What do I tell the broker?

[gophermn]

[oldhack]

I'm not sure what you CAN do. But, what you suggest doing sounds like it may well be construed as mortgage fraud, so I certainly wouldn't advise doing it!
FHA will only guarantee loans for a primary residence. If you still occupy your current home and it isn't rented out already, and you can't explain to anyone's satisfaction what you're going to do with it, realistically, I don't see them riding along on a new mortgage.

[BKorbust]

That's not an option anymore. FHA guidlines were changed about 18 months ago to prevent it.

[HHM]

Agree with the others, you have no option here.

Welcome to rental land.

[gophermn]

Ok so let me throw this in. My credit report currently shows the property with a $0 balance because it was IIB and there has been no reporting to the credit bureaus for over a year.
So realistically, looking at my credit report, it shows i have absolutely no financial strings attached.
Also - my current home is a convential - not FHA.

[gophermn]

Again - let me reiterate I DO NOT LIKE DOING THIS NOR WISH FOR ANYONE TO DO THIS - however I need options and don't know of any. If you say there are no options then so-be-it. But I am sure there are others reading this right now that can respond to my post directly above this one.
Thanks all for the honest replies!!

[HHM]

In your scenario, your credit report is not the issue. The title search shows the house in your name and there is still a deed of trust filed against your house evidencing the mortgage on your home.

FHA, and pretty much all other lenders, have closed the loopholes to allow getting a second home without actual proof that the prior home has been sold, is rented (i.e. 6-12 months copies of rent checks), etc.

Just face it, this house is going into foreclosure, and it will be 3 years before you can buy another.

[keepinitreal]

Again - let me reiterate I DO NOT LIKE DOING THIS NOR WISH FOR ANYONE TO DO THIS - however I need options and don't know of any. If you say there are no options then so-be-it. But I am sure there are others reading this right now that can respond to my post directly above this one.
Thanks all for the honest replies!!

Gophermn, we were in the same situation recently and were unable to qualify for a new loan while we were living in our current high-mortgage house. Good luck to you and please let us know on this forum if you are successful in buying a new house while you still own your old house.

[HakunaMatata]

It doesn't appear you can successfully execute a "buy and bail" initiative unless you have sufficient income to support both properties (rental income is excluded) and/or job relocation coupled with a tenant who has signed a one year minimum lease.

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/08-25ml.doc

[DeadManCrawling]

gopher,

We avoided lenders altogether and bought a place outright with cash. In many markets, houses can be had for less than the price of a used car. Here you can purchase homes that are fine to live in, need minor repairs, and are otherwise sound for less than 20k. You can get a condo for 10k.

If you have the money for any sort of down-payment, this may be a viable option. Instead of trying to use it as money down through FHA (which I agree with the others on-no longer an option) you would buy something outright.

We had a bit over 150k to spend, and did so in October.

Other than that, I cannot conceive any plan that would accomplish what you are trying.

Not sure where you are at, but I guess we were lucky (depending how you look at it) to be in one of the epicenters of the housing crash, Tampa, FL.

Good luck, in any case.


-dmc

[NoMoreCards]

The only suggestion I have is a possible land contract. Many people are desperate to sell, so it may be a option.

Best of luck with this. I suspect I will be in the same boat down the river a bit.

[gophermn]

Perhaps I can get the lender to offer my current home as a short sale - then I might have options. Or would I?
However as HHM said, a short sale I believe could be considered a foreclosure which sets me back 3 yrs. Uggggh!

[HHM]

Yep, the only thing you can do is cut the lender out of the deal, either...

1. Pay cash
2. Get the owner to carry and do a land contract/wrap-around mortgage, but this can only be done with assumable mortgages and with interest rates as low as they are, this option is not that attractive (The only way this makes sense for the seller is to charge a higher interest rate than the existing mortgage).

[oldhack]

Just a thought, and a puzzlement:
I realize a lot of folks are "upside down" on current homes, and that must be a frustration to anyone who bought into the cultural fallacy that home prices MUST always go up. But, as in this case, how is it worse to continue paying for say, a $300,000 home that is now valued at $170,000 than going out to buy another house now valued at, (again) say, that same $170,000, on which you're going to pay considerably more than what you're "upside down" in interest on a new, for example, 30-year loan at even 5.5%?
You have a $170,000 home in either case of this example, but your $130,000 loss is in the past in your current home, while a new mortgage puts that cost (and more) into the future.

[HHM]

Just a thought, and a puzzlement:
I realize a lot of folks are "upside down" on current homes, and that must be a frustration to anyone who bought into the cultural fallacy that home prices MUST always go up. But, as in this case, how is it worse to continue paying for say, a $300,000 home that is now valued at $170,000 than going out to buy another house now valued at, (again) say, that same $170,000, on which you're going to pay considerably more than what you're "upside down" in interest on a new, for example, 30-year loan at even 5.5%?
You have a $170,000 home in either case of this example, but your $130,000 loss is in the past in your current home, while a new mortgage puts that cost (and more) into the future.

Not sure I follow, are you seriously arguing that a person should try to dig out of $130,000 of negative equity vs. dumping the upside down house and buying a house for current market value.