| Totally screwed PLEASE HELP (Long)
Wow what a great Forum. Looks like people are really getting help here.
Like to share my story in hopes of someone being able to help with some advice.
My wife and I live in Virginia and in March 2006 when a friend of ours decided to sell his house we decided we would try to buy it. With a growing family living in a townhouse it was time. In hindsight now we realize we bought at the worst time. We were buying our townhouse and had some equity in it. This is where out nightmare begun. We had our townhouse appraised it can in a 345,000. We pulled every bit ouf equity out to purchase our friends house which appraised at 475,000. Which we now realize was way out of our income level.
So we have our townhouse know which is on a interest only loan 1st 90/10 and normal am second. So basically we still owe 345,000 after 2 years. Our payments on this home are 2400.00 a month. Since at that time the market was still strong we decided to keep this home and see if there was any money to be made. We rented it out for 1600.00 leaving the negative balance each month of 800.00. No biggy we set aside 10,000 from the refi to cover this hoping that after a year it would go up in value if not sell it and hope to break even. Well year one went buy and down went the market after the first year was upside down probably40-50,000. Couldn’t sell so have keep it and hope the market gets better the following year to sell and get out of our hair. The market continues to go down in the second year. So where we are after 2 years is the homes in neighborhood are selling for 220-240,000. So upside down at least 100k there.
This is where the problem gets really bad. The new home we bought appraised and we purchased at 475k. We put 10% down on the home 90/10 leaving about 430k balance on the loan. We did the biggest mistake ever and signed up for the pick a pay loan (neg am/interest only/full payment). Knowing we were paying back 800 every month with the townhouse we knew for the first year we could only afford to pay the negative am. Payment. We were not to worried considering we put 10% down and it would only be for one year. Well two years we are really in the whole. We are adding about 12k a year back onto our loan. So know we are about 455k-460k range. Since we bought at the high end of the market and it has now went crazy low we are about 200k upside down. There is a foreclosure 2 houses up from me that is my same model, but not in great condition on the market for 250k.
My wife’s aunt is an accountant and we contacted her to see if she could help. She was very nice and put together a packet for both properties’ including everything the mortgage company’s wanted. This was about 2 months ago. Never heard back from them except the second on the townhome and he basically said there was nothing they could do to reduce the amount of the loan to get the property’s mortgage anywhere near the rented amount. Never heard back from any of the others at all, not even to say they received it. Some I have talked to say this is due to the fact that we were current on the loan and had not missed or been late on any payments. So basically they had no reason to help us.
Well this changed as of the 1st of May we just can’t afford it anymore. Not only is it costing us 12k a year to stay in our current home, we have added 15k to our current credit card debt bring out balance to almost 30k just trying to stay afloat. I had to stop,the market is still going down and our situation is getting worse every day. On the 15th of this month the phone started ringing from the mortgage company. I yet to answer them up till now. I really don’t know what to say they have our proposal in the packets we sent them and from everything I have read companies are still not reducing amount owed and willing to take the loss, and honestly that is the only way we can afford either of our homes at this point.
At this point letting the townhouse foreclose is the only option I see.
If we let the townhouse foreclose should we let the house we reside in foreclose as well?
Should I try bankruptcy? I have been told in the last few years the laws have changed and very difficult to file a 7. Someone told me that because of the two properties and one causing us to get in this situation that alone would allow us to qualify for a chapter 7. Don’t know?
I am find with finding somewhere to rent if this nightmare would stop.
Are they going to come after me if they sell both properties and say I am upsidedown 300k. I don’t have to money so what happens?
Do they write the losses off?
Someone mentioned to me that I was victim of a predatory loan and the mortage company put in this home knowing I could not afford it based on my income and debt. Is there something there with this?
Should I forclose on the townhouse and try to work something out with the mortgage company on the home I live in?
Forgot to mention that all 4 loans are through either homecoming or Washington mutual.
Also my wife and I combined make just about 100k a year, and currently my credit score(atleast till the 30th) is a 740 and my wifes is a 700.
I have at this point talked to a legal adviser or a bankruptcy attorney.
If anyone can give us any advise or suggestion please let me know. We would really appreciate it.
I have typed so much and I am sure that I maybe missing some important info that maybe needed before sound advise can be give so please let me know. If I don’t know the answer I will find it out, and post a response.
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