Investment Property refinance/modification Help!

[strugglinglandlord]

Hello, my wife and I have 4 rental properties, 3 in my name and 1 in her name. We purchased the properties in 2006 at the peak market value and when the interest rates were getting relatively high (ranging from 8% to 8.6%). We have one 30 yr fixed rate loan on each property, all with PHH and all of them were 95% financed. In the beginning the properties were all cash flowing at roughly $150/mo. Now, 3 years later, we are having trouble staying afloat. The properties are located in low-income neighborhoods, with tenants that are unreliable. In the past couple months I’ve had one eviction, one tenant that suddenly decided to move-out after not paying me for 2 months, and another tenant that skipped a payment because her husband lost his job. The properties are in ok condition and I’m in the process of doing some upgrades and repairs at 2 of them. In the meantime, I am hurting for income. At this point all of our savings are depleted we’ve been using credit cards to keep up with all our living expenses.

I’ve made several attempts to refinance under Obama’s plan, but PHH has said that I need to have 6 mos. reserves. I’ve spoken to PHH’s Loss Mitigation department regarding the foreclosure process and my options for temporary loan modification. I was able to pay the credit cards off this month by waiting until the 15^th to make all the mortgage payments (as suggested by PHH). They do offer a 6 month hardship modification which the rep believed I qualified for. It will reduce my P&I in half for six months with the difference being tacked onto my principal at the end of the 6 months. This does not help me in the long run. I’m at the point where I have to do something or I am looking at foreclosure.

Has anyone been successful in turning around a similar situation whether it be through refinancing or through loan mods?

[strive2win]

Hi Strugglinglandlord (I should have picked that name), I can't say that I have turned my situation "around", but I have gotten loan mods on three different investment properties. An example...a loan that I was paying $2600.00 per month interest only at over 7 percent (the loan was a 7 year fixed, I was in the second year of repayment). I was able to get a modification wherein the first year's payments are at 3% fixed for the first year, 4.5 percent the second year and 5.75 percent fixed from year three through the life of the loan. My first year's payments are a little over $1,600.00, and is is WONDERFUL! I am paying principal and interest and saving over $900.00 each month. I had never been late on the mortgage either. I hired someone to do the loan mod for me and it ended up being worth every penny in the end.

I just wanted to let you know that it is possible, although I can't give any pointers on how to do it successfully, I can assure that it is possible and I hope this helps to motivate you to give it a try. The best of luck to you!

[heidi79]

Strive . . . what banks were you able to do these modifications with? I'm having trouble with Citimortgage right now. Your reply would be appreciated.

[strive2win]

All three of my mods were with WAMU...good luck to you! I must add that I believe that know-how is more important than luck with these mods...which is why I let someone else handle them for me.

[Banzai]

What type of firm helped you? A lawyer ? Also what reserves did you have to get these mods done?

Thanks for sharing

[strive2win]

No, it was not an attorney...it was a company I found while scouring the web for a company that could handle my loan mods for me. At the time, they only did loan mods for Wamu mortgages. I did not have more than a couple of thousand dollars in savings when I went through the process. I didn't get the feeling that reserves had a lot to do with them getting my loans modified.

[Eneal08]

Dear Strugling landlord, Wellcome 2 the club. I was successful in getting as loan mod for 24 units 6 months ago. Bayview Bank is the lender;. I got a phone call from their loss mitigtion dept. once i stopped paying the mortgage.
The process wasn't difficut. Just contact your lender and submit a hardship letter. along with what ever documents the bank requires. My payments went from 12k to 5600 per month! The missed payments were tacjed onto the back of the loan. I did have to pay upfront for the missed impound payments for taxes and insurance. I have several other properties that i'm requesting modifications on with other lenders. i had to stop making payments due to loss rental income. Tenants have also become financially unstable. And vacancies are sitting empty significantly longer. You should do something before you exhaust all your hard earned savings. Good Luck.

[chasqui]

Eneal08,
I have a question, do yo have any idea how the bank calculates wheather they can help you out or not? I know that for a primary residency the monthly payment has to be 38% of the total income. I am asking this because we have an investment property, the rental income doesn't cover the expenses and loan by $100 dollars. I called the bank and gave them all my expenses and they said that they couldn't offer us anything except a shortsale. That didn't quite make sense to me. So I am planning to call them back again, but want to get more information before I do that.
Any insights would be appreciated.

[lasvegash]

Strive2win, how much did the loan mod company cost, how long did it take and whats the name?

[Elle Pace]

Hi All,

I am new to the forum. NEED some help on my investment property.
I have an investment property located in so cal. I have only one loan from B of A. Since california is a non-recourse state, if I forclosed on this investment property, can the bank sue me for the difrerence?

Thanks in advance

[HopingtoFind]

Originally Posted by Elle Pace

Hi All,

I am new to the forum. NEED some help on my investment property.
I have an investment property located in so cal. I have only one loan from B of A. Since california is a non-recourse state, if I forclosed on this investment property, can the bank sue me for the difrerence?

Thanks in advance

If you only have one loan, you're safe. In CA there is one option rule, if they foreclose using non-judicial foreclosure, I haven't heard them do otherwise, they cannot come after you for deficiency.

[Elle Pace]

Hopingtofind,

Thanks for the response. So if I only have 1 loan on my investment property in CA, do I have to pay the difference in TAX to the IRS.

[HopingtoFind]

If lender sends you 1099, I believe yes. I would double check with an accountant.

I suggest you do an appraisal on your property right now to protect yourself. So that if lender sells if for a lot less then it is appraised for you can contest it.

[Elle Pace]

HopingtoFind,

Thanks again for all your great advice.