Deed-in-Lieu of Foreclosure - HAFA Assistance

[frustrated51]

At what point do you receive the check (being told $10,000) for relocation assistance? We need to relocate as soon as possible because the house has mold, but need to be living here to get the check. How long does this take? I am worried about not being able to find a place that will work for us so hesitate to do all the paperwork until I have found a place, but also will need the relocation money to move in.

Thank you!

[Drazil65]

Hi, there are not many that this has actually happened to, unless you see it in writing (as in have they presented the offer for "cash for keys" in writing yet?) and have had an attorney look it over for you before signing.

Have you stopped paying your mortgage (and I assume you did to get to this point) then you should have enough money freed up each month to save enough to move? If not, then get a second job to save it if you need to, ultimately this is your responsibility to make sure you can move and do not count on this "verbal" offer, the ball is in their court on any timelines regarding this. Good Luck!

[frustrated51]

Hi, there are not many that this has actually happened to, unless you see it in writing (as in have they presented the offer for "cash for keys" in writing yet?) and have had an attorney look it over for you before signing.

Have you stopped paying your mortgage (and I assume you did to get to this point) then you should have enough money freed up each month to save enough to move? If not, then get a second job to save it if you need to, ultimately this is your responsibility to make sure you can move and do not count on this "verbal" offer, the ball is in their court on any timelines regarding this. Good Luck!

Oh, that doesn't sound promising. Are you saying they don't pay it?

We are completely current on the mortgage. Was hoping to find a FHA short-refinance, but my understanding at this point is even if we did find that the house isn't in good enough shape for that to happen. I have not been able to find out if there is a way to combine the 203K (rehab) with the short-refinance which is our preference, but there doesn't seem to be a way to do that.

Because of fall in values here we are about $50k underwater (had 100K equity in 2007) and house needs about $50K in work rotten floor, including joists, was recently discovered. So it just doesn't seem to make sense to keep it and when I talked to them they said we would qualify for $10K in moving expenses. They seem to be in a hurry to do this though so I haven't even filled out the paperwork. We don't have any way to get the money to do the repairs that need to be done now. We can't save enough fast enough to pay for the repairs.

[LadyInTheRed]

There is no guaranty you will be approved for a deed in lieu. You do not have to be in default to qualify for HAFA, but default must be imminent. So, you have to show that you can't afford your mortgage payments and that you meet other qualifications.

Don't count your chickens before they hatch.

[frustrated51]

Right. I won't sign unless it says there is relocation money. They did say that the cost of repairs would be considered as to whether or not we can afford the house and if we can't afford it then we would qualify. My main contact basically said we would qualify, but I have zero trust in them and am suspicious because they seem to be in a really big hurry here and every time I talk to them I tell them I don't want to give back the house, but it has to make financial sense to stay, but since interest rate deduction doesn't help me fix the house fast enough and keeps us underwater. I have not even filled out any of the paperwork yet.

I am trying to find a FHA short-refinance, but no one can even tell me if the loan investor (Bank of NY) participates in that program and there is concern the house isn't in good enough shape to qualify.

I feel like they are not listening to me and trying to push me into this.

We can afford the mortgage. We can't afford to fix the house right now and it needs it immediately.

[LadyInTheRed]

The first thing you need to do is decide what to do and stick with the decision. Are you going to refinance or walk away? I think you know what the smart move is, but are not willing to commit to it. Have you talked to your BK about how defaulting and walking away will affect your BK?

Your first question was "at what point do you receive the check." But, it doesn't sound like you have applied for anything. You won't get any check unless you apply for and are approved for the program that includes the moving allowance.

If you are uncomfortable with the people you are talking to, you may want to get the help of a HUD approved housing counselor: http://www.makinghomeaffordable.gov/...s/default.aspx

[frustrated51]

The attorney is filing a motion that we intend to give the house back (but we don't have to we still have options) so the payment will stop being made that way.

The smart move is the short-refinance, but I can't find the information I need to do it and no one seems to know anything.

I realize there is no check without doing all the paper work. I can't give the house back if the check doesn't come until the day we have to be out. I need more time to find a place (which is proving to be very difficult) and move everything. I need the check up to a month prior.

I have talked with a housing counselor and that is how I found out about the short-refinance.

[LadyInTheRed]

The smart move is the short-refinance,

Really? If you get a short refi, will you have a way to pay for $50,000 in repairs?

but I can't find the information I need to do it and no one seems to know anything.

For any of the government sponsored programs, you are supposed to contact the loan servicer to find out if they participate in the program. Tell them the exact program you are interested in. If they participate, they will know about it.

[frustrated51]

Well $30K of the repairs do not have to be done right now and we would no longer be underwater. We would save about $800 a month with a short-refi (appraisal not in yet so guessing) and we would owe 97.7% of what the house is worth right now. We wouldn't have a deed in lieu of foreclosure on our credit report. It would be great if we could combine it with the FHA 203K, but I am not sure if that is only for purchases or if we could get one with a short-refi.

I have asked and the mortgage servicer isn't giving me a clear answer. They referred me to another division of their bank and that person wasn't sure if our investor did them or not, but he thought the house might not be in good enough shape. No one has been able to answer my question about the 203K. If we can't do the 203K we may be able to do a VA refi to fix the house if we can get our balance down to what the house is worth.

I have been in the house for 28 years and it has some sentimental value. Finding a place to rent has proved to be very difficult and would cost us twice our current mortgage payment (they say they can reduce our interest).

[LadyInTheRed]

What is the 203k? Do you have a Jr. loan of $203k in addition to the loan you want to refi? When you say you are $50K underwater, are you including the $203K?

[frustrated51]

What is the 203k? Do you have a Jr. loan of $203k in addition to the loan you want to refi? When you say you are $50K underwater, are you including the $203K?

A FHA 203K is a rehab loan. We do not currently have one. We only have the first mortgage. I think a 203K might only be for purchases, but am unsure and no one has been able to answer that question. We are $50K down on our first (was 100K equity in 2007) If we could do the short-refi and get the mortgage down to the current value I do think we could get a loan to fix or a refi to fix the house.

[LadyInTheRed]

A FHA 203K is a rehab loan. We do not currently have one. We only have the first mortgage. I think a 203K might only be for purchases, but am unsure and no one has been able to answer that question. We are $50K down on our first (was 100K equity in 2007) If we could do the short-refi and get the mortgage down to the current value I do think we could get a loan to fix or a refi to fix the house.

LOL! I thought you were talking about a $203,000 loan.

It looks like you can use 203k for a refi. Have you seen this summary on the HUD website? http://portal.hud.gov/hudportal/HUD?.../203k/203k--df

You need to apply for a 203k with an FHA lender who offers this specific type of loan. If you aren't getting any answers about a 203k, maybe your lender doesn't offer them? I doubt anyone can tell you for sure whether you will qualify for the 203k until you actually complete the refi of your current loan. Could you qualify without first refinancing the current mortgage? I'm guessing not since you are underwater by $50k.

From http://www.zillow.com/mortgage-rates...oan/fha-203k/:

The maximum amount of money a lender will give you under an FHA 203k depends on the type of loan you get (regular vs. streamlined). With a regular FHA 203k, the maximum amount you can get is the lesser of these two amounts: 1) the as-is value of the property plus repair costs, or 2) 110 percent of the estimated value of the property once you do the repairs.

You will be required to put down 3.5 percent, but the money can come from a family member, employer or charitable organization.

[frustrated51]

No, our entire mortgage isn't even $203K! I can see the confusion though.

A rehab loan would only work if we can get the FHA short-refinance. I am going to try to call FHA directly if that is possible to see if they have a list of banks that do participate in that program. Hopefully they have real people that answer phones. It seems impossible to ever get a real person on a phone anywhere these days.

Am looking at the only rental I can find that will work for us tomorrow. Will double our current housing cost.

My dilemma really is whether or not I stop paying the mortgage. If I am giving back and not a day late that seems like such a waste, but to get a FHA short-refinance you have to be current. Also I assume being current on the mortgage will help find a place to rent.

Thanks!

[Drazil65]

All this stress over a house, its a building and it is killing you to keep it quite frankly. You are racking your brain for a building that is underwater, you will more than likely not be able to refinance (especially underwater). You need a plan B as you are putting way too much thought into the short refinance, at some point you will need to decide and move on. Even if you jump through all the hoops for a bank is no guarantee you will get the loan (and as you are experiencing the banks will jerk you around with paperwork for a very long time) in the end so have a backup plan already to go anyway.

You biggest decision will be whether or not all this stress makes sense, you will need money to move so give yourself a deadline to stop paying the mortgage to save the money. If you stop paying your mortgage soon you will have a ways to go before foreclosure happens so you will have time to save and look around for rental (you could have a year or more of saving). Go with private landlords if possible as seem to be most interested in whether you have a job more than anything. You will have time to plan out your exit strategy and the timing to move. Take the emotion out of the decision and look at this from a business standpoint, most good business people know when to stop throwing money at a losing situation. Good Luck!

[frustrated51]

You are correct. The problem is we literally cannot find anything because we have large animals and need pasture. I have been looking on and off for years because we would like to get out of this area and closer to town because gas has gotten so expensive. It is normal for us to drive over 100 miles a day.