Question : Any suggestions as to how to refinance when your upside down on a mortgage?
My husband and I bought a home from my husband's former employer for $160,000. The home appraised at $140,000. The employer co-signed and put up a $20,000 CD as collateral. We didn't have good credit and had to pay some things off, so the employer did that for us, so we owed him money. We paid him back with the loan, but now we have to refinance the home come January and we have not been able to afford to do any improvements on the home, and It will not appraise at what we owe on it. No one is willing to refinance 100% because of the negative equity, and I don't have the $15,000 plus closing costs to pay the differece. Not sure what will happen if we don't get refinanced. Can't sell either I would assume. Any suggestions?Payments have always been on time. We can afford the payments. That has never been a problem. At the time, it seemed they were doing a nice thing for us. I've never bought a home before, and we were living in a mobile home that was older than dirt and falling apart, and I was desperate to get out of it. I had no idea this would come back to bite me in the ass. Seemed at the time they were doing us a favor, but now I see they took advantage of our bad situation. Of course I never would have agreed to do this if I had known that we would end up in a situation like this.This is what was written about the CD:AGREEMENT REGARDING PLEDGE OF COLLATERAL AND GUARANTEE"Bank" is lending the necessary proceeds to "buyers" to purchase said property on the condition that the loan is guaranteed by the "seller", and on the condition that a Certificate of Deposit owned by "seller" is pledged as collateral for said loan.It is hereby agreed and stipulated by and between said parties as follows: 1. To the extent that "sellers" are required to pay any amounts based on the guarantee, or on the pledge of additional collateral in the form of a CD, they shall be entitled to a n assignment of whatever security is held by the "bank" for the amount of said payment. 2. Any assignment made by virtue of paragraph 1, shall be subordinate to any remaining interest held by "bank". 3. If "sellers" are required to pay any amounts on the mortgage bu virtue of their guarantee, they shall be in the same position by virtue of the assignment as the "bank" and would then own all the
- asked by Strawberry Fields Forever
All Answers:
Answer #1
this sounds BAD! you should have never bought ahome for more than the appraised value. your bossshouldn't have offered the additional cash to makeup for the sales price, he SHOULD have lowered thesales price to the appraised value of $140,000.whyon earth would you purchase a home, knowing itdidn't appraise for what you were paying for it? why even get an appraisal at all if you were goingto do that?!?!are you sure it won't appraise atwhat you owe on it? how long have you owned it?are your payments current, or have you been over30 days late on any payments since you boughtit?it sounds like your boss put you in a home heknew you couldn't afford, but didn't care so longas he was getting out of it. also, you've beenfurther screwed because if you can't sell it forwhat you've got in it, and cant' make payments ontime, then you will likely go into foreclosure.you are in a bad spot, as you already know. youremployer really did a number on you guys!!! youneed to go talk to a mortgage consultant or loanofficer at a lending institution/mortgage companyASAP. they can advise you of what to do. if i wereyou, i'd go to a mortgage company over a bank,since the mortgage companies generally have moreloan programs, etc. at least they can let you knowwhat's going on!good luck, and sorry you gotscrewed by your employer!!! next time, try using arealtor!!! they would have had your best interestin mind and would have suggested many of the abovethings i mentioned to you!
- answered by thetoothfairyiscreepy
Answer #2
There are several companies that will do mortgagesat 105% or 115% or even as high as 125% of thevalue of the home. Let me kno if you want moreinfo. Shoot me an e-mail if you have morequestions
- answered by unclejesse1
Answer #3
Unfortunately, you are somewhat stuck. Theproblem you face is actually going to become alittle more common if proprty values soften inmajor metropolitan areas.First, your current bankis supposed to have valued the property at theLOWER of the purchase price or appraised value. If your appraisal came in at $140,000 they NEVERshould have lent you the full $160,000.I work fora major US Mortgage Bank and never heard ofputting up a CD for collateral on a home purchase. Your bank may consider this whole transaction asfraud. It soulds like you were used as a "StrawBuyer". This means you knew the seller, and theysold you a home significantly above value, andleft you to deal with the problems. Most strawbuyers never make a payment and the home goes intoForeclosure. You seem to want to work somethingout, but there is a strong possibility that youwill not be able to refinance, and may have to gointo FC if you cannot afford the property.If theformer employer is a co-signer, they are asresponsible for the timely payments of themortgage as you are. It seems that they wouldalso lose the $20,000 CD if you defaulted on theloan. It is in their best interest to see yourefinance out and remove their name from themortgage. You may look to them to provide cash tolower your loan needs from the amount youcurrently owe on the home to the current appraisedvalue. From your description, it sounds likeyou'll be $15,000 short. You can enter anagreement to pay them back over time.Also, you cantry to have your home reappraised if you thinkvalues went up, or wait until January if you thinkvalues in your area may continue to go up betweennow and then.Good luck!
- answered by SUNYScott
Answer #4
My name is Jason Fry, I work with ProvidentialBancorp, a nationwide lender in Downtown Chicago.I have many programs for people in your situation.I actually just closed a loan for 125%, similarsituation, customer had bad credit at time ofpurchase, had a friend who sold him the propertyin the same manner, but the house thenDEPRECIATED... Luckily the 125% was able to coverwhat we were missing. I would be happy to assistyou with the refinance, i would just need somemore information to let you know if you qualify.Call me at 312-264-6448 on Wednesday the 5th, orshoot me an email today atjasonf@providential.com..Your not stuck, you havemany options, you just need the right lender thatwill work with you. I work with a portfolio ofover a hundred lenders, and there's sure to be aprogram to help you..Enjoy the holiday, and trynot to let this ruin your weekend...you will beokay!Hope to hear form you soon!Jason Fry
- answered by frymail2005
Answer #5
Ask your boss to cancel his 20k note, and refundyou any payments you have made to him. He cheatedyou, plain and simple. It's not illegal, justimmoral and chicken sh--!
- answered by Nick R
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