When you can't pay your mortgage, what do you do?

[Tabrett]

Dh pay was cut in half last October. In March he lost his job. DH has a good part-time job teaching at a small college. He lost half his hours this semester. He will get back his hours in January, but it still won't be enough to pay all our bills. We have used all our savings and sold everything we could. It is all gone now and our mortgage payment is officially overdue.

 

What is the next step? We want to sell the house, but owe more than what it is worth. We are the people who did everything right. 20% down, regular loan with a good rate, no second mortgages, we easily could afford the home with dh old job. We have been barebones for a year. Nothing is left to cut back on. We are having a hard time trying to get the house ready (having to spend money for paint, ect...) knowing it is not going to sell. The only houses that have sold where we live are foreclosures. We really don't want to keep the house. We have another housing option available in about a year.

 

We had enough money to pay for utilities, insurance, car payment, gas and food and that is it! We would not have been able to pay rent if we were renting.

 

What do I tell the bank? I don't know what to say. What are they going to say to me. Are they going to be mean? I don't know if I can handle that right now.

[Mama Geek]

:grouphug::grouphug::grouphug:

I don't have much advice other than have you looked into doing a short sell?

[Tabrett]

:grouphug::grouphug::grouphug:

I don't have much advice other than have you looked into doing a short sell?

 

We just can't get motivated to get it ready. We keep trying, but there is so much that needs to be done. It needs new carpet and paint. I don't know how to keep it "show-able" with three dc under 7 and 2 dogs. Dh said it would take us a week with both of us working 8 hours a day to get it ready. In other word it has about 80 hours worth of work needed to make it sellable. It is a good house and only 5 years old. It has just been lived in for 5 years with a family of 6.

[cathmom]

:grouphug:

[Gooblink]

:grouphug::grouphug: I've always heard the best thing is to talk to your bank, sooner rather than later. They won't be mean. Since your dh's income is expected to rise again in January, they may be willing to work with you on modified payments for a while.

 

You can only do what you can do. Try not to make yourself sick over it - these times will pass.

[Mejane]

Go to the bank now and see what they're willing to do for you. Putting it off will only make it worse and cause you more worry. Best of luck!

[BeckyFL]

I have a friend who was in this situation. One thing she said was that no one will do anything until you are behind in your payments. Then (and from what others told her this is normal) her bank pretended that if she paid on the mortgage, they would work on modifying the loan. After she put $6000 on credit cards, they told her they wouldn't be able to help her. So she ended up with a short sale anyway and $6000 more on credit cards that she wouldn't have needed. I guess you can't always believe what they tell you. They want to get whatever money they can since they know they are going to lose on a short sale. :-(

[Lolosoli]

:grouphug:

 

It is so frustrating....the way the economy is today. I'm in Canada and it isn't (as far as I have heard) as rough as it is in the U.S....but, in my city our taxes are really, really hurting people. We have the highest tax rate and the lowest employment rate. It's hard and it isn't the fault of most hard working people!

 

Can family help you out at all? Even if it is simply a loan?

 

Is bankruptcy something you could consider? I know here you can go bankrupt on "loans and debts" and not on your home or vehicle. That allows people to keep their homes and vehicle and be debt free (some just rack it all back up again though!!!). I think some people give the option of bankruptcy a bad name...but, sometimes it is the only logical and humane option for people! There are agencies that will discuss that option for you....maybe there is one in your area?

 

"Sometimes" banks will work with you as much as they can. If your bank won't...try a different one. They should discuss different loans, delaying payments, etc., Talk to them and see what they can offer as far as options are concerned.

 

When we had difficulty in the beginning of our marriage the banks wouldn't help AT ALL....it was terrible. They harrassed us on the phone and wouldn't budge at all! Don't let them intimidate you and do not allow yourself to feel as though you have somehow done something wrong and should feel ashamed. Keep your chin up! :) When we recently had a bit of trouble (15+ years later) they really worked on helping. To be honest I think the difference was our age, maturity and our attitude. The first time we were teary-eyed, ashamed and embarrassed. This time we were basically just pointing out the obvious, shrugging our shoulder's and saying see what you can do...our hands are tied.

 

Good-luck...I'm sending positive vibes your way!!!!!!

Edited October 22, 2010 by Lolosoli

[Karenciavo]

Your mortage company may be willing to renegotiate your terms or work out a hardship payment that lowers your payment but adds years to the life of the mortgage.

[Karenciavo]

I have a friend who was in this situation. One thing she said was that no one will do anything until you are behind in your payments. Then (and from what others told her this is normal) her bank pretended that if she paid on the mortgage, they would work on modifying the loan. After she put $6000 on credit cards, they told her they wouldn't be able to help her. So she ended up with a short sale anyway and $6000 more on credit cards that she wouldn't have needed. I guess you can't always believe what they tell you. They want to get whatever money they can since they know they are going to lose on a short sale. :-(

 

Yes, I had a friend who went through something similar.

[Tess in the Burbs]

going through it right now.

 

call the bank and tell them due to loss of income you can't/won't be paying anymore. ask for loss mitigation dept so you can get the short sale paperwork list to begin. get a realtor to list the house. find one who has closed a short sale!!! Get started on the bank paperwork and be able to call a lot to keep them moving. you will get calls in the beginning but eventually they stop when they realize you aren't paying anymore. don't fall for the 'deals' they offer.

 

We have a short sale offer ready to close and the bank suddenly has an 'issue'. it's their fault we haven't closed. we too did everything right and in the end....they may auction our house in 3 weeks. They don't seem to care we have an offer on the house. they would rather let it go than get the paperwork done on their end....

 

it's frustrating.

 

call the bank but be prepared long term that even if you do everything you need to it will not turn out ok. :-(

[sandalwood]

We have our house up for sale now & we are also upside down. It's worth about $50,000 less than our payoff. We bought in 2005 at the height of the prices in our area and our area just has done a nose-dive every month in prices. The only advice I can give is don't spend money on paint, etc. to fix it up if you are severely upside down on it or need the food for something else (food, electricity, etc.). You'll NEVER get that back when you sell it if you are upside down. If you are lucky enough to get an offer on the house, it will be less than you need anyhow. I guess I am saying don't throw good money after bad, etc.

 

I understand right where you are. If you call about your loan, they won't be mean but write down names & times of who you talk to. You can call 10 different times and get 10 different answers. It's all a mess right now. Document everything & get things in writing if they agree to different terms. IF you go with a short sale, make sure you won't be held responsible for the balance of the loan (for instance if it sells for $80,000 and you owe $100,000). Most places won't go after you for the difference but some places can & will. So, make sure if you do a short sale you can't be held for the diff. or it might not be worth it. You can also check out something a deed in lieu of foreclosure, etc. Check out forums like clarkhoward, etc. This is worth a read: http://www.realtor.org/archives/feat4200710

Edited October 22, 2010 by sandalwood

[Sherry in OH]

:grouphug:

Talk to your mortgage broker. Document every conversation, including names, times, and dates. If selling is part of the plan - Declutter and pack up what you can. Clean the house from top to bottom and tidy the yard. Do not spend money on paint or carpeting. You will not recover the costs and you need the money to live on.

[LizzyBee]

Will you be able to make the payments when your dh's hours increase in January? Some banks will add missed payments to the back of the loan when the hardship is temporary. That increases the amount of interest you pay in the long term, but it can help you get through a tight spot.

[NanceXToo]

Your mortage company may be willing to renegotiate your terms or work out a hardship payment that lowers your payment but adds years to the life of the mortgage.

 

Yep, they'll ask you to write a "hardship letter" and provide certain paperwork, but you may at least be able to get your payments reduced!

 

Good luck!

[Barry Goldwater]

Talk to a bankrupcy lawyer...(you don't have to declare bankrupcy just to talk to one, but you can evaluate your options) state laws vary. You may be able to get out of this spot...remember, it's a business decision. If you are in a bad deal with your mortgage (upside-down), you can make a business decision to walk away. Companies do this all the time. BUT talk to an expert in the laws of your state...there are consequences.

 

Feel free to PM me for more details.

[Renee in NC]

If your house is already worth less than you owe and you have no way of bringing the cash difference to the closing - do not spend another dime on paint, carpet, etc. In this market a short sale isn't going to be dependent on how nice it looks.

 

Talk to your mortgage company, but be forewarned they are in it to get everything they can out of it. Do *not* put payments on credit cards or take out second loans for the shortages.

 

I am so sorry you are facing this!:grouphug:

[elfgivas]

:grouphug:

 

what a hard thing! so many folks are upside down.

 

you've had good advice, especially the "document everything" advice. keep a journal, write down names, get email addresses and at the end of every conversation send an email to the person and your dh saying "this is a summary of what we talked about. "this is a summary of what we agreed on. this is a to-do list for each of us." then, follow up.

 

i would not spend money on paint or carpets or just about anything. i don't know what your debt load is like aside from the mortgage, but it takes a while for them to evict folks (where we live it is currently taking about 2 years, but i know other places that are faster). take all the money you can and reduce your debt load everywhere else, so that if/when you move on to your new housing option, that is the only thing you have to pay monthly.

 

meanwhile, help the bank choose a short sell option. what is happening here in SoCal appears to be that the bank agrees, the realtor sets the price, people put in offers and the bank then either does nothing or refuses the price. it is just nuts. so i would be ready to just walk away, even if you do everything you can at this point.

 

:grouphug:

ann

[KingM]

I haven't been in that position, but if it were me, I'd try to keep the house. It does sound like you need more income and this might mean picking up some scrap jobs, perhaps both of you.

 

My gut feeling is that people who fight through the underwater period will be better off five or ten years from now than those who walk away.

[sandalwood]

Here is another option we looked at I forgot to mention. Would you be able to rent your home? In our area, things are renting like crazy while houses are not selling. People are looking to rent & not buy in our area. We thought of renting out ours (and may go with that in 6 months when our realtor contract is up) for several years till the market recovers (hopefully). I dread to ask this, but do you live close to family you could stay with while you in the immediate future rented your house? I know no one wants to do that, but maybe you have that option until your other housing option opens up in a year?

 

I agree with elfgivas. In our neighborhood, owners that are doing short sales are getting offers but the banks are refusing them. So, it's kind of a catch-22. The sellers are putting them up at awesome prices and when they get a bite from a buyer, the bank is saying no & the potential buyer walks away. I know Bank of America said no to one across the street where they would only lose $20,000 on it (versus no payments on it at all right now??? crazy) It's awful... just a mess.

 

 

I'm sorry your in that situation, but I promise it will get better. We would love to get rid of our house, but I imagine we'll be renting it out before it's over and done with. We listed it earlier this month and not one person has walked in the door. Scary times!

[Tabrett]

Here is another option we looked at I forgot to mention. Would you be able to rent your home? In our area, things are renting like crazy while houses are not selling. People are looking to rent & not buy in our area. We thought of renting out ours (and may go with that in 6 months when our realtor contract is up) for several years till the market recovers (hopefully). I dread to ask this, but do you live close to family you could stay with while you in the immediate future rented your house? I know no one wants to do that, but maybe you have that option until your other housing option opens up in a year?

 

I agree with elfgivas. In our neighborhood, owners that are doing short sales are getting offers but the banks are refusing them. So, it's kind of a catch-22. The sellers are putting them up at awesome prices and when they get a bite from a buyer, the bank is saying no & the potential buyer walks away. I know Bank of America said no to one across the street where they would only lose $20,000 on it (versus no payments on it at all right now??? crazy) It's awful... just a mess.

 

 

I'm sorry your in that situation, but I promise it will get better. We would love to get rid of our house, but I imagine we'll be renting it out before it's over and done with. We listed it earlier this month and not one person has walked in the door. Scary times!

 

I'm not sure we could rent it for enough to pay the mortgage. Maybe we could. We can't afford to rent it for less than the mortgage. I honestly don't know where we would find rent where we live that we could afford. At the moment we can't afford any rent. I'm very nervous about renting. The renters in our neighborhood don't seem to rent very long. We don't have the money to pay for the months we don't have renters.

 

What happens when your renters don't pay. Can't they STAY in the house for several months? We can't afford to get renters where that happens.

Edited October 22, 2010 by Tabrett

[Mejane]

What happens when your renters don't pay. Can't they STAY in the house for several months? We can't afford to get renters where that happens.

 

Yes. It's very difficult to kick people out in most cases.

[Renee in NC]

I haven't been in that position, but if it were me, I'd try to keep the house. It does sound like you need more income and this might mean picking up some scrap jobs, perhaps both of you.

 

My gut feeling is that people who fight through the underwater period will be better off five or ten years from now than those who walk away.

 

I assumed that there were no jobs available or her dh would have one.:confused:

 

I agree that you shouldn't "walk away" if there are other options. I was going on the assumption, since she mentioned depleting their savings and selling all they could sell, that they were at the end of their options.

[Sara R]

If you can't pay the mortgage, you can't pay the mortgage. So don't pay it. After a month or two, you can contact your mortgage company to see if they can negotiate at all, or if you can work out some kind of short sale.

 

The banks are dealing with lots and lots and they might not have time for you right now. There is some scandal going on now (google "robo-signing scandal") that may cause a foreclosure moratorium. Before, if you quit paying on your house it took about 7 months before you were kicked out. Now it looks like it will take even longer.

 

[Note: I am no expert about this; I just like reading real estate news. Please talk to someone who knows something about your specific state before taking any action.]

 

So sorry you're having to deal with all of this!

Edited October 22, 2010 by Sara R

[justamouse]

First, :grouphug::grouphug::grouphug:. Your situation sucks, and that's saying it nicely. Second, you can do what you can do and that's all you can do. They can't squeeze blood out of a stone and if you can't pay you can't pay. Most renegotiation situations that I have heard of have gone terribly terribly wrong and I would even hesitate to go that route.

 

I wouldn't rent if I were you because if the renters eventually default on the contract, they can stay and you still lose the house.

 

I don't know, talk to a financial advisor? Someone who's walked this route before? Does your church have any financial aide classes? One thing, though, you're not alone and there's no shame in losing your house. No one wanted to, you know?

[KingM]

I assumed that there were no jobs available or her dh would have one.:confused:

 

I agree that you shouldn't "walk away" if there are other options. I was going on the assumption, since she mentioned depleting their savings and selling all they could sell, that they were at the end of their options.

 

I'm thinking holiday jobs, an evening job at Walmart or something similar. Maybe there aren't any where she lives, but if you're desperate enough you can usually find something. Maybe not.

 

One other possibility would be to get a boarder. Someone trustworthy, obviously, given the family situation. People did this a lot in the Depression to survive. People who lost their housing moved in with people desperately trying to keep hold of theirs.

[Margaret in GA]

Talk to a bankrupcy lawyer...(you don't have to declare bankrupcy just to talk to one, but you can evaluate your options) state laws vary. You may be able to get out of this spot...remember, it's a business decision. If you are in a bad deal with your mortgage (upside-down), you can make a business decision to walk away. Companies do this all the time. BUT talk to an expert in the laws of your state...there are consequences.

 

Feel free to PM me for more details.

 

 

Just a word of caution about bankruptcy-- talking to a lawyer for whom your bankruptcy would benefit isn't always a good idea. Cause whether it's in your best interest or not, they might push you into it.

 

Hugs to you. These are tough times!!

Margaret

[justamouse]

Talk to a bankrupcy lawyer...(you don't have to declare bankrupcy just to talk to one, but you can evaluate your options) state laws vary. You may be able to get out of this spot...remember, it's a business decision. If you are in a bad deal with your mortgage (upside-down), you can make a business decision to walk away. Companies do this all the time. BUT talk to an expert in the laws of your state...there are consequences.

 

Feel free to PM me for more details.

I agree.

 

I do know many people who walked away, and in all honesty, if I were in the position, I would too. But I wouldn't tell anyone else to do that. :)

 

And bankruptcy is a lot easier than you think and Barry is right, it IS a business decision. It's so hard to think of your home like that, but he's right.

[Trish]

First, check to see who owns your mortgage at this time. If the answer is "MERS" (Mortgage Electronic Registration System) then it's possible there is no one who can legally foreclose on your house. Google Foreclosuregate and MERS Scandal for more information on this.

 

Second, even if you are unable to pay your mortgage, you should pay your taxes. So if the escrow is included in your house payment, you may want to write a check directly to your taxing authority (county) to make sure you are not behind on taxes.

 

Bottom line is, if your mortgage was sold over and over again, and the chain of title was broken, the bank may have no more right to your house than anyone else. There's a way to check online if your mortgage is part of the MERS system. Here's more info:

 

http://www.dailypaul.com/node/146238

[abbie5]

i didn't read all the replies, but have you thought about renting the house out? seems like that might be a good option for you. then, you can rent something cheaper somewhere else.

[Barry Goldwater]

First, check to see who owns your mortgage at this time. If the answer is "MERS" (Mortgage Electronic Registration System) then it's possible there is no one who can legally foreclose on your house. Google Foreclosuregate and MERS Scandal for more information on this.

 

Second, even if you are unable to pay your mortgage, you should pay your taxes. So if the escrow is included in your house payment, you may want to write a check directly to your taxing authority (county) to make sure you are not behind on taxes.

 

Bottom line is, if your mortgage was sold over and over again, and the chain of title was broken, the bank may have no more right to your house than anyone else. There's a way to check online if your mortgage is part of the MERS system. Here's more info:

 

http://www.dailypaul.com/node/146238

 

 

OK, this is what I was going to PM you about...many of the big banks have behaved worse than the mafia and are illegally foreclosing on people without standing...If your bank cannot produce the note with your original wet signature on it, they may not have standing to foreclose on you (depends again on the state that you live in). This is a great way to go on offense with the bank if you need to...but again, talk to your CPA and a real estate lawyer for your specific situation.

 

I know you said you couldn't handle it if the bank "got mean." And I understand your feelings. :grouphug:

 

But realize they may use this as a tactic to intimidate you into making a decision(s) that is bad for you, but good for them...So let me gently encourage you to get educated on your specific situation, then unleash more of :angry: and put away :crying: so you don't get railroaded. Remember these theiving scum and their fraud have helped create the 10-15% unemployment and economic depression that has now visited upon all of us, even the ones (like you) that have 'played by the rules.' Don't be afraid to fight back.

[SBMama]

Sorry, posted on wrong thread!

Edited October 23, 2010 by SBMama

[kalanamak]

Dh pay was cut in half last October. In March he lost his job. DH has a good part-time job teaching at a small college. He lost half his hours this semester. He will get back his hours in January, but it still won't be enough to pay all our bills. We have used all our savings and sold everything we could. It is all gone now and our mortgage payment is officially overdue.

 

 

Moonlight. When hubby was supporting his previous family, he'd do carpentry while it was light, and when they knocked off that job, he went to a job tossing pizza, and ate dinner there.

[justasque]

Can your dh call the bank if you are stressing over it? I know what it is like to dread making a phone call. But it is important to call earlier rather than later, as you have more options at that point. Don't just ignore it and hope it goes away.

 

I'm assuming your dh *and you* are actively looking for other work. Any little bit will give you more options than without it. Let everyone know you are both looking. In addition to your fields, look at seasonal work, nursing homes, night shift at stores or FedEx places, fast food, cleaning of any kind, child care. Look at the college where dh works - is there something in tutoring or food service or the library that will work for one of you? Apply for everything! Scrambling now will give you options. If you end up losing the house, you will still have to pay for housing one way or another, so might as well see what you can get going now.

 

Can your dd16 find a little something of a job to take care of her own bits-and-pieces? It could help her keep her self-esteem through tight times. She can also watch your youngers while you and dh work and get the house in order.

 

I understand you feel the task of getting the house in shape is overwhelming. Nonetheless, you have to give it your best shot. Now that you've sold a lot of things, it should be easier. Just pick something small to start with, to get the ball rolling. It doesn't have to be perfect, just do what you can. I agree about paint and carpet - no need to spend money on it. Your house doesn't need to be without flaws, just make it as nice as you can. Clean and de-cluttered goes a long way, especially with a house as new as yours. With dh home a lot now, you can team up and work together. Maybe tackle a room at a time - do what you can to get it decent, then maintain it while you do the next room.

 

The good thing is that it sounds like you have minimal debt, which is great! That can really help you through this.

[Jody]

I agree with Barry! We have friends now that the bank says they never paid on their mortage. They have been paying all along. Now they are wondering if it went to the wrong place. This fraud is coming out and it is bad. Too many people losing their homes and it isn't because they borrowed too much and all that stuff people keeping throwing in. It is because the housing was inflated and the loss of jobs.

 

My husband lost a very good job and now is working for less than he made in 1987. So guess what we are now renting our house and moving in with my dad. My mother passed away earlier this year. We are helping him and he is helping us. He says it is bad and it is only going to get worse he is afraid of.

 

However, we are learning about this fraud as well!

 

Please hang in there! I understand you did it all right, but it doesn't matter. This is hitting to us ones that did it right and the jobs aren't there. If you find a job they aren't paying either. We probably will be in proverty level when it comes to tax time with our kids. We can make it but it isn't going to be easy. Thankfully we don't have to buy alot of extras, just the basics of survival.

 

Please keep us updated!

[Alyce]

Although Bankruptcy may eventually be your only way out don't just jump and do it. It's great for the short term fix but it follows you for 7 years which mean if you need any kind of loan in the next 7 years you will probably be turned down or given at a very very high interest rate.

 

Everyone is talking about short sales. Our paper just recently had an article on that in our newspaper. Basically the bank will tell you they will do it, you will get an offer and in just about every case they will come up with some excuse and eventually they will auction your house. That is because they can auction your house at a higher price than what someone offers so if they let you lose your house it is really a better financial decision for them. Very few banks will actually go through with a short sale. It's just a ploy to make people trust them more. That is not to say that that is the case always. There are some reputable banks out there that will take the offer.

 

I know this is a hard spot you are in and all I can do is tell you to lean on your faith (if you are Christian), pray and keep your courage. I will also do what I can do for you and that is pray.