Upside Down on my House

[momof1in150]

Under the laws that were passed this year if you have a short sale you are taxed on the difference as it used to be categorized as income. The Mortgage Relief Act took that out of the tax code.

That being said you need to talk to your lender. All good lenders are willing to help people keep their homes. Wells Fargo is constantly sending us letters that if we need help to please call them and we have never been late on any payment.

[PetMom]

What happened to any legislation to address this issue for so many people in this situation? Seems we just keep hearing about the big people getting bailed out.

You are not the only homeowner in this situation.

Many have resorted to desperate measures and a lot are just walking away.

I would call the bank and talk to them. They are getting these calls from others and should have some solutions.

Naturally you should try to cut back on any expenses that you can, and possbily get a renter. This may become something more common as this was done for survival in the Great Depression.

Trying to find a second job (unless handed to you) will just get you competing with the thousands of people losing their jobs and trying to find work.

What you spend on frivolous spending would equate a second job income minus the work expenses. You would also have a lot more stress and end up more prone to drastic walk away measures. Spend the extra hours keeping the property up and yard up (do it yourself as one poster mentioned). Cook, cook from scratch. What people are spending on food convenience and eating out (even fast food) is quite a big expense.

Call the bank and admit you are just treading water with this. You are motviated to do something, many people don't even work out a plan.

Hopefully, they will admire the fact you have not missed a payment but let them know you are about at that point soon.

If you do a missed payments/short sale you might be on the market with many others competing for the same buyers - check your area for what is going on with this.

Before you make the decision walking away/foreclosure will be on your credit record for a long time.

[segmond]

someone said you should walk up...

well, here is my opinion, cuz i am sort of in the same boat. my mortgage is certainly worth more than my house is worth according to sales happening in this area. However, if I was to rent an apartment of same sized rooms or a house. I would be paying what I pay for mortgage or maybe a little more, so on that accord, I hold on to it.

[disneysteve]

my mortgage is certainly worth more than my house is worth according to sales happening in this area. However, if I was to rent an apartment of same sized rooms or a house. I would be paying what I pay for mortgage or maybe a little more, so on that accord, I hold on to it.

That makes sense and, IMO, is the right thing to do if you are able to afford the payments.

The situation with the OP, though, is that the ARM is going to reset and he/she may not be able to afford the payments once that happens. What do you do when you find yourself upside down with a payment that you can't afford?

[tripods68]

That makes sense and, IMO, is the right thing to do if you are able to afford the payments.

The situation with the OP, though, is that the ARM is going to reset and he/she may not be able to afford the payments once that happens. What do you do when you find yourself upside down with a payment that you can't afford?

I guess, what's not clear to me is the CAP and mortgage balance. ARM reset 1% or 2% plus or minus every year unless they are neg AM. With the feds fund rate being at 1%, how much will they be in the hole when it reset?

[disneysteve]

I guess, what's not clear to me is the CAP and mortgage balance. ARM reset 1% or 2% plus or minus every year unless they are neg AM. With the feds fund rate being at 1%, how much will they be in the hole when it reset?

OP said it was an interest-only ARM. I'm guessing that means the first 3 years was interest payments only and then principal payments start. That would explain a big jump in the monthly payment due.

Lots of people took out these ridiculous loans that they couldn't possibly afford, and the lenders made all those loans with total disregard for reality. That's a big part of why the housing market is such a mess now.

[tripods68]

Interest-ONLY ARM is definitely not good. They need to contact the Loan Loss Mitigated department of their lender. They may able to "freeze" the rate and extend the reset date by another couple of years just to ket them keep paying the mortgage. But that's just delaying the eventual disaster. There's also the HOPE program.

[ThriftoRama]

I would call Consumer Credit Counseling Service or your local housing nonprofit and meet wiht a counselor. It'd be better to do a workout than have nowhere to live!