Mortgage Help in MI?

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We cannot REFINANCE! Due to the low housing market we are upside in our loan. We owe $ 219,000 and my house will only refi for $ 190 tops. We have an arm that is adjusting at the end of ’08 and the payment will be way out of our range. We will not be able to make our mortgage payments. I know you have all heard this time and time again…but I dont wont to loose my home. My husband and I have a 2 yr old and 6 yr old and do not want to loose our home. Should I work with my lender or try to get an investor buy our home now and lease the home from them????? We are trying to work on this now and be prepared for Nov. ’08. We dont know where to turn?? Lawyer, financial planner, etc.??? Any suggestions?

I am in the process of refinancing my home and I am becoming a bit annoyed with the lender I am working with. It’s a typical rate/term refi. However, I am receiving a $ 20K gift from my father to to bring my loan down to 80% LTV to avoid MI. I used to work in the mortgage industry and based on my experience, all I should need is a signed gift letter and canceled check.

However, the lender is now (in the 9th inning) asking for 2 months of my FATHER’S bank statements and claiming it’s some new law as the reason why they’re needed.

Is this lender correct that I really need to provide my FATHER’S bank statements? If yes, please explain why and what the law is and what the rationale is. Thanks.
Thank you to all who answered so far. I could totally understand if this was a purchase transaction and they needed to verify my downpayment wasn’t coming from an ineligible party (broker, seller). However, this is a REFI. Is this standard practice to ask for my father’s bank statements? Or, is this lender incorrect?

  1. Reply
    February 16, 2011 at 11:11 am

    Contact the lender. They would rather have you keep paying at a lower rate then foreclose, and lose money in the process.

  2. Reply
    February 16, 2011 at 11:44 am

    I suggest you talk to a certified housing counselor, who can work with you to establish a budget, set priorities and figure out how to keep your home. They could possibly help you work out an arrangement with your current lender. Be careful that you work only with a legitimate organization–there are lots of people out there trying to take advantage of worried homeowners. Good luck!

  3. Reply
    clifford g
    February 16, 2011 at 11:50 am

    Contact you lender and negotiate a new principle amount or interest rate amount or both. Hard to believe that some banks would go for that, but they do. A friend of mine gave his house back to the bank and they wanted him to stay. They offered to reduce the principle amount down to $ 120k from $ 160! But he still couldn’t afford it.

  4. Reply
    RE its what i do
    February 16, 2011 at 11:55 am

    Hi Mabe,

    Did You get my email? Depending on your location in Mi. I may know some investors that you can talk to. Realtors, lawyers and financial planners all have there place but in your situation and investor is your best bet. Only talk to your lender if you have to!! they will start writing bad remarks on your account as soon as you tell them you are in trouble. When it is time to talk to your lender (heaven forbid!) you will want to ask for a “letter of forebearance” – more on this later. If you would like some help, check your email, I will offer you as much advice as I can.

  5. Reply
    Real Estate Guy
    February 16, 2011 at 12:23 pm
  6. Reply
    the tax lady
    February 16, 2011 at 1:11 pm

    The banks are cracking down on loans that are called gifts only long enough for the bank to approve the loan.

    By checking your dad’s bank statements, they hope to guess correctly whether or not your dad could afford to give you a gift of this size.

    BTW, if you are single and your dad is single, he need sto file a form 709 with the IRS because the gift is more than $ 13,000 in one year.

    the changes came in 2008 with the Mortgage Disclosure Information Act that requires ‘proof of funds’ for both you and your dad.

  7. Reply
    February 16, 2011 at 1:51 pm

    In fairness, lenders are very skittish these days with respect to mortgage fraud. You’re right, however. If you can prove that the gift is irrevocable, that should be enough. I’d suggest you go back to the lender and work with them from that perspective. Don’t bother butting heads with them, its not worth it. Give them the comfort that the gift is not a “sham”. If that doesn’t work, consider taking your business elsewhere.

    Its completely understandable for a lender to want to avoid any risk of mortgage fraud. However, if they are being overly-intrusive for no reason, as a consumer you have a right to “vote with your feet”. Good luck.

  8. Reply
    February 16, 2011 at 2:25 pm

    That’s nuts. The only time I have found banks get very anal about fund sources is FHA loans. If you have the money and it’s not from unsecured funds (that will reflect on your credit report) there should be no reason to know where that cash came from. I would do some bank shopping if I were you. I’m on my 5th home purchase and we have done everything from 0 down to 20% and at that 20% level there were very very few questions asked. A refinance should be twice as easy as a purchase too.

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