Hello everyone. I don't expect a lot of sympathy from folks who are not in my tax bracket, but here she goes...
Bought house in 2004 for $875k. $750k mortgage. My income was $225k a year, and fully documented.
Comparable homes selling in 2005 for $1.2 to $1.4M...but we knew we needed a major backyard project to get our home up to neighborhood standards. Did a 10 year ARM at 5.6% and a HELOC for $200k.
So we owe $950k. The house was $1.4M to $1.6M at high point. Last month the house across the street short-sales for $785k after being purchased for $1.4M at the height of the market. They are the most direct comp in our neighborhood of custom homes. So we are likely under water by at least $150k based upon the banks numbers. That short sale took us from $1.05M to $850k IN A DAY according to Chase.
Loan doesn't adjust for 5 years, and now my income is closer to $300k a year.
Both loans with Chase.
We can afford to pay a 30 fixed mortgage on $950k at today's interest rates, but no one will do the loan based upon loan to value. In 5 years I expect interest rates to be double or triple what they are now based upon government spending coming home to roost. The people in my tax bracket have giant tax targets on their backs, so there in now way home values will rebound in my price range as the folks who could afford them in the past...like me...are facing additional taxes approaching 50 percent of the monthly mortgage we have right now. In other words, I am staring down the barrel of $3,000 a month in new taxes, fees, utility increases and the like that all target high earners since there are not enough of us to buy our votes. That knocks me out if interest rates are 10 percent in 5 years. I can't cover both.
Once Chase told me they would not refinance my loan into a fixed rate, I stopped paying principal. I was paying based upon a 20 year schedule. More money than the loan I want would cost me each month. Now I am banking the money and waiting until the loan adjusts in 5 years.
The whole thing is ridiculous. I can afford the mortgage. The bank will make money. We are a great credit risk.
I never thought I would EVER consider something like a "strategic default", but if I am going to be taxed out of my ability to pay my mortgage, I guess I don't feel bad.
I think I have done everything I can to TRY to work with Chase in a responsible way. My last call with them ended with me saying politely, "Well, I guess we are partners in this now."
Fixed rate loan for $950k at today's rates...no problem for us financially. But L2V means no one will finance. So the time bomb is ticking. Although I pay for every program available from the government, I am disqualified based upon being too financially successful.
I appreciate your thoughts. Thanks.