HELP - Don't know what to do next

[inozip]

Bought a home 18 months ago at the height of the market. No money
down, interest only on 1st (11K prepayment penalty for two years).

We owe $275 on the first Mortgage... and $68K on the 2nd...

House is worth about what we paid for it, if that. We have good credit
and pay all our credit cards on time. We both work 2 jobs, with overtime.

We are struggling now but are doing ok. HOWEVER, here's the problem.

Just got a notice that our property tax and insurance has doubled. So
our payment will increase by $450/month!!!!!!!!!!!!!!!!!!!!!!!!

Payments were $2400, now will be $2850.00 I can see us making this
payment for about the next two months at our current income level.
We make around 4K a month, and the 1K a month pays car note, utilities,
credit card debt, food, gas, medical, car insurance, cable, phone, etc.

Did I mention my husband is also in sales, straigh commission. so his
salary goes up and down. Mine as a nurse is steady... I have the potential
to make alot more if I take a travel assignment...about $1000 more per month.

Here's the question: What do we do... we can't refinance, we can't sell
it (its been on the market for 7 months) the comps in our area are down
20%. I can travel, and quit my two good jobs but "rescue" us out of
this debt for the next 9 months. (or longer)

We have 9 more months on the prepayment penalty.

On the bright side, the area where we live is growing, getting a new airport
in the next two years, but is being overbuilt with condos.

Should we keep throwing money at this house we will not be able to live
in?

I've never done a foreclosure.... don't want to do it if at all possible.

With our good credit, this seems so unfair, but we just don't have the
income (or energy ) to maintain this note (We are in our 50's).

Thanks for ANY advice!!!

[avega]

Here's the thing.. when you finance a home at 100%, it is based on the appraisers value of the home, but now in a buyers market, with homes sitting on the market for so long, an appraiser will still be able to find comps that show X value for the home, but if no one is willing to buy, where does that lead you?? screwed..
I am in sales as well, and my industry (mortgages, the irony) we had our equivilent of the oil crash and things are super slow. The same thing happened to me, and we are now in foreclosure. I decided that we need to live beneath our means so when these things happen, we are not a the mercy of our debtload..

Have you filed for your homestead exemption? What are you going to do when your mortgage Interest Only period comes due and reamortizes? Your payments will go even higher, not to mention your insurance is not going down anytime soon. While your currently not deliquent, now is the time to think outside of the box. Do you think you will be able to rent (maybe to college student per room if near a college) until the market turns around and your able to sell?
One way that people are getting out of their homes is to offer seller financing. This way people with the income, but no means to qualify for traditional financing can get into a home. Since you have no equity, this would only get the house of your hands(kinda) and you would not get any cash out of it, obviously. The risk those options pose is if the tenant or buyer default, you will have to cover the payments, and also being a landlord does have its headaches.

Hopefully this helps, or at least gives you ideas of ways you can look for a alternative solution.. good luck..

[inozip]

Thanks for the reply....

Here's my real question:

Do we continue to make these mortgage payments knowing we will only
be able to make about two more payments, or do we need to contact
an attorney now to see what our options might would be.

I have a FSBO sign in the front yard now. No calls.

I am looking for a higher paying job... would travel to California to work
if necessary, but then, I'm out there, hubby is here, and he might have
to move out by himself.

Stay, go??? Make payments? Call mortgage company?

I'm so confused and stressed out!!!!

Thanks

[IMBROKE]

If I was in similar situation. My situation was my families moved and left me with the mortgage. I knew without there help every month. I knew I would struggle and not last long until I had to dip into my savings After 2 month on my own I had to dip into savings. The saving last me 4 months before I had to call it quit. My credit card was max everything in my life was just going south. That was when I realized I had to call an attorney for advice. I will be filing this month and my mortgage will be included.

If I would have known that it was going to come down to this. I would not have use my saving to try. I would just let the house go. I did know that I was not going to make it on my own, but it my ego the cause of my stupidity.

Hope my story helped you with your decision.

Bought a home 18 months ago at the height of the market. No money
down, interest only on 1st (11K prepayment penalty for two years).

We owe $275 on the first Mortgage... and $68K on the 2nd...

House is worth about what we paid for it, if that. We have good credit
and pay all our credit cards on time. We both work 2 jobs, with overtime.

We are struggling now but are doing ok. HOWEVER, here's the problem.

Just got a notice that our property tax and insurance has doubled. So
our payment will increase by $450/month!!!!!!!!!!!!!!!!!!!!!!!!

Payments were $2400, now will be $2850.00 I can see us making this
payment for about the next two months at our current income level.
We make around 4K a month, and the 1K a month pays car note, utilities,
credit card debt, food, gas, medical, car insurance, cable, phone, etc.

Did I mention my husband is also in sales, straigh commission. so his
salary goes up and down. Mine as a nurse is steady... I have the potential
to make alot more if I take a travel assignment...about $1000 more per month.

Here's the question: What do we do... we can't refinance, we can't sell
it (its been on the market for 7 months) the comps in our area are down
20%. I can travel, and quit my two good jobs but "rescue" us out of
this debt for the next 9 months. (or longer)

We have 9 more months on the prepayment penalty.

On the bright side, the area where we live is growing, getting a new airport
in the next two years, but is being overbuilt with condos.

Should we keep throwing money at this house we will not be able to live
in?

I've never done a foreclosure.... don't want to do it if at all possible.

With our good credit, this seems so unfair, but we just don't have the
income (or energy ) to maintain this note (We are in our 50's).

Thanks for ANY advice!!!

[SinkingFast]

Sorta the same here as ImBroke.

Hubby lost his job. Unemployed 7 months. Found new job outa State. Had to move immediately.

Kids and I stayed behind with the house. I was getting the house ready to sell while son was finishing his Senior year in High School.

Put the house on the market. Moved in August for daughters to get registered in new School District in new State.

We paid Rent and Mortgage for a year. Cashed out a Retirement IRA, ran up every CC to the max. Sold jewelry, a truck, other stuff to stay afloat. Still wound up filing BK.

As we were Consulting with attnys, EACH and EVERY ONE said, "Do you realize how much money and frustration I could have saved you if you'd have only come to see me a year ago."

[SamanthaJones]

Having an upside down mortgage:

If the house is worth what you paid 18 months ago, really, you are OUT about $40,000 today! Your selling costs would be about $30,000 plus prepayements penalties of about $10,000. Plus, your taxes and insurance will continue to rise- not to mention the devastation when your interest rate hikes upward. This means that even if your house had appreciated $40,000 in the pat 18 months, you still would receive nothing if you sold it. The numbesr are really mind-numbing, the reality of what is happening in the housing market. And I hear that in the past two years 2 of 3 homeowners pulled equity out of their houses- so HUGE numbers of people are now upside down on their mortgages. It's a pretty bleak picture of what direction the economy is heading...

[cschon911]

question

I've read several of your posts and wondering if you work for a mortgage
company? You seem to point out the worst case scenerio frequently.

[SamanthaJones]

Hmmm.

Since this is a bankrupcty site, for folks with financial crisis- I certainly would not expect to see anything other than the worst case scenario in here, and hear about people ended up in worst case situations, and how by discussing worst case, it may help others find a way to relive their worst case? No I don't work for a mortgage company. But mortgage problems and adjustable rates and no down and no doc loans are going to explode in foreclosures this year, as will the resulting bankruptcy filings. Yes, worst case. If you are seeking best case, I have to wonder why you are in a bankrupcty forum?(In fact- my own worst case scenaario is due to mortgages, so I do know a lot about them. And it ain't pretty~)

[SinkingFast]

Actually,............. We look for lots of good things here. Not worst case scenarios as you suggest, Samantha.

We hope people will be able to find some way to fix their financial issues.

If it's get a 2nd job,...... GREAT! If it's cut back here and there, learn to budget better,........ GREAT! If it's a DMP with a legit Credit Counseling Agency,....... GREAT!!

If they HAVE to file for BK or they are loosing their homes and/or cars, we're here to help with that as well.

And if you've gone to Hell and back, we're here to help in the rebuilding process.

This Forum is not about "Worst Case Scenario". This Forum is about Support and Hope and Light at the end of the Tunnel that ain't a train.

[cschon911]

Bankruptcy was the best thing I ever did. We were ripped off by the man who sold us our house. I really don't feel bad about the mortgage company
losing money because we did not pick them. Our mortgage was sold to them
by our original mortgage company. The second mortgage company would not
work with us AT ALL when we needed help. If that sounds rude, I'm sorry,
but that's how I feel. I am glad we did it. I am sure there are many others
out there who will never regret filing bankruptcy. Our credit would have been
ruined anyway because we were stuck with a mortgage mess. I mean't no disrespect
to samantha. I was just wondering, I sensed she was very much against bankruptcy.

[SamanthaJones]

Samantha, against BK?

Not even in your wildest dreams! I caan't see where you'd get that at all. I am talking only that mortgage problems are a MAIN source of bankrupcty, and lenders should be liable for risky loans and shoving credit at people. BK is a constitutional RIGHT, and that's all there is to it. (It's actually good for the economy, practically speaking- if at first you don't succeed, file BK and try, try again- you may end up starting the next Microsoft, and employing huge numbers of people! If not for this safety net, how many inventors and the like might not have ultimately hit the jackpot?).

[Hillbilly]

I see from your initial post that you still have good credit, when we found ourselves in a somewhat similar situation, and realised that the time was soon approaching when we would no longer be able to meet the rising expenses of a house that we were already upside-down on, with foreclosure and/or bankruptcy an eventual certainty, we used our good credit rating to downsize to a more affordable home, discontinuing the payments on our former residence and allowing it to go into foreclosure.
Proceeding in this manner enabled us to purchase our replacement property at a reasonable interest rate that was based upon on our (then) still high credit rating. We were thus able to reduce our total monthly housing expenditures by about 30%.
We have been careful to continue to pay all of our other debts on time, keeping our bank accounts active with minimal deposits, and maintaining small balances on a couple of credit cards.
Thus far, other than the foreclosure notice, and monthly notices of the outstanding balance, and a couple of phone calls ( in which we have tactfully avoided the answering ANY questions, or providing them with ANY additional information, other than our new address....... NEVER complain, NEVER explain)
Certainly, this may not be a viable course in your situation, as every case is unique, what you need to do is carefully examine your options and weigh the pros and cons that are peculiar to your own circumstances, and plot a course of action that will result in the best outcome for yourselves, and don't let anyone sucker you by laying a guilt trip on you (and don't do it to yourself)
But the bottom line here is to be pro-active, make a plan and carry it forward while your good credit still allows you some maneuvering room, 'cause if you wait until your broke and they "got you by the short hairs", things will certainly get harder and cost you more.

[cschon911]

curious

If this has happened to anyone else.
We bought a house we were renting. The man who rented us the house
owned his own mortgage company. He said make an offer anytime.
Over 8 months he led us to trust him. We got a phone call one day that
he wanted to consolidate his debts to start another business and he
had to sell the house. Mind you, we trusted him. At closing we found
out that he didn't even own the house, his father did. We figured ok,
We still wanted to buy the house. We did not have a lawyer to look over
the papers. (BIG MISTAKE). We couldn't afford it at the time. We needed no money down to buy it.
He had his "friend" assess the house. Surprise !! We found out months
later when we went to refinance, that the house was not even worth
what we paid for it. So here we were, stuck with a 2 yr ARM mortgage
with a mortgage payment of 1400 a month not including taxes and the
ARM mortgage about to expire and the payment would have gone up even
more. We could not sell or refinance the house because the house was not
worth what we paid for it. We would have owed the mortgage company
thousands of dollars even if we had sold it. Or been stuck with a monsterous
mortgage payment with no end in sight. He knew we were vulnerable because
I wanted my kids to live in the same neighborhood they grew up in their
whole lives and that we were "nice" people who trusted him. Curious also
if somehow we could still sue him for something. We bought the house in
2003.