Adjust/Renegotiate mortgage on property that is worth 100K less than I bought it for.

November 16, 2011 7:14 PM

My house is worth $100K less than I bought it for. I have trouble making payments. Is there anything i can do?

Through a couple of assessments I have learned that my house is worth about $100K less than what I paid for it. At the time I bought it, we actually did a pretty good deal but right now, the area has gotten a lot less attractive and there have a been a lot of vacant houses around.
I tried to call my bank and talk to them about it and possibly doing an adjustment, and they said the investor who know owns my house does not participate in any of those programs.
They also said I have no right and no way of finding out, and they are "not allowed" to tell me who now allegedly owns my house.

They said if I had any trouble paying they would put the house into collections.

Does anyone have any advice for what I can do? I cant sell the house. I cant move into someplace new and still pay a 100K mortgage. What are the repercussions for defaulting
on the house? I assume my credit will be destroyed. Are there any government programs or any legal way to help out? Anyway I can encourage the owner who I am not allowed to know who is to agree to adjust it? Obviously if I stop paying and they evict me, they will have to sell the house and a considerable loss anyways and all the legal fees of evicting etc. It does not seem rational to me to not allow it to be adjusted. I cant refinance because there is not enough value in the home.

posted by digividal to home & garden (26 answers total)

It would help to know where the house is located. Different states have different laws.

Also, don't confuse the assessed value of your how and its market value. The market value of the house is what it sells for, which may be higher or lower than the assessed value.
posted by dfriedman at 7:16 PM on November 16, 2011 [1 favorite]

I was wondering if you are in a position to rent out all or part of your home. It would be helpful to know more about your financial situation, in terms of monthly payment, local going rent, what kind of home you own, etc. How much equity you have would also help.
posted by Chaussette and the Pussy Cats at 7:17 PM on November 16, 2011 [1 favorite]

they are "not allowed" to tell me who now allegedly owns my house

Sounds to me like they're shit-scared you might find out that nobody does.

$100k strikes me as a pretty good incentive to get stuck into a bit of research.
posted by flabdablet at 7:24 PM on November 16, 2011 [11 favorites]

I would definitely recommend renting out a room (if you have it). How much would you need to collect in rent to be able to pay your mortgage?
posted by DoubleLune at 7:26 PM on November 16, 2011 [1 favorite]

They also said I have no right and no way of finding out, and they are "not allowed" to tell me who now allegedly owns my house.

I seriously doubt that this is right.
posted by Clyde Mnestra at 7:29 PM on November 16, 2011 [2 favorites]

Strategic default is an option.
posted by procrastination at 7:30 PM on November 16, 2011 [1 favorite]

https://www.mers-servicerid.org/sis/ lets you search by address to identify servicer - borrowers can request investor information
posted by zepheria at 7:34 PM on November 16, 2011

Yeah... you own a house. Who cares what it's "worth?" That being said, anyone who tells you that you can't sell your house either is lying or has made you sign a mortgage contract with some wicked evil covenants.
posted by Yowser at 7:35 PM on November 16, 2011

procrastination: "Strategic default is an option."
Absolutely right on this. Send them the keys, tell them it's been nice doing business with them—which is more than they'd ever tell you—and walk.

Remember—it's a business deal, that's all it is. I promise you, if it had gone the other way, that bank would absolutely remember that it's a business deal and you'd have been out on your butt, minus whatever else they could stick to you.

This isn't a moral question, you're not bad nor wrong. It's a business decision.
posted by dancestoblue at 7:41 PM on November 16, 2011 [7 favorites]

Their stories start with a mid-decade home purchase and turn sharply as they simply walk away from those homes and the mortgages that accompany them. What was supposed to happen next was that their financial lives would crash and burn for years.

Or so the dire warnings went. In reality, both men said, walking away turned out to be the best financial decision they made.

They Walked Away, and They're Glad They Did.

posted by alms at 7:43 PM on November 16, 2011 [1 favorite]

Strategic default is not an option in every state. You shouuld talk to a lawyer.
posted by grouse at 7:48 PM on November 16, 2011 [5 favorites]

Walk. Don't let anyone make you feel guilty about walking away. You never promised to pay come hell or high water. You promised that you would either pay or let them take the house back. You are exercising the second option.
posted by LarryC at 7:53 PM on November 16, 2011 [1 favorite]

You need to talk to a lawyer or at the very least research the state laws governing real property in the state the property is located. This is something you can self research, but I suggest talking with an attorney in your area specializing in this, I guarantee you will have no trouble finding one.

You may find it advantageous to short sale the property, it may make more sense to walk away, or it might make sense to rent it out and weather the storm, but only an objective evaluation of your situation and plans on your time horizon can govern this.

Do not assume that a story in the times about jingle mail or strategic default is possible for you, in many states and depending on your loans (purchase money vs refinance vs cash out) strategic default is the worst thing you could do. I don't like linking them to send traffic but I found a lot of good info and plenty of bad on the forums of loansafe.org, your mileage may vary and there seems to be an effort there to sell you some evaluation packages, which I think is a waste of money.
posted by iamabot at 8:09 PM on November 16, 2011 [3 favorites]

Strategic default is an option.

Uh, it depends on what state she lives in. In some states Mortgages are no-recourse loans, where, after taking the house they can't come after you. In others, they can. this site has a list, its:

Alaska
Arizona
Arkansas
California
Colorado
District of Columbia (Washington DC)
Georgia
Hawaii
Idaho
Mississippi
Missouri
Montana (as long as non-judicial foreclosure is used)
Nevada - note that the lender CAN get a deficiency judgment (See below)
New Hampshire
Oregon
Tennessee
Texas (but even in a non-judicial foreclosure, the lender can pursue a deficiency judgment)
Virginia
Washington
West Virginia

On the other hand they say the following states make it easier to go after you:

Michigan
Minnesota
North Carolina
Rhode Island
South Dakota
Utah
Wyoming

Definitely get solid, and talk to a lawyer.

Also, you can talk to a lawyer and see if they really do have a legitimate claim on your house. In a lot of cases, the mortgage issuers screwed up the paperwork and can't show they actually own the mortgage.
posted by delmoi at 8:33 PM on November 16, 2011 [3 favorites]

I used the Consumer Financial Protection Bureau recently to file a complaint about a bank credit card that was treating me unjustly. They say on their website that they also deal with home loan problems. I was shocked when after filing a complaint, the bank called me and lowered my interest rate back to the original rate and is crediting my account for 30 months of overpaid interest. Maybe they can help. www.consumerfinance.gov
posted by cairnoflore at 9:03 PM on November 16, 2011 [3 favorites]

Speak to a bankruptcy lawyer. You can get a free consultation and they can help you figure out what your options are -- not necessarily bankruptcy. An experienced attorney will have dealt with HAMP and can help you find out who owns the loan (and/or make the calls for you, which tends to get more response). Try the NACBA directory to find someone good in your area.
posted by katemonster at 9:13 PM on November 16, 2011

Where are you? If we know the state, we can help find reputable sources of information and aid. For example, MA has this Foreclosure Prevention Counseling page and this HUD page on mortgage forclosure.
posted by barnone at 10:46 PM on November 16, 2011

LAWYER. Bankruptcy, default, complaints, negotiations...this is too complicated without a lawyer. A bankruptcy-experienced lawyer might be a good choice.
posted by the young rope-rider at 11:36 PM on November 16, 2011

Possibly of interest
posted by flabdablet at 11:38 PM on November 16, 2011

You are getting not very good advice that may or may not apply to you in this thread. I am unclear where you are or why you are now having issues making payments, but you MUST pony up for a property lawyer consult to a) find out what the options in your state actually are, and b) protect yourself. It sounds like you also need help tracking down who holds your loan; for god's sake verify they can actually produce the paper.
posted by DarlingBri at 1:44 AM on November 17, 2011

You said you are having trouble making the payments. What changed?
posted by gjc at 5:05 AM on November 17, 2011 [2 favorites]

With GJC here - the loss in value and your inability to make payments are not obviously related. I need more context.

With or without context, thought, I can confidently tell you that you need more data. Do talk to a lawyer and get in touch with local housing programs.
posted by Lesser Shrew at 6:17 AM on November 17, 2011

This many years into the housing / mortgage crisis, which lack a mechanism to negotiate mitigations (modifications, forbearances, capitalization of arrearages, short sales, etc.) Unless you're in an unlucky minority, there's a spreadsheet that has diagnosed your mortgage as likely underwater, with a menu of things that can be done that are better for everyone (you AND the lender) than you stopping paying, them foreclosing and evicting you six months (or eighteen months, or more) later, and them taking over yet another empty and (statiscally) likely to be damaged house worth less than they loaned on it.

What the person you talked to may mean about your loan being put into "collection" is that your loan is not authorized for any discussions on mitigation >until it ceases to perform< -- i.e., for so long as you are paying your mortgage on its original terms, they aren't going to show you any alternatives ... and when you miss a payment, the "collection" is actually the desk (at that company or a different company) which is authorized to discuss mitigations with you.
posted by MattD at 6:44 AM on November 17, 2011

Suze Orman is telling people who are drastically underwater to just get out (specifically, if you are in one of the non-recourse states). Home values are slow to recover and if you think you want to get out, just get out. The banks aren't "working with" people so she says to just get out.

Through the end of next calendar year, the IRS will not pursue you for any deficiency that the mortgage companies forgive. This is a once in a lifetime free pass. Remember, it has to be a non-recourse state.
posted by getawaysticks at 7:43 AM on November 17, 2011

I haven't had direct experience with these organizations, but they might be a source of help. Took descriptions right from their sites.

The Homeownership Preservation Foundation (HPF) is a network of non-profits that helps distressed homeowners navigate their budget challenges by providing specific actions steps and, whenever possible, helping them to avoid foreclosure. And best of all, we do it for free.

HOPE NOW is an alliance between counselors, mortgage companies, investors, and other mortgage market participants. This alliance will maximize outreach efforts to homeowners in distress to help them stay in their homes and will create a unified, coordinated plan to reach and help as many homeowners as possible. The members of this alliance recognize that by working together, they will be more effective than by working independently. The Department of the Treasury and the U.S. Department of Housing and Urban Development encouraged leaders in the lending industry, investors and non-profits to form this alliance.
posted by madamjujujive at 7:48 AM on November 17, 2011

I guess I can be more specific than I was above. madamjujujive's suggestion for Hope Now is a good one, if the banks did anything that was recommended by these places. I had a foreclosure in February of this year and did everything I could do - filled out all the forms, called the government agencies, called the mortgage insurer, even - everyone refused to budge and said that the home should be affordable for me. It wasn't, and it sold at foreclosure auction for $25k (it was worth $114 in 2003), and now the bank has another vacant house to deal with.

This is why Suze says to just get out. The banks aren't doing anything to help the people who are hurting, even though Obama/etc made it easy for them to do so. They are treating this like a business decision, so we should as well.
posted by getawaysticks at 7:55 AM on November 17, 2011