unable to pay mortgage

We have two mortgages on our home both were taken out at the time of purchase of our home the mortgage company said they structured our loan this way so we wouldn't be paying extra money in mortgage insurance.

Recently my husband lost his job and then was ill for several weeks. He has been unable to find enployment.

We are currently in our second month of not being able to pay our first mortgage and this will be the first month of not being able to pay our second mortgage.

What is the proceedure for turning our home over to the mortgage companies? The housing values have went down. Are we going to be responsible for the difference if the second mortgage is not satisfied? We don't want to wait and just get foreclosed on, what are the best steps to take to turn over are home. We need to do this within this month.

Have you talked to your lender? Many lenders have hardship exceptions that will allow you to defer payments. Foreclosure is a serious mark against your credit and is emotionally difficult as well. Most lenders will go to great lengths to keep customers in their homes. Talk to them before you let your account go into arrears any further. You may be surprised at how they can help.

Some lenders will let you deed the house back to them, but that is the equivalent of a fast foreclosure. If the house is foreclosed on, it will be sold and the lender can seek a deficiency judgment against you if the amount the house sells for is less than the amount owed. It all depends on the lender.

Contact them, communicate with them. It may save both your sanity and your house.

Not that it matters, but I don't understand how having a first and second mortgage lets you avoid mortgage insurance premiums. Customarily when you purchase a home with two mortgages at the beginning, it is done so you can have 100% financing--but doesn't let you avoid MIP. MIP is avoided when the loan to value ratio is 80/20. In other words, once your house is worth twenty percent more than you owe you can get rid of the MIP. (This varies from lender to lender---just the practice of many lenders).

In any regard, contact your lender. You may be surprised how they are willing to help.

Good luck.

What she just said, Grace, is that she has been working with a mortgage company that deals in substandard loan apps... These are the reason Fannie Mae and Freddie Mac are going to be subsidized for capital by us taxpayers.

These folks have little to no equity with the drop in housing values. The best thing in their favor is that there are a lot of people in their same boots.... and the banks cannot expect to sell all those homes. Better that they work out some kind of arrangement to rent the house and revise the loan IF they recover their job situation. At least the house would be occupied.

Mortgage companies really don't want to receive the deed in lieu of payment. They don't have many hoops to jump through in a down market anyway.

You will likely be hit with a judgement for the amount not paid at sale - if you cannot arrange some kind of deal with the mortgage company.

I have NO Idea why EVERY posting you write says "GRACE". I understood the poster clearly , and it appears she understood MY response as well.

MY response was :"Contact them, communicate with them. It may save both your sanity and your house."

I wasn't hypothesizing as to what arrangements they MIGHT be able to work out--I was encouraging her to talk with them and see what they could come up with.

How that is different from what YOU said escapes me.

Feel free to address your comments to the poster---they are not applicable to me in the least.

We had a hard time selling our house. I think it is getting close to foreclosure. Our realtor is trying to do a short sale with no luck. My husband has a lein against him, or so we thought. It was for another person by the same name. I knew it wasn't him. Anyway, why would we have to pay the attourneys for the job that they are doing and we didn't ask them to do it. Plus the reason why we moved out of the house was because we couldn't afford the house payment. That's why we are in the apartment.

Judy

Possible foreclosure. Our realtor had been working on a short sale. Did I say that I had been trying to get in touch with someone regarding the lein against my husband which wasn't him? I was trying to call him and there was no answer. I tried to look up the number online via the white pages and it said that number was a landline number. Right now, we don't have money to pay $1,000. They can take our house and get the money that way,which is fine with us. Any info that anyone can give us would be greatly appreciated.

The reason I addressed you is that you suggested the near impossible because you don't understand the market... lenders who prey on folks with substandard loans that sound affordable but quickly cause them to go under are selling those loans and have NOTHING AT RISK but they CAUSE the damage it causes to the buyer or to the public through FNMA capital support. I seriously doubt they will work with her, but it is worth a try given some NEW developments in the bankruptcy courts. The best news I've heard is that a judge in a court in Virginia has said upon several foreclosure attempts that the lender SHOULD work with the borrower because the LENDER was responsible for the bad loan and the terms that brought it to foreclosure. And they made a bundle in closing fees to boot.

So maybe it is time to haul these flight-risk lenders back into the picture and ask why they didn't advise you that they were writing a mortgage (after you paid your hard earned money for a shot at a good loan) that was substandard and wouldn't pass lending criteria until they put out a second loan for the downpayment. They set you up. And NO, this is not actually a legal thing Grace suggested. It might be called charity... or just false hope.

The mortgage is a legal document and you should READ it to see what penalties might apply. YOU might not want to pay those penalties and then HOPE that the lender will NOT charge them... because they WILL. Better to kill it up front that to get involved with huge penalties ... and still lose the house. ALWAYS be aware of the downside. Get out your calculator and figure out how much the house might sell for if it sold in a month or less... with significant losses, but seldom less than the current market unless this lender has written lots of similar loans with no collateral. That has been done in some markets, and the homes NEVER sell. They languish on the market and deteriorate. All homes in the area are affected because NOBODY can sell in that down a market.

If YOUR market is like that, with NOTHING selling, with whole subdivisions defaulting when jobs are lost, then I really think you might find it dangerous to live there... but it might actually make it possible for you to have a realistic discussion with your lender... with facts at hand from your friendly realtor about the market pressures, unemployment stats, empty homes, foreclosures as a percent in various areas... so that they can begin to understand that these homes are going to be sitting there wasting the lender's... or maybe the fractional owner of the mortgage... asset behind the mortgage. It might best serve that company to have you pay rent or a reduced mortgage or a rewritten mortgage at today's below 6% rates on a fixed interest rate and longer term. This prevents his asset from being wasted if you are in a broadly down market. AND He still has a mortgage asset to put on his books in the PLUS column. BUT YOU HAVE TO DO YOUR HOMEWORK.

OBTW, situations like this with large numbers of houses on the market and sitting empty will draw thieves who will strip the houses of their marketable fixtures and copper. They also have been known to go into houses that are NOT empty and strip them of everything while their owners are at work. Hence I say get a map of houses that are in your neighborhood. If nobody lives there you are at risk... IS IT WORTH IT?

Congratulations, Grace, you did a pretty good job. But $12K is a pretty steep stripping job. How do YOU know who did the stripping? You must have had someone else do the work. But then I realize that you are somewhere in the Carolinas where housing could be fairly large for not much money.

You probably are not aware the the north central states near the Atlantic are experiencing whole subdivisions going into foreclosure. Those that are left can't sell either without losing their downpayment. Living in an area like that can be both dangerous, because of the thieves, and lonely.

Unfortunately, this is the second time in thirty years that we have had large numbers of loans surreptitiously written without adequate credit investigation. The first time the loans were written down by the RTC (Resolution Trust Corporation, an arm of the federal government engaged to write down Savings and Loan mortgages by appraising the properties based on current market), was the Savings and Loan Crisis of the late 1980's and through the mid 1990's. Now with the lax supervision and the multiple new kinds of fractional shares of loans being sold to multiple lenders, it is often the case that the lender cannot find the legal papers to take to court proving that they are owed money.

Moreover, the supervision crisis will always be with us when the financial gurus in Washington allow new financial instruments to be laid out without so much as an overlook to see if they have merit or if they are just the next RTC write down that the American Public or the Financial Institutions will have to bail some company out of a failed capital situation. Look at Lehman Brothers going down on Monday. They are a prime example... but the other bankers were called in to do the buyout.

But who gains with all this repricing of our subdivisions? The answer is not simple... basically it is the foreign lenders who gain when we pick up the tab for failed loans. They have underwritten the financial thieves who wrote the underwater loans.... but frankly, if we let them go down with Lehman Brothers, we would lose a market for some of our products and it would just tumble all kinds of groups into a recession or even a depression.

So for the growth in real estate as an industry that the President has touted for the last 7 years, just remember that the result is that the American people lose the houses pretty rapidly, neighborhoods are damaged, entire towns are damaged, the financial gurus who thought up the fractional lender sharing the risk on no documentation loans and low down payment loans win some temporary money, but the new industry the president has "created" to replace the manufacturing of American products by adding $$$ to the Gross National Product has failed for lack of oversight by the federal government... we didn't have to go down this road... we only wound up here to keep the 2001 recession from extending itself long enough to prevent Mr. Bush from getting a second term.

Judy, when you post your situation on top of someone else's initial posting, their initial posting becomes lost to us when we are trying to post an answer. Perhaps you should just enter a new thread in the same category.

WE have done so. The person that I was trying to get in touch with doesn't answer. The phone keeps ringing and so does the fax number. I will have to find the number and see what I can find out. I have already faxed the other person's lein to the government,or whoever it needed to go to, and then we recieved something that said that they needed an actual location of the property that we had. How can I get in touch with someone to let them kow where my husband actually lived for the 4 other leins against the other person with my husband's name?

Thanks,
Judy