What can I do about my mortgage?

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My husband and I bought our house in central Florida in June 2007. It was appraised at $ 145,000 and we had a 100% loan for $ 138,000. We still owe $ 135,000 and are current on our payments. However, we tried to refinance to get a better interest rate (currently 6.5%) and were approved by our current mortgage company for a refi at 5.5%. The house did not appraise out, though. Even with all our upgrades and remodels, the house appraised for only $ 97,500. This seems a little low to me, considering that the county appraised it at $ 95,000 and they usually appraise for significantly less than market value (it was $ 119,000 when we bought the house, for comparison). We did not see the actual appraisal since it was free through the mortgage company.

So, I think our appraisal came in low, but any which way, it wouldn’t have appraised for enough to get the refinance. We don’t qualify for any of the gov’t-sponsored mortgage programs, like the refi or mod recently set forth, since we haven’t had a change in income or anything like that. I don’t understand why our same mortgage company won’t refi us, despite the low appraisal, since they are holding the loan either way. We are also paying out the @$ $ for PMI at $ 110 a month! Our total payment would have dropped about $ 200/month if the refinance went through. We are more likely to default with a higher payment so it makes no sense that our lender won’t approve the refi just because of the appraisal.

Are there loan programs out there to help us refi for the amount our home appraised for? We were never planning on staying here for the long-term, 5 years tops, and now there is a possibility of job loss or relocation. No matter what happens, we have to figure out what to do with our house. Our lender is required by law to work with us during a short sale but we don’t want to have to pay the deficiency, which would be significant, or the taxes on it.

PLEASE HELP! Please no solicitations, I’m just looking for answers and explanations, not ads from lenders!! Also, no judgments about how we shouldn’t have taken out a loan for 100%; what’s done is done.
Also, I don’t mind paying PMI but we are getting screwed on it. It is costing us over 10% of our monthly P&I payment (which is less than $ 1000) at $ 110/month. We got totally screwed by our lender on this; a mortgage broker had quoted us half what we’re paying now, as far as PMI goes. Our lender is Wells Fargo, a HUGE company that has just acquired other banks, making them even bigger. There is no reason for them not to work with us on this, but I don’t know how to approach them about it, other than call customer service and get the run-around again. Our local office is the one that denied us the refi.
I am not looking for people to tell me “Be happy with what you have, just keep paying your mortgage.” If we have to move b/c of job loss or relocation, we aren’t going to be able to keep paying how we are now. I’m looking for a solution to lower my payments (making renting it out easier) or get out of the mortgage entirely, as one of these problems is imminent (next few months).
Thanks for the replies. The amount we refinance would have actually gone up to about $ 145,000 b/c we would have to add closing costs in, but the PMI amount would be reduced (don’t ask me how, I don’t understand how they arrive at those numbers!), bringing the total to about $ 200 less per month b/c of the decreased interest rate. I can somewhat understand how they don’t want to refinance us b/c of it is a business but at the same time, we would end up paying more over the long term b/c of the new amount plus additional interest for 30 more years. The risk of them not refinancing us is that we are more likely to not be able to pay the mortgage at what it currently is versus the $ 200/month less. And, if the job is lost, it’s not just a matter of $ 200 less per month, it’s a matter of losing $ 6000/month income, which means NOTHING will get paid and the house is completely lost unless we can somehow get it rented out and find a cheap rental for us to live in.
The issue with it being rented out is that nobody is going to pay our mortgage with their rent. P&I, taxes, PMI and insurance come to $ 1165/month. We’d be lucky if we could rent it for $ 1000. So the $ 200/month would help us there.

We closed our homeloan on a home we built 3 months ago and final appraisal was$ 245,000 which is what it needed to be around for approval since we were borrowing $ 190,000. we already owned the land prior to building. After closing we went to refinance with a different company who approved us at the lower rate only one thing was wrong…the appraisal came in at $ 160,000. Needless to say we were shocked since apparently our home depreciated $ 85,000 in 3 months!! after reviewing original appraisal we found many misrepresentations of supposed home values used for comparisons, as well as an inflated value of our land already owned and when I contacted lender they said that agent was fired for questionable practices and that was that. Soon after they sold my loan to another company which was also shocking since this bank bragged about how they dont sell their loans off. can i sue for this or what? what type of lawyer? Any help would be great

13 Comments
  1. Reply
    Ralfcoder
    January 20, 2011 at 10:36 am

    Your current lender won’t refinance because it would cost them money. They’re making money on your mortgage now, and you’re current. What you’re asking them to do is to do a bunch of paperwork and incur expenses, so that you can pay them less. Would you do that if you were in their shoes?

    Nobody else will refinance you because you’re asking them to take a big risk – to lend you $ 140,000 for a house that only appraises at about $ 100,000. In other words, you’re asking them to trust you for the other $ 40,000. Mortgage lenders don’t do that.

    I think your best bet is to just keep paying on the current mortgage if you can do so, and wait for the market to catch up with you and increase the value of your house. Then, you can either keep it or sell it, as you wish. If you sell it, and you buy a new house, don’t go for the 100% financing option again.

    Ralfcoder

  2. Reply
    Joe
    January 20, 2011 at 10:44 am

    That mortgage company will not do anything now

    A new one might but they will have to get appraisals too

    to drop pmi you will need a appraisal of about 163,000

    but pmi will stay till you have 20 percent below appraisal

    the way things are now you will be paying pmi for 5 more years or more

    be happy with the rate you have

    You still can write the interest off on your federal taxes.

    They are not going to lend you 145,000 on a house appraised 97,000

    So you are looking to loose your job

    so loose the house

    is this what you wanted to hear

    probably not

    looks to me you got the house at a bad time

    are you looking for the Gov. to pickup 20 to 30,000 dollars
    of the loan.

    good luck I hope they do

  3. Reply
    You're Kidding
    January 20, 2011 at 11:18 am

    I suggest you contact this organization…they offer free legal advice and assistance in working with your mortgage company to reduce your interest.
    I have sent a couple of clients to them and they have been the go-between with the mortgage company and the clients had success in getting the loan holder to reduce interest allowing the clients to keep their homes.
    http://www.greenpath.com/how-we-can-help/housing-counseling.htm
    1-800-550-1961

  4. Reply
    Carol
    January 20, 2011 at 11:46 am

    Hello Andrea,

    I know Florida has some areas where homes have lost a lot of value. Yours must be one of them.

    And this is the problem so many people are facing. It’s in the news every day. W/o the value, lenders will not refinance the loan. There are special programs for this under Fannie Mae and Freddie Mac. But the max they will consider refinancing is 125% of the appraisal value. Your numbers don’t meet that cushion.

    Keep in mind that the lender is running a business. It’s not “Charity Mortgage.” Please don’t take that the wrong way. But a lot of borrowers first look to their lender for help in paying their bills. You say it does not make sense to you that the lender won’t refinance just because of an appraisal. But it makes perfect sense to the lender. The appraisal is the foundation of the mortgage business. You are borrowing money based on the value of the supporting asset. That value can’t be ignored. Thorns in lending and appraising are what caused many of the problems today.

    Lenders do not care at all that you have been their client and you are paying the loan. Again, it’s a business. And when you apply to refinance, you are looked at as a new customer. They will not refinance your loan and ignore the value.

    If your issue now is you anticipate a drop in income, then you have some time to find ways to add income via a part-time job or other. If $ 200/month is the breaking point for you losing or keeping your home, then extra income sounds like a workable solution. Most people need far more than $ 200/month to tide them over. There are many ways to cut back and save $ 200/month. Give that a shot too.

    I looked at the numbers you gave in your question and I don’t see how you were going to save $ 200/month anyhow.

    Keeping it simplistic, $ 138000 at 6.5% = $ 872/month for principal and interest.

    $ 135000 at 5.5% = $ 766/month for principal and interest.

    And this is with no closing costs added to the loan amount. You would still pay the PMI. How were you going to save $ 200/month? Seems the lender gave you bad numbers.

    I really think your problem is workable outside of the mortgage. Especially since it wasn’t going to save you what you thought.

    Good luck.

  5. Reply
    Jumper12
    January 20, 2011 at 12:00 pm

    I am afraid that you are like the rest of us, stuck in the mortgage meltdown crap with falling equity. As for the loan modification, no one ever gets them. Obama was all talk with his “hope for homeowners” program. I know 5 people including myself who have tried to get help with this program, none of us qualify and it doesn’t make sense. We all have the same lousy sub-prime lender. So you cannot count on your lender helping you out. They don’t care, all they care about is getting their money from you. I am about to walk away from my house. It just isn’t worth the aggravation.

  6. Reply
    E
    January 20, 2011 at 12:12 pm

    Sounds similar to our situation. We tried to refinance and the appraiser told us our house was worth $ 50,000 less than it was 3 years ago, and we’ve done improvements since!

    The mortgage company isn’t going to do a thing about it. They won’t loan out more money than someone says it’s worth, however inaccurate it may be.

    We are trying to do a streamline refinance right now with our current mortgage company, where you don’t need an appraisal. That’s the only way we’ll be able to refinance. And since we didn’t originally pay pmi because the house was worth much more than we paid for it, we won’t have to pay it on the new mortgage either. You could look into that unless that’s the refi or mod you’re talking about above. I didn’t realize there were eligibility requirements, no one said anything for our loan, so I’m not sure if that’s the same thing.

  7. Reply
    Reuben
    January 20, 2011 at 12:33 pm

    The most critical thing I see in what you said is that you say “if we lose income.” Mortgage companies have so many people to help who have ALREADY lost their income, people who are already in foreclosure. They are not going to jump in to try to help borrowers who “might” lose their income.

    Before you will be considered for a loan modification, you must show you cannot make the payment NOW. Heck, tomorrow, you could have a new job in which case the lender wasted time helping you when they could have saved one of their other properties from foreclosing.

    I have to agree with someone else here who talked about business. The lender looks at all the loans they have and will make decisions from a business balance sheet point of view. Whereas you only see things from a personal point of view in terms of what you want/need. Big clash. Your mortgage company does not care. Our lenders are not our saviors.

    As for PMI (mortgage insurance), such insurance is provided by a third party insurer. It is not a Wells Fargo price. Mortgages are just not that simple. The pieces of the puzzle are much larger than what you know. Everyone does not pay the same amount for PMI. Many factors go into the computation. This may confuse you, but just take a look at this site and see all the factors that make up your PMI cost: http://www.radian.biz/mortgage/micalc/ratefinderinput.aspx.

    Frankly, for 100% financing, your PMI sounds right to me. PMI is astronomical for 100% loans.

    No lender is going to refinance your loan with a home value of $ 97,500. And you are not going to get a loan mod because you ANTICIPATE a problem down the road.

    People who get loan mods done are able to show they have a problem right now !! And in the lender’s eye, everybody else can wait. That makes sense. It is unfortunate that your family “might” experience this problem, but it is not the lender’s fault or responsibility to rush in and refinance your loan. Logically, you can go to your employer with the same story. Why not be just as adamant to your employer that you can’t afford to lose your job? Your lender owes you nothing. If anything, your employer owes you more. In the end, we have to take responsibility for our course in life. As you said, “What’s done is done.”

    If a short sale won’t work, your other option is to walk away. Read this interesting article: http://money.blogs.time.com/2009/11/30/is-walking-away-from-your-mortgage-the-smartest-thing-you-can-do/

    You needn’t worry about any solicitations. Any you do get will be bogus.

  8. Reply
    Shayla
    January 20, 2011 at 1:28 pm

    http://loan-seeker.info/mortgage-loans/ has mortgage requirements, good lenders and mortgage rates, how to get approved for a mortgage, and all other laws and information.

  9. Reply
    wartz
    January 20, 2011 at 1:56 pm

    How did your lender defraud you? You got the loan you wanted. If they have sold the loan off, the loan buyer is the one who has been defrauded.

  10. Reply
    Mary T
    January 20, 2011 at 2:18 pm

    Yes, it appears you do have a case since they arrived at their approval with what looks to be knowingly fraudulent data. Now you are in a mortgage that you cannot refinance and you may end up not being able to afford. I don’t know which kind of attorney to contact, but try a consumer protection lawyer. If that isn’t right, they can guide you from there.

    Best of luck!

  11. Reply
    Pengy
    January 20, 2011 at 2:27 pm

    Although that does seem to be an extreme case of devaluement the price and or worth of homes have been dropping dramatically mostly in CA, FL, NV, MI etc. If the assessments where based on 6-12 months ago before the downturn and credit crunch most likely speculatively they where correct or at least close to it. Many places have yes in the last few months have had a decrease in prices or worth of 25% and expect another decrease of at least 10% to follow. Loans are bought and sold all the time Although they might claim it is rare, it still happens. Again the market has moved south quickly and will continue to because of depreciating values in a market that is in the middle of correction, and will continue as such for at least the next 18 months. Sorry but that is the market right now.

  12. Reply
    gogo7
    January 20, 2011 at 2:28 pm

    The first things I would do is contact your attorney general’s office and see if there have been any complaints on the people you originally worked with like the builders, appraisal company, and I’m assuming it was a mortgage broker but it might have been the lender also. The attorney general’s office will also be very helpful on recommending what to do and they may even investigate it or may know of a class action suit to join in on.
    Unfortunately, you are not the only one this happens to. It seems there’s usually more than one person involved in the transaction to make this fraud stuff go through unnoticed, like a mortgage broker and an appraiser being related as an example.
    Other information to gather would be estimates on building your home versus the ending figure. Maybe find out about other homes the builder has done. One of the “guilty parties” would be the appraiser if it was indeed “fixed”.
    I would even show a 3rd appraiser the two appraisals and see what they say. A lot of times also they have a lot to say which might help.
    Good luck!

  13. Reply
    STEVEN F
    January 20, 2011 at 3:10 pm

    It sounds more like you should be suing the APPRAISER for fraud. The lending company was a VICTIM of fraud by the agent and the appraiser.

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