TheHaitian
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Post by TheHaitian on Dec 21, 2019 10:38:57 GMT -5
We just found out that a family member almost lost their home in May/June to foreclosure. A date was set for auction and everything... but last minute they managed to do something and save the house.
From what I understand it is a loan modification in some sort. That the bank now accept what she can pay or something like that ; getting this information second hand so a lot of information might have been lost by the time it gets to us.
My suggestion was for them to sell but I was told they would lose money or still owe money if they sold. So been googling how exactly does a loan modification works?
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haapai
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Post by haapai on Dec 21, 2019 12:18:58 GMT -5
Well, here's something that I stumbled across a few weeks ago regarding the increasing re-default rate on mortgages that have already been granted a modification at least once. It will get you started. (I.e. try googling "mortgage modification" instead) and it is probably written to scare the pants off anyone that reads it. The second paragraph defines a mortgage modification pretty well. The rest of the article might have been inspired by short-sellers, or maybe not.
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Bonny
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Post by Bonny on Dec 21, 2019 13:00:21 GMT -5
We just found out that a family member almost lost their home in May/June to foreclosure. A date was set for auction and everything... but last minute they managed to do something and save the house. From what I understand it is a loan modification in some sort. That the bank now accept what she can pay or something like that ; getting this information second hand so a lot of information might have been lost by the time it gets to us. My suggestion was for them to sell but I was told they would lose money or still owe money if they sold. So been googling how exactly does a loan modification works? Every situation is unique but unless your relative was experiencing a short-term economic loss e.g. job loss or short term disability, it's likely they just can't afford the house.
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Bonny
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Post by Bonny on Dec 21, 2019 13:04:51 GMT -5
Well, here's something that I stumbled across a few weeks ago regarding the increasing re-default rate on mortgages that have already been granted a modification at least once. It will get you started. (I.e. try googling "mortgage modification" instead) and it is probably written to scare the pants off anyone that reads it. The second paragraph defines a mortgage modification pretty well. The rest of the article might have been inspired by short-sellers, or maybe not. The problem with the 2005-2008 market was that so many people bought houses with no realistic way to pay for them. The Stated Income Loans were sold to secondary markets under the assumption that people would do anything to keep their houses. As the markets showed, most people were unwilling to make payments if their homes were under water by 25%-50% so they walked.
For many people their credit recovered faster than the market.
Some markets even though it's been 10 years later, still haven't recovered to their 2005 levels.
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Tiny
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Post by Tiny on Dec 21, 2019 15:17:05 GMT -5
My suggestion was for them to sell but I was told they would lose money or still owe money if they sold. So been googling how exactly does a loan modification works? A piece of useful info would be to know how long they have had their mortgage. Once you know that - it's a little easier to "extrapolate from incomplete data". Another thing to think about is how people use the term "foreclosure". It might just mean they've missed enough payments to get the loan holder to send them a nasty gram. Sending in some money (any amount) might placate the lender. They might say they are in "Foreclosure" but if they can keep funneling some money every now and then to the lender - they can stay in the house. Generally, it takes more than a couple of missed payments for the bank to actually kick out the owners and take back the house - even though the house might be SAID to be in Foreclosure or pre-Forclosure. The real trick is property tax (if they are high).. that and insurance adds up pretty quick and the lender MIGHT take action because of those costs. Keep in mind, If they bought the house recently (2 to 3 years ago) with not much down it's possible that housing prices haven't gone up enough so that a sale today would cover the realtor fees and the other costs of selling AND the outstanding loan on the house. I just bought a house that was owned for 18months - prices have kind of leveled off - the seller didn't put much down (10K) I estimate the final amount they finished with was between -1K and +1K (depending on how much the realtors got paid. Public records are amazing source of info.
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TheHaitian
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Post by TheHaitian on Dec 21, 2019 17:44:56 GMT -5
They did not tell us directly... we found out by accident actually. My wife was sending the son a gift and could not remember the zip code. So I went on google and entered the address and there come up the Zillow listing and all the information about the foreclosure , auction date, when they missed payments etc.
I asked my wife if she knew because she never mentioned it and she said she was not aware. She then ask her mom and her mom said she was aware of it somewhat, that they had already said a date to auction the house but she managed to save it somewhat.
I am not surprised by the foreclosure, I am actually surprised they have been able to hold on to the house for so long. My wife aunt has not work in at least ~7 years that I can think of (probably more). Her cousin is divorce sharing custody of her son with the ex, have as much student loans as my wife (if not more)... so we knew she could not carry the mortgage on her own; but by the grace of God they have made it so far.
I told them to sell it since year 1 of the aunt losing her job... it seems at first the bank denied the modification because they said the cousin did not make enough to carry the mortgage by herself ( DUH) and the only reason they got approved the next time is they said that another cousin of my wife lives there and is contributing financially in the form of rent payment (which is not true).
So while this buy them sometimes and maybe they can afford the new payment under the loans modification ... but their financial situation as far as “income” has not changed.
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TheHaitian
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Post by TheHaitian on Dec 21, 2019 17:49:20 GMT -5
We just found out that a family member almost lost their home in May/June to foreclosure. A date was set for auction and everything... but last minute they managed to do something and save the house. From what I understand it is a loan modification in some sort. That the bank now accept what she can pay or something like that ; getting this information second hand so a lot of information might have been lost by the time it gets to us. My suggestion was for them to sell but I was told they would lose money or still owe money if they sold. So been googling how exactly does a loan modification works? Every situation is unique but unless your relative was experiencing a short-term economic loss e.g. job loss or short term disability, it's likely they just can't afford the house. That is the concern that this is just a band aid on the inevitable. A lot of maintenance have been neglected in the house (I am guessing due to cost and they cannot afford it) because they have been in survival mode. The house was purchased in 2009 and 2011-2012 my wife cousin had her first mental breakdown because everything was just to much for her : she was the only one working (her mom had just lost her job around then); her marriage was on the rocks (since then divorced) ; had to go back to work 2 weeks after c-section because she was the only one with a JOB, postpartum etc. So really the past decade they have been just holding on to this house I don’t know why...
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andi9899
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Post by andi9899 on Dec 21, 2019 17:57:07 GMT -5
At this point if they're upside down on it and their credit is already trashed, they might as well just give it back and get out from under it.
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TheHaitian
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Post by TheHaitian on Dec 21, 2019 19:27:50 GMT -5
At this point if they're upside down on it and their credit is already trashed, they might as well just give it back and get out from under it. They purchased it in 2009 for 409k, Zillow and Redfin has it worth 565k-580k. Is it possible they are upside down? Do you think with late fees and everything the bank tackled on it? I don’t think they would make as much profit as they would like but I don’t think they are upside down personally but could be wrong. I think that after their sister passed away she took part of her and daughter inheritance and put it as a down payment on the house. I remember the ex husband bragging about how they put ~100k down on the house (maybe true maybe not). I think it is a pride thing and they (mostly the mother) are like the people the banks like / prey on: willing to do anything and sacrifice anything in order to keep the house. I am not... I would have sold that house a LONG LONG LONG time ago... to them it is not only a matter of pride but they see the money they already have in the house and don’t want to lose it. The issue: with each passing year the mother remains unemployed the less likely she is to get a job and I do not see the cousin salary shooting up overnight. Their only saving grace: the cousin lands a husband with a good job / income willing to move into the house and contribute. If not: only a matter of time before they lose it. I am just surprised it has taken that long... and here I am afraid of missing 1 payment. Weird because we found out about this the day after I have a conversation with my wife about Jim Jones and his girlfriend losing his house in that same area and it being sold back to the bank for $100. He did not make a payment since 2010 and was sued in 2017... I told my wife how you are made to believe you miss 1 payment and you are at risk of losing the house and you have those people out there going years without making a single payment still living in there. Like wow.... Anyway let’s see what 2020’brings !
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Deleted
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Post by Deleted on Dec 21, 2019 19:31:22 GMT -5
At this point if they're upside down on it and their credit is already trashed, they might as well just give it back and get out from under it. They purchased it in 2009 for 409k, Zillow and Redfin has it worth 565k-580k. Is it possible they are upside down? Do you think with late fees and everything the bank tackled on it? I don’t think they would make as much profit as they would like but I don’t think they are upside down personally but could be wrong. Well, you said in your first post that they may still owe money after the sale...
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TheHaitian
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Post by TheHaitian on Dec 21, 2019 20:25:31 GMT -5
They purchased it in 2009 for 409k, Zillow and Redfin has it worth 565k-580k. Is it possible they are upside down? Do you think with late fees and everything the bank tackled on it? I don’t think they would make as much profit as they would like but I don’t think they are upside down personally but could be wrong. Well, you said in your first post that they may still owe money after the sale... That is what MIL stated and it may be true or not... I don’t know. I just have what MIL sister told her and what I am guessing/assuming. If they had made every single payment since the loan was issued then they should not owe but then you have missed payments, late fees, etc So how much did the initial loan ballooned to? Using the Jim Jones story : He took out a mortgage of 680k in 2006, did not make payments since 2010... sued in 2017; reached an agreement with the bank and continue to not make payments till he lost the house in 2019. House is Valued at 742k yet he is still on the hook to the bank for Read More: Jim Jones' House Foreclosed, Sold Back to Bank for 00: Report - XXL | www.xxlmag.com/news/2019/09/jim-jones-house-foreclosed/?utm_source=tsmclip&utm_medium=referralSo could it be the same for them? Maybe. But again I am not taking everything they are telling MIL at face value because they will always present the story a way to make themselves look like the victim and needing help.
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Post by The Walk of the Penguin Mich on Dec 22, 2019 13:00:43 GMT -5
Another thing to consider is that when the value of the house went up, they pulled money out of the house on a refinance.
My sister and her ex did this. Built the house for $165k, with $30k down. House is worth about $425-450k, they owe $225k. They built the house in 1996.
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Tiny
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Post by Tiny on Dec 22, 2019 14:02:56 GMT -5
I'd take the redfin estimate with a grain of salt - I'd guess everything about the house is now 10 years older than when it was purchased (HVAC, roof, etc...) I'd also guess that there are alot of quick DIY fixable things that didn't get fixed. Houses with someone living in them and doing no maintenance decay slower than empty houses - but they still decay. Even with a sale of 500K they may not have enough to cover the realtor fees (possibly 30K), paying off the mortgage lender, the back taxes, any back hoa fees, and who knows what else they haven't paid (electric, gas, water/sewer/trash, etc...) Maybe they could "negotiate" what they owe to lower amounts... I know sometimes the county/city/whatever will reduce what's owed (write off late charges, some fees associated with late charges/non payment/etc...) in order to get the property sold to someone who WILL pay their bills. I'm not sure what kind of lawyer or patron one needs to do that.
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Bonny
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Post by Bonny on Dec 22, 2019 15:58:43 GMT -5
Another thing to consider is that when the value of the house went up, they pulled money out of the house on a refinance. My sister and her ex did this. Built the house for $165k, with $30k down. House is worth about $425-450k, they owe $225k. They built the house in 1996. I was thinking of a HELOC or 2nd mortgage.
One of my first listings was a house whereby the divorced nurse bought a house down the street from her ex, a doctor. She took out a 2nd because she couldn't afford to make the payments on the first. She kept making the payments on the 2nd because she could afford them. In the meantime the first started foreclosure proceedings. I had no idea she was in foreclosure until she told her bank to contact me. Needless to say we had to drop the price to keep the house from being foreclosed on. Between closing costs and her attorney, the seller netted $1,000. We agents chipped in parts of our commissions.
People do some strange things.
ETA: This would have been back in 1981 or 1982. The interest rate on the 2nd must have been 19%!
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Plain Old Petunia
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Post by Plain Old Petunia on Jan 3, 2020 15:30:15 GMT -5
Well, here's something that I stumbled across a few weeks ago regarding the increasing re-default rate on mortgages that have already been granted a modification at least once. It will get you started. (I.e. try googling "mortgage modification" instead) and it is probably written to scare the pants off anyone that reads it. The second paragraph defines a mortgage modification pretty well. The rest of the article might have been inspired by short-sellers, or maybe not. The problem with the 2005-2008 market was that so many people bought houses with no realistic way to pay for them. The Stated Income Loans were sold to secondary markets under the assumption that people would do anything to keep their houses. As the markets showed, most people were unwilling to make payments if their homes were under water by 25%-50% so they walked.
For many people their credit recovered faster than the market.
Some markets even though it's been 10 years later, still haven't recovered to their 2005 levels.
My old area is still way below the market high, which occurred in Aug 2006 (in that particular locale).
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