Upside Down Modification???

[mbayan]

HI,

I bought my home from a builder (brand new home) this past November of 2007 in the builder's first phase of sales. Its now May, 6 months have passed, and I bought the home for 745,000 and now the builder is selling my larger models for 600,000 and my model for about 550,000 as of last week. Meaning that I've become upside down in the home over 150K. I have a 10 year fixed at 6.25% on my first and I have never been late on any payments.

DOES ANYONE THINK THAT ITS EVEN WORTH CALLING COUNTRYWIDE, MY LENDER, TO SEE IF THEY WILL MODIFY MY LOAN BALANCE? Or does anyone have experience calling countrywide to modify an upside down loan balance?

Thanks For Any Assistance!

[Moe Bedard]

Hi mbayan,

Welcome to the forum and thank you for joining...........

You have a 6.25% fixed for 10 yrs. so that isn't going to be modified, ..

if you are looking for a principle reduction that isn't happening yet......and who knows if it will in the future......most think not.....

[MlcMBjnn]

Hi mbayn,

Let me play devil's advocate here ... A lender gave you a loan(s) for 745K based on the value of your home at that time. Nobody had a crystal ball to tell them that in 6 months or whatever the value would decrease by 150K - even if they had and only leant you 550K, you couldn't have bought the house then! So, fast forward and now it's only worth 550K - but you have 10 years at a really excellent rate. In all likelihood, the real estate market will be well on its way to recovery by then and you could conceivably have regained that lost equity. If they reduce your principle now to 550K that means they are accepting a substantial permanent loss. In 10 years, when your house is again worth 745K, are you going share that regained equity with them? Why would they take all that loss now and leave any future gain to you? Banks aren't in this business for altruistic reasons - they let us use their money so they can make more money and if we're lucky we will all share in the profits. But if we lose, then we all share the loss and that's only fair.

If you like your home and you intend to be there for a long time, then just hold on because there is a very real possibility you will get that equity back in 10 years. It's time for people to get back to basics and think of a home as just that and not their sole means of wealth. If we have learned anything in the last year, it is that the stakes are too high to place so much of a burden on our homes.

[evel1999]

I know how you feel on this. I am upside down on my home for $65,000.
Mine was a refinance. They over appraised my home and I took out the loan.
I was able to get a Loan Modification to a lower rate to get out of the ARM and not loose my home but no reduction on balance. I have a payment I can afford now and am happy even tho I owe more than the home is worth right now. I know this does not make since, but the housing market will come back and all this will be behind us. It will take time. Most all homeowners are going to be upside down.

Some choose to walk away because they are upside down. But if you truly want to keep your home, eventually this market will come back up again as it has in the past when we have been in a housing slump before. I wanted to stay in my home, so I choose to continue to pay back the money I owe on my home even tho it will not appraise for that amount.

About the only way you can get a reduction on what you owe is do a short sale. That is good for the ones who choose not to stay or cannot stay due to hardship and etc.

Some are doing a refinance with FHA Secure and they have included provisions for when the home will not appraise for what you owe.