How to get out of my mortgage mess?
February 15, 2013 11:08 AM Subscribe
stuck in a mortgage mess with friends, seeking advice to help me get out of it
posted by dy to Work & Money (21 answers total)
Two and a half years ago Kent and I signed an FHA loan of $500,000 for a mutual friend, Bob, who could not get a loan himself as he was commission based. The house is located in Costa Mesa, CA 92626. So, the gentlemen's agreement is 1) Kent and I are on the mortgage and title, 2) Bob lives there and makes the mortgage payments, 3) we'll add Bob to the title later so Bob can refinance it under his name later and keep Kent and me out of mortgage OR sell the house 2 years later as a flip, possibly for a small profit.
Of course it did not go as planned (stupid me!). Refi under Bob's name was not approved. Bob couldn't sell the house as there is not enough equity to cover the selling cost, and he does not have any saving in the bank to cover the cost.
To make it worse, 6 months ago Bob started to run into all sorts of financial troubles and has been late on his payments, 30 days, 60 days, 90 days. The bank has been calling us for late payments and sending breach letters. We have been on the edge of foreclosure several times. Bob made some partial payments, just barely enough to bring the account to 60-90 days late before the letter expired. We are constantly 60-90 days behind these days. Kent and I have never lived there or paid any money to the house. We don't really consider it our house anyway even though we know we are financially obligated to the loan. We looked into the short sale option. Kent rejected the idea. He is afraid of disclosing his financial situation to the bank, and the bank may go after us as neither Kent nor I ever lived there (violation of FHA loan requirements for the primary residency??)
So we stuck now - Bob does not want to sell "his" house, Kent does not want a short sale, and I can't get out of the loan. I accept the fact that my credit will be screwed for years as long as I don't have to take any money out of my pocket. If you have any advice or suggestion of any sort, financial or legal, please do share with me. I simply ran of ideas as to how to get out of this mess. Thank you for reading this.
This post was deleted for the following reason: poster's request -- cortex