It’s nice to have this blog back up and running, especially on days like today when it’s cold, windy, rainy, and I’m in no state to be taking photos of myself twirling around in a pretty skirt. I like the fashion blogging, but some days I don’t have the motivation to dress up and take photos to post online. I had a free day off from work today (in return for working all those ridiculously long hours that last two weeks), and now that I’ve run all my errands, my main goal is to put the final touches on my short refinance package that I’ll be sending to the mortgage company.
I know I’ve written some ranting posts about the mortgage company recently, so I thought I’d share some interesting things I’ve learned over the past few years that I’ve been arguing with those idiots.
You’re probably already aware of the fact that I purchased my condo in 2006 with my friend/roommate at the time, and she’s since moved out, gotten married and started a family. We financed 100 percent of the value of our condo when we bought it, and since we had hardly any credit established between the two of us, we’re paying a ridiculous interest rate on our loan. (Ridiculous.) We’re obviously updside down in the property — just like everyone else on the planet — and we’ve been trying to figure out a way to get her name off the loan for almost two years now. She’s not interested in owning the condo anymore, but I live there, so I’m not really willing to sell it or give it up any time soon.
Of course, the bank won’t assist us in any way because we’re current on our payments, and unfortunately, since we’re upside down, there’s no refinancing unless we want to sink a bunch of money into the black hole we refer to as “negative equity.” The government loan modification programs won’t help us because modifying a loan doesn’t remove a borrower from the note — it only modifies the terms of the loan, like possibly the interest rate and the monthly payments. (And I’ve heard lots of sketchy stories about those modification programs anyway.)
After all my digging for options, I’ve only come up with four ways to get my co-borrower off of our loan:
1. Refinance, which would cost tons of money (see above).
2. Short sale, which would ding both our credit reports and most likely result in me being unable to buy another home in the next few years.
3. Foreclosure or deed in lieu, which, again, would ding our credit reports and definitely result in me being unable to buy another home for a few years.
4. Short payoff refinance, the best option yet. This process is similar to a short sale, but instead of the property being sold, it is simply refinanced with a new lender. Well, 97.5 percent of the current value of the property is refinanced with a new lender, and the remainder of the principal is forgiven by the previous lender. In our case, it would be refinanced only into my name, removing her obligation from the old mortgage and leaving me as the sole owner of the condo. Doesn’t that sound perfect?
Before I learned about this program, I had been asking for years whether it was possible for me to short sell my condo to myself, and everyone kept telling me no. Why not? I’d wonder because it always seemed like a great idea to me — kind of like a price adjustment for my house.
A few months ago, a short sale officer with my current lender suggested a short payoff refinance to me. He explained how it works, and sent me on my way to find a new loan. It took a few calls to locate a bank familiar with the FHA Short Refinance Loan. Apparently the program is pretty rare — there aren’t really any incentives to encourage banks to let homeowners do this, and it’s a huge pain in the ass to convince them. Besides, you have to be current on your loan and have decent credit to qualify for the program. I’m sure a lot of people are already in too much trouble by the time they reach out for help to take advantage of something like this.
When I say it’s a pain in the ass, I’m not kidding. The program was first brought to my attention in June, and it took me almost three months to get another person on the phone at LBPS (the servicer of my current mortgage) who would even acknowledge that the program existed. “We don’t do those,” they’d say. “I don’t know what you’re talking about.” “I’ve never heard of that.” Finally, two weeks ago, I demanded that someone list off the names of everyone I had ever spoken to at LBPS and the dates I spoke with them. I caught a date and a name that sounded familiar and waited on hold to speak with that person for more than two hours. When he finally picked up, he remembered me.
“I do remember advising you to try that, Ms. DeNoia,” he said. “We really don’t do those, but you’re right. Your situation is a unique one. If you’ll write a hardship letter and gather the required information, I’ll try to make a case for you.”
Many say the program is doomed, but I’ve got my paperwork done and ready to go. If they’re going to make and exception for someone, why not me? It’s at least worth a shot. There’s a chance this could save me a lot of money in the long run and decrease my mortgage payment by a pretty significant amount. It would be well worth the two years of bullshit I’ve had to deal with with these freaking mortgage companies (companies, plural, because my loan was sold in April).
I’m sending in my package for approval tomorrow, and in the meantime, I’ve been sending my mortgage payments via certified mail to make sure LBPS doesn’t try to screw me out of being eligible for the FHA loan by marking one of my payments late. I’ve got a lawyer, a lender, and a new loan all ready to go, and if LBPS approves it, it’s possible that I could close on the new loan before Christmas. Score!
If it doesn’t work, then maybe I’ll figure something else out. It doesn’t make much financial sense to pay as much as I’m paying to live in my condo right now because I could give it up and rent one for a lot less every month month, you know? I don’t know about you, but I’m not convinced that a squeaky clean credit report is worth thousands of dollars. I’d rather take the hit, move out, and save the money if I have to make that choice because I’m not sure my property would regain it’s value in the time it would take me to recover and purchase something new for less money.
Either way, for now I’m just keeping my fingers crossed because this could turn out to be a pretty sweet deal.
I normally wouldn’t share my financial information on the Internet like this, but I’m sure there are others out there struggling with housing issues. If all the time I spent trying to get this loan under control could assist others in some way, maybe I wouldn’t feel like it was wasted — even if my attempt at a short refi falls through. I’d love to hear your real estate stories if you’ve got any good ones. E-mail me if you’re not comfortable leaving a comment. I’d be happy to give you some advice on how to get your mortgage company to respond — for me that’s been the biggest challenge.
This crazy trip has got me feelin’: persistant
And I’m singin’ along to: Walk Like A Man – Frankie Valli & The Four Seasons