depending on what might come down the pike with all the "Bailouts" and such. So that could be another reason to hold out.
 
This is a direct result of the idiotic bailout plan.

My primary bank (I have a primary and secondary) is slashing the interest rate in half for anyone who has defaulted on their loan in order to keep those folks in the house. Now, what do us folks who played the game fairly and are paying current get? Nada, zero, bunk! A 50% cut in my interest rate would be about $700 extra a month in my pocket. Even if I default purposely, another stipulation is that the new loan put you at 36% debt to income ratio. I'm already at about 28%, so I still wouldn't get help if I defaulted.
 
Originally posted by: CPA
This is a direct result of the idiotic bailout plan.

My primary bank (I have a primary and secondary) is slashing the interest rate in half for anyone who has defaulted on their loan in order to keep those folks in the house. Now, what do us folks who played the game fairly and are paying current get? Nada, zero, bunk! A 50% cut in my interest rate would be about $700 extra a month in my pocket. Even if I default purposely, another stipulation is that the new loan put you at 36% debt to income ratio. I'm already at about 28%, so I still wouldn't get help if I defaulted.
Click to expand...

Well duh, that just means you need to go buy that Corvette you want and also pick up a new 50"+ LCD TV on the way home to. That should push you close to the 36% mark 😉


But some people do this. If they can take the credit hit them why not. You owe say $300k and the house is only worth $200k then you have to ask how long working will it take to make it up. If it is less time then it will cost to pay extra % and such from taking the hit then you take the hit and walk away.
 
She should pay as she agreed in the beginning to do so and her income has increased which should put her is a better position now. Sounds like she did a stated loan though and fluffed her income.

The reality of it is some places have dropped so low and may not recover for years especially condos where 50%+ vacanies are common.

If I were looking at a $500,000 condo now worth $100-150k...it'd be hard for me to justify not walking away. The first thing though is serious negotiation....everyone and their brother is 'calling' in and asking for a principal/rate reduction...customer service has probably been told to politely refuse on any performing customers.

She will need to send in a letter showing proof and that it's only time before she enters foreclosure. The bank does not want that esp now.

However, in the end it seems most really don't want to keep their homes...they always intended to just flip them. They are looking for free in these situations and not a better payment structure.

I bought last year when things had sort of settled down here...I still lost $30-50k in equity based on other sales in the area now.
 
She isn't necessarily crazy, but she might be stupid and she's definitely a worthless bitch. It may be in her best interest financially to do this, but that doesn't make it right. It may not be in her best interest financially, because she may not be considering all of the factors. Hopefully that's the case, and she gets screwed.

Originally posted by: CPA
This is a direct result of the idiotic bailout plan.

My primary bank (I have a primary and secondary) is slashing the interest rate in half for anyone who has defaulted on their loan in order to keep those folks in the house. Now, what do us folks who played the game fairly and are paying current get? Nada, zero, bunk! A 50% cut in my interest rate would be about $700 extra a month in my pocket. Even if I default purposely, another stipulation is that the new loan put you at 36% debt to income ratio. I'm already at about 28%, so I still wouldn't get help if I defaulted.
Click to expand...

People were doing this before the bailout plan, but they were doing it to get out of their house and not to get better terms for their mortgage.
 
She bought at the top of the bubble. Now, she wants to back out without recrimination?
This thought process is what is wrong with America. Problem is, it is exactly what Corporate America would do, and they would be lauded for being "proactive".
She can do what she wants, but that Repossesion and Foreclosure will stink up her credit report for at least 5 years.
She will not get ANY sympathy from anyone she applies for credit for in the future.
She should stick it out until she can sell, or until she can get her lender to re-negotiate.

Sucks to be her, but then again, she's not doing all that badly, all in all. Her biggest problem was not investing enough in at the purchase, and buying at the peak.

More SHOCK Economics at play.

 
Originally posted by: AlienCraft
She bought at the top of the bubble. Now, she wants to back out without recrimination?
This thought process is what is wrong with America. Problem is, it is exactly what Corporate America would do, and they would be lauded for being "proactive".
She can do what she wants, but that Repossesion and Foreclosure will stink up her credit report for at least 5 years.
She will not get ANY sympathy from anyone she applies for credit for in the future.
She should stick it out until she can sell, or until she can get her lender to re-negotiate.

Sucks to be her, but then again, she's not doing all that badly, all in all. Her biggest problem was not investing enough in at the purchase, and buying at the peak.

More SHOCK Economics at play.
Click to expand...

"Corporate America" can't just walk away from debts that they can afford to pay. Individuals often can thanks to states requiring non-recourse first mortgages. Meaning even if she had $1 million in the bank, they couldn't touch it. Of course, that's a good reason to require 20% down, to provide a big disincentive to walking away (and also to provide a buffer before the owner is upside down). But lenders got greedy, homeowners got stupid, and here we are.
 
Originally posted by: JimRaynor
She bought a condo 2 years ago.

Her income has increased in that time and she has made all her payments on time.

She has two mortgages. One is like 80% of the loan (fixed) and the rest is variable.

She has $3,000 in equity and has made $36,000 in interest payments (what she told me).

She is currently upside down on the house (she owes more than the house is worth).

She called and threatened foreclosure to try and bait them into reducing her payments or refinancing but they said they wouldn't do anything until she stops paying (big surprise right?). Her parents told her she should sell the home cause it's bleeding her dry and to take the credit hit.

Plan of action? What should she do?
Click to expand...

Why are you responsible for running her life?
 
Originally posted by: rbV5
She has $3,000 in equity
Click to expand...

She is currently upside down on the house
Click to expand...


Does not compute? 😕

$18000/yr in interest alone? sounds like "doomed from the start" loan. Is your Boss responsible for financials at work....?
Click to expand...

He means she paid off $3k of the principle... which of course is not equity, but whatever.

Paying $3k toward the principle vs $36k in interest does seem pretty bad. I think you'd have to have a high interest rate or a negative amortization loan to get those numbers. I plugged some numbers into an amortization calculator, and got about $3k/$36k for the first two years of a $200k loan @ 9%.

Edit: Maybe she meant she made $36k in mortgage payments, which includes escrow for taxes and insurance.
 
Banks are just as much to blame here. I remember talking to a Countrywide LO after a closing.

Me: Man, this 2/28 probably isn't the best loan for the borrowers.
Him: True but my commission on this deal was 12k along with yield spread.
Me: .............................
 
Originally posted by: CPA
This is a direct result of the idiotic bailout plan.

My primary bank (I have a primary and secondary) is slashing the interest rate in half for anyone who has defaulted on their loan in order to keep those folks in the house. Now, what do us folks who played the game fairly and are paying current get? Nada, zero, bunk! A 50% cut in my interest rate would be about $700 extra a month in my pocket. Even if I default purposely, another stipulation is that the new loan put you at 36% debt to income ratio. I'm already at about 28%, so I still wouldn't get help if I defaulted.
Click to expand...

thats what pisses me of. we got a place that we could afford. saved the money for the down payments, make sacrifices to be able to pay the damn mortgage.

what do i get? nothing. but idiots that baught to much of a house are getting rate cuts and reduction on the principle.

not to mention with the "bailout" they are saying the odds on getting a good deal on a house is gone. banks cna afford to keep the house now.
 
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