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Money Monday: Avoiding foreclosure

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Today’s Money Monday segment today focused on ways to avoid foreclosure on your home. Below are some online resources people can consult in case they need more information. Official HUD site Freddie Mac website North Carolina Department of Justice Trademark Investments

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House foreclosures

So I live with a woman that bought a house with an ARM that jumped to 12.5%. More than twice what it started at. She is unable to refinance due to her son's medical problems causing her to stop work. I make plenty of money and am more than willing to help her anyway I can. The problem is I have no interest in buying the house, she can not sell it, we are stuck with paying more than twice the market rate. We have decided to allow the bank to foreclose if they will not refinance her at a reasonable interest rate. Her credit will be shot. Can you blame us? How would you like to pay an extra $20,000 a year, extra because of the inflated interest rate, on a house that we could rent for $1,200 a month. Her payments are close to $4,000 a month right now. She has been paying this 12% rate for more than a year now, 3 years at 6-8%. She is just about cashed out of her savings, I am fortunate I have some spare money and I am amazed that these geniuses can't give her a fair interest rate. She will lose the $22,000 she put down on the house, the new heat and air system as well as the cost to pack and move. The banks lose at least 50% of the loan in the deal... or wait, do they really lose money? Of course not, they got you to pay for it with the bailout. If these banks would just realize that whoever buys these houses in foreclosure will finance it at 5% what have they got to lose by reducing my girlfriend's interest rate from 12% to say, 6%, cut it in half. How hard is that to do? So far impossible. HUD says you have to be 3 months behind before the bank will even talk with you about any sort of adjustment. Christ your credit will already be ruined by that point. IDIOTS!

It is made available, it has to be read......

While I'm sympathetic to your friends situation, she is in the same boat as many people that bought when predatory lending prevailed. The only problem is that the interest rates are clearly defined in the contracts along with their ability to rise and what the caps if any are. Buying a house is a big decision and responsibility. The contracts should be read extremely carefully and understood, because it is all in there in BLACK & WHITE. Nobody held a gun to anyones head when these contracts were signed by the buyers. Lack of reading and understanding what you are signing will put you in great liability as in this case. I do hope you can get this worked out. Normally if you work with you lender up front and don't just ignore the problem, they will work with you. A 3 month lapse in payment before negotiation is a heck of a lot better that losing your home, principle and credit rating due to foreclosure.

mortgage scammers

You are absolutely correct, no one held a gun to her head when she signed the loan document. However she could not predict the soon to come disability of her child that took her out of the workforce and prevented her from refinancing. She tried for months to get the bank to work with her. She can afford a refi at 5%-6% or even 7%. She gets some child support etc and her parents are more than willing to help her meet her expenses. I am not in the position to take over as bank. I am just out of a marriage myself and have no desire to get married anytime soon. Should things not work out between my girlfriend and myself I would be stuck having to force her out of the house and Im not that kind of guy. But as a taxpayer underwriting these banks toxic loans, that no one held a gun to their heads and made them accept, I expect these banks to work with these people in these sort of situations. Screw the people who never could afford the loan in the first place, but someone whose job situation or some health issue has forced them into a situation where they have no options, these people should be the first to help. 12% mortgages should be eliminated. Nobody wins and Im afraid you and I will be the biggest losers because pretty soon we will all stop buying things and damn near everybody will be out of work. Id bet 100 billion can be saved by refinancing people like my girlfriend. Its not like they are asking for anything the rest of us arent getting.

No intent to criticize....

I had no intent of criticizing yours or her situation. My main point being that the ARM terms are fully disclosed in the contract and one should assume the worst case condition to calculate what "could" happen when those rates go to maximum. With a job or not, those kinds of payment increases will hurt most people deeply. Only those with near perfect credit will be able to lock in to retain a 5% interest rate mortgage these days. I'm sorry to hear of her family disability issues and hope that this can be rectified for the both of you quickly. Myself, I'm still reeling from a divorce as well. I am forced to rent at the moment while I have pay for other peoples homes. I have spotless credit, excellent income, but no up-front capital for a down payment, taxes, insurance, etc., that it takes to buy a home. I gave all of that capital to the divorce attorney.

OK OK...

WAIT A MINUTE...she is SOLELY responsible for this. There was no "predatory" lending here...SHE signed the contract that said in PLAIN ENGLISH..."ADJUSTABLE RATE MORTGAGE" That should be ENOUGH to scare the BEJESUS out of ANY rational person to RUN from that loan as fast as you can....I got offered an arm for BOTH my mortgages...I just LAUGHED and said no thank you...ANYONE who signs an ARM KNOWING full well that it is a fully ADJUSTABLE rate...KNOWING it is for 15 years or more....should have ENOUGH SENSE to understand there is NO WAY to predict the market or your circumstances for that period of time...and should do the SMART THING...RUN! It's ashamed that the American taxpayers are having to bail out STUPIDITY on all sides...

Mortgage industry no brighter than their victims

When a smooth talking mortgage broker introduces you to a smooth talking closing attorney and both of them smooth talk you into taking the ARM then refinance to a fixed when rates drop and laughing all the way to the bank behind your back what do you do when the bait and switch happens? Sure we are all supposed to know better, they teach it in school right? Drivers ed and finance. The average kid leaving college has over $7,000 in credit card debt. People under 40 know nothing. Fine, people should have known better. But what about the banks? Shouldn't they have known better than buy up a bunch of these loans? Shouldn't they suffer for their mistakes? Apparently not, we bailed them out.

LOL

Your kidding, right? Those nasty salesmen....I mean its not my fault I have to pay a new car payment...it's that NASTY SALESMAN'S FAULT! There's NO BAIT AND SWITCH...it's ALL right there on paper, your rate, for how long and how much....ADJUSTABLE means JUST THAT...there is no TRICK word for ADJUSTABLE! The blame lies SQUARELY on the signer! Also, the Fanny/Freddie thing....call up Clinton and Congress on that one! THAT is the FULL fault of the politicians that forced them to give loans to IDIOTS that never should have gotten loans to begin with! It's what happens when the government gets involved!

Fault

Don't you know it's always someone else's fault.

Banks fault the note holders

So I suppose the banks are accepting blame for gambling on bad credit risks, I guess AIG blames themselves, Merrill Lynch too? I am not saying whose fault it is but had those woman not have had a child that needed her around the clock care she would have qualified for a refi. Somethings are just life. My point is why not refi her at an affordable rate instead of holding her to a 12% rate and forcing her into foreclosure so nobody wins. Makes sense to me to work with her, and everyone else in her shoes. My God what's all those trillions of dollars for if not to keep the housing prices from going into the toilet. I hope her house is next door to you and when her house sells on the courthouse steps for 60% of the value it drags your house down under with it. Good luck, you're going to need it.

Your situation stinks, but

Your situation stinks, but instead of letting her credit get ruined, (which will ruin you too if you marry her) why don't you just buy the house and hang onto it until it can be sold? You have to put aside being mad at the bank, and think about what it is you need to accomplish. Lower monthly payments and saving her credit. Your buying the house from her accomplishes both of those things. When the market picks back up, sell it (maybe even back to her), or maybe keep it as an investment property and rent it out.

Contact

the bank again. They should be willing to work with you for just the reasons you mention. Especially true if you will give her some funds to put down and reduce her balance due even more. You could even take back a second mortgage for what you put in and forgive a portion of that annually. If you're going to let the house go to foreclosure, consider a short sale. get the lender to agree to take less than is owed if you can find a buyer who will take it off her hands. If all else fails, look to the White House. Barrack said he will save all who appeal to him and promise him votes in 2012. Of course, he may also want to borrow your birth certificate if they ever investigate his place of birth.

Have you considered a died

Have you considered a died in lieu or possibly a short sale? Lease option might also be a possiblity for you. Look over my site www.trademarknc.com for some ideas and feel free to contact me with any questions. Brian Edwards

bosemans lease option

you mean like seantor boseman did to those mexicans in brunswick county? Remember she did a lease option with them and allowed the house to go into foreclosure even those these mexicans were never late on their payments and had given her like $5,000 as a down payment. It amazes me that people can screw people like this and still get elected. How can you sleep at night?