patrick.net

Tekkierich - for what it's worth, you're credit union may be willing to negotiate your rate. Have you tried calling them yet?

I'm not sure how much differently a mortgage from a car note would be treated if held in house by the credit union, but I bought a used car a few months ago. Because it was used, the local credit union would give me a rate of 6.9% (even with 800+ credit score), the dealership offered me 4.25%, so the credit union said they would match it.... When I went into the credit union with the paperwork (after driving the car home), they brought it down 3.75% after talking with the branch manager.

The only reason I took a loan out, was because they were offering $100 cash if you took out a new loan with them (no strings)... So I took out the loan, collected the $100, and paid off the note. I robbed a bank :)

Anyhow, rather than stressing out about it, or role playing scenarios in your head, just call or stop into your local branch and see what they can do for you.

Too early to worry. With BRAC coming to Aberdeen and Ft. Meade, your house could get back to your purchase price by 3/2013. I think that mortgage rates will stay low till then because housing nationally will still be weak.

Consider the tax benefits of selling your property. Because it is a rental property, the rules are different (I.e. Capital loss deductions DO apply, unlike in the case of your primary residence). This could be a huge offset to your actual loss.

tekkierich says

Tenouncetrout says

tekkierich says

We have moved about 80 miles away to York, PA for a job and a little more “wholesome” atmosphere to raise our children in.

Nothing more wholesome than two stressed out people “mother eph’ing” each other over bills.
That’s what you get for not being happy with you got, and for thinking your kid is more precious and special than everyone else.

This is an uncalled for flame.

It wasn't a Flame it was the damn truth. I'm sick of hearing about yuppie losers that think their evil spawn are any more precious than my evil spawn. So they get in way over their head, and use their kids as an excuse to hide behind their disastrous financial direction, by claiming they are doing it for the schools. Then they have to work so hard they don't have a minute to notice their kids are going down hill at the new school, because they have been left to their own devices, to grow like weeds and kick it with who ever. That's if the financial truth doesn't put the kibosh on the whole affair.

Like losing the job that made the move possible, then losing the house in the swanky neighborhoods, that these Halfwits were ill equipped to pay for, and the Manager at their job, that they hated in the first place was the only thing standing between them and their McMansion in Burbdale with the schools where the kids teach them selves and the lunch lady gives out scholarships in the fortune cookies.

We need a new mantra...

"Think Small!"

Tenouncetrout says

It wasn’t a Flame it was the damn truth. I’m sick of hearing about yuppie losers that think their evil spawn are any more precious than my evil spawn.

You don't know my story one little bit, so get of your high horse. Our baby doesn't go to child care, my wife works about 20 hours a week mostly on the weekend. I work from home. My almost three year old goes to preschool three days a week. So we see our children plenty thank-you.

Our move was both more wholesome and less costly. The wife has a shorter commute, the rent we pay nearly matches the rent we receive. We are better off tax wise by several hundred dollars a month in PA rather than Maryland.
My disabled mother on a small income will be moving into an apartment near us, and will benefit greatly from from one bedroom apartments going for $500 in safe areas near bus lines, rather than $850 plus.

The house we live in is double the size of the last one, and has room for the family gatherings we are rapidly becoming the central part of our extended family by hosting. It is very important to us to host family from all over the country at Christmas time.

Oh, and wholesome, yeah. The idea of raising my children around PA Dutch country is much more appealing than near the factories and chemical plants that were five miles from my last house.

Please worry about the environments of your own children, and I will worry about mine.

bayview6 says

Too early to worry. With BRAC coming to Aberdeen and Ft. Meade, your house could get back to your purchase price by 3/2013. I think that mortgage rates will stay low till then because housing nationally will still be weak.

The Maryland house was close enough to Meade that we got some BRAC families looking at the place both for rent and purchase last year. Aberdeen is a bit far to have a direct affect.

BRAC does have my hopes up a bit, but they were squashed so hard last year trying to move that I am careful with my emotions.

repo - your car is out of registration. The stickers go in the mo & yr boxes. You better watch out, someone at the IRS may be trolling this board for suspected illegal activity. Once the DMV can teach their employees to use computers, they will be doing the same.

Walk away. If you were a business and had to make a business decision it would be a no brainer. The bank made a deal with you. They already got 7 years of interest worth. And if you stopped paying, as a collateral they get a house. Let them have it. This is business. Don't get emotianal about it.

YesYNot says

repo - your car is out of registration. The stickers go in the mo & yr boxes. You better watch out, someone at the IRS may be trolling this board for suspected illegal activity. Once the DMV can teach their employees to use computers, they will be doing the same.

In California we're required to have front license plates, this is that. Front license plates don't have registration decals, only rear ones do.

Seems to me that you gambled, and lost 50K. Now pay up! I'd sell the house before it becomes worth even less (and around here houses are getting cheapr by the day).

bayview6 says

Too early to worry. With BRAC coming to Aberdeen and Ft. Meade, your house could get back to your purchase price by 3/2013. I think that mortgage rates will stay low till then because housing nationally will still be weak.

Sounds like realtor talk to me. I really don't think BRAC is going to have nearly as big an impact as the newspeople around her keep saying. It's going to be bigger in Aberdeen.

zzyzzx says

Seems to me that you gambled, and lost 50K. Now pay up! I’d sell the house before it becomes worth even less (and around here houses are getting cheapr by the day).

Not really.... I bought a place to live in and lost 75k so far. Unfortunately I don't have another 25 - 50k sitting around so that I can pay for the privilege of selling.

She is a RN, I am an IT security guy. When we bought our house we pulled about $120k combined, now we are at about $140 - $150, and have two kids.
In March of 2006 we bought our house for $325k.

I want to sit a cross the table from a loan officer and say “No I will not pay 7%. I will pay 5.75% or I will give you the keys right here, right now”.

------------------------------

Dont worry about it. I think they will offer you 5.75 or so down the road.
Your purchase is only 2.2x income. So not much risk there for the bank.

zzyzzx says

bayview6 says

Too early to worry. With BRAC coming to Aberdeen and Ft. Meade, your house could get back to your purchase price by 3/2013. I think that mortgage rates will stay low till then because housing nationally will still be weak.

Sounds like realtor talk to me. I really don’t think BRAC is going to have nearly as big an impact as the newspeople around her keep saying. It’s going to be bigger in Aberdeen.

-----------------

Brac @ ft meade will not be done till September. Don't expect a tidal wave but rather a rising tide over several years (at least 6) as the commuters from DC get tired of the 3 hr commute and either retire or move. Probably it will be the private sector folks plus the new Cyber Command that will really jump start the area. New construction of SFR and townhouses is currently underway in Odenton. No, I'm not a realtor. Aberdeen since it is a small area so it will see a more rapid result.

The forecast is about a 3% rise in prices in 2011 in the ft meade area. Not huge but at least it is in the right direction.

tekkierich,

To be rid of the house would require a short sale. The gov. has a program called HAFA that you'll probably qualify for. You'll need to be creative with a hardship case but I'm sure you can think one up.
See the details here, you also get $3,000 to move.

http://www.makinghomeaffordable.gov/programs/exit-gracefully/Pages/hafa.aspx

You'll need to complete the sale by the end of 2012 to be eligible for the Mortgage Forgiveness Debt Relief Act of 2007 on your Federal taxes. You may also have a State level relief act as well so look into it. Also speak with your CPA to determine if your 2nd will qualify (if you have one)

Also Google the effects to your FICO. If you think you'll need to finance a large purchase in the next 3 years (car etc) do it before hand. Also keep your credit cards and all else current and it'll rebuild faster.

FHA allows for a home loan 3 years after a deed in lieu or a foreclosure and 2 years after a short sale. You can get the details on the FHA site.

shrekgrinch says

Mr.Fantastic says

Look, it’s two guys who know nothing about banks, the finance industry, or anything about micro economics at all.

Get used to it. Especially with Tatoo.
As for the poster, he’s screwed and too bad. After being a lifelong renter who endured ridicule as such by all the ’smart people who have mortgages!’ I now get to say, “Sorry sucker, perhaps if you weren’t one of the now-proven-stupid-people…”

Haha.

Most people won't get those. It's interesting an accountant gave you that advice. Because you don't know what the interest rate is at the time the mortgage "balloons". One problem "all" of you have. You filled out a 1003 saying you would occupy that house as your primary residence. They could "call" the loan on you. For renting out an owner occupied house. That's called the "acceleration clause".

The "acceleration clause". Means that the entire mortgage becomes due and payable at the time you do something they really don't like. Its in the documents you signed at closing. Every single mortgage written is like that. So I really don't have to see them. Rentals are very risky in a lenders eyes. Because it is not your primary residence. Then you have potentially two mortgages. Or two payments. They look at it like a second home. You can walk away from that easily and keep your primary residence. They are stuck with the other house you could not afford.

When you go to play "chicken" with the lender. If they find out you have a renter in the house your supposed to be living in. You could have some problems. You need to look into the fact. That when you bought this you had a rate on an SFR. You are now the owner of a NOO. house.

You could be dead in the water at this point. There are triggers that will let that lender know its NOO. Then your rate is definatly going up. NOO rates are way higher than SFR rates. Not only that the requirements for a NOO are different. Like the LTV (loan to value). They have to do rental comps. If they can't find those your in for a long wait. If they catch you trying to refinance a NOO to a SFR. Thats real trouble and can be expensive not to mention the fact your facing the acceleration clause. I would not take back to the same lender. If you are going to attempt something like that. So you are unless you move back into that house. Really looking that ballon straight in the eye. No pun intended. I would not want to be you. More trouble than its worth.

bayview6 says

The forecast is about a 3% rise in prices in 2011 in the ft meade area. Not huge but at least it is in the right direction.

Ummm higher housing prices is a bad thing, just like higher food and energy prices. I'd call a 3% price increase a move in the wrong direction. I'm also curious as to what's considered the Ft Meade area. I'm not thinking that your MD house is in not particularly close to Ft Meade or Aberdeen (I suspect Dundalk or Essex).

For the locals.... the house is in Northern Pasadena MD with a view of a tributary off the bay. It would be a 25 - 30 minute commute to Meade.

WRT the NOO issue. I acknowledge that. I tried to do my refinancing before I moved out. If I had not been in negative equity the loans I was looking at would have required residence for 6 - 12 months from what I understood. I would have stayed for the duration needed to complete the loans

This is why I think my rate will not be good in two years. I will guess I will need 105% - 120% LTV and I will be a NOO, plus my gut thinks rates are going up. However, hopefully I will have a demonstrative tenant history for 2.5 years. "Doing the right thing" might be impossible.

zzyzzx says

bayview6 says

The forecast is about a 3% rise in prices in 2011 in the ft meade area. Not huge but at least it is in the right direction.

Ummm higher housing prices is a bad thing, just like higher food and energy prices. I’d call a 3% price increase a move in the wrong direction. I’m also curious as to what’s considered the Ft Meade area.

Agreed. Don't know anybody who thinks rising prices are in the "right" direction unless they can cognitively displace that the cost of living is increasing and buyers are going to get squeezed. Do we hope that automobiles become more expensive? Water, gas and electricity?

klarek says

Agreed. Don’t know anybody who thinks rising prices are in the “right” direction unless they can cognitively displace that the cost of living is increasing and buyers are going to get squeezed. Do we hope that automobiles become more expensive? Water, gas and electricity?

Klarek--that's a bit of a dumb analogy. Housing is not truly a consumable good. You can't compare it to water, gas, electricity, or candy bars for that matter. It's not a pure investment, but people who own houses plan on reselling them at some point...

tatupu70 says

Klarek–that’s a bit of a dumb analogy. Housing is not truly a consumable good. You can’t compare it to water, gas, electricity, or candy bars for that matter. It’s not a pure investment, but people who own houses plan on reselling them at some point…

It's not a perfect analogy, but increased prices translates into a higher cost of living just as increased consumable good prices do. Why wish for one by not the other? Delusional homeowner self-interests.

Traditionally in this type of enviroment. Where the lenders clamp down on SFR's. They really clamp down on NOO. The typical LTV (loan to value). In good times is 15%. You put 10% down on that house of course. NOO is a loan a lender just doesn't like because of the losses they incur. If you attempt to walk in and refi that loan as a SFR. Of course you would be breaking the rules. We know you would not want to do that. You face the risk also of laying out money and losing it to begin with.

You also may want to look at how you are writting that house off. If you are writting it off as Owner Occupied. You could get into big trouble with someone. Consult your accountant. Or you could get turboed. They should have some software like that somewhere.

I am not going to make any claims about being a SFR now that I am renting it out. My 2010 taxes are treating it as a rental as they should.

tekkierich,

Did you file your tax return? and is your rental income enough to make money or are you breaking even or loosing?

zzyzzx says

bayview6 says

The forecast is about a 3% rise in prices in 2011 in the ft meade area. Not huge but at least it is in the right direction.

Ummm higher housing prices is a bad thing, just like higher food and energy prices. I’d call a 3% price increase a move in the wrong direction. I’m also curious as to what’s considered the Ft Meade area. I’m not thinking that your MD house is in not particularly close to Ft Meade or Aberdeen (I suspect Dundalk or Essex).

I would consider the ft meade area to be within 15 miles or so of ft meade. The closer the better. My MD house is in Odenton. Takes me about 5 minutes to get to the front gate. .

House prices, like food and energy prices, are a function of supply and demand. Nothing particularly good or bad about them per se.

klarek says

zzyzzx says

bayview6 says

The forecast is about a 3% rise in prices in 2011 in the ft meade area. Not huge but at least it is in the right direction.

Ummm higher housing prices is a bad thing, just like higher food and energy prices. I’d call a 3% price increase a move in the wrong direction. I’m also curious as to what’s considered the Ft Meade area.

Agreed. Don’t know anybody who thinks rising prices are in the “right” direction unless they can cognitively displace that the cost of living is increasing and buyers are going to get squeezed. Do we hope that automobiles become more expensive? Water, gas and electricity?

For sellers rising prices of 3% is a good thing since it shows that the market is in balance, hence the house is easier to sell. I would also say that even for the buyers a 3% rise in price is good since it shows that the real estate market is healthy.

The interest rate you put forward reflects that. However you mentioned something about rates going up. Rentals can be risky. If you are acting off of or are in some way learning from the criteria the lenders are using. Lenders are not the best example to try to get a rental in place. Best of luck to you.

bubblesitter says

tekkierich,
Did you file your tax return? and is your rental income enough to make money or are you breaking even or loosing?

loosing $200 a month and had the expense of putting in a fence for the tenant, so yeah It is a loss. I have not filed yet, but will this week.

Well tenant's are unpredictable. It's a landlord's - lament.

"Per the recommendation of my Uncle who is an accountant, we chose a 7 year balloon loan from my credit union."

That was mistake 1...

Mistake 2 was not selling the house and trying to turn it into some kind of investment. RN + IT does not an investor make... sorry.

I know this isn't going to help, but you're a landlord by chance and not design. Buying a SFR and trying to turn it into a moneymaker is a muggs game.

If you're interested in investing you should really get into it and see how much there is to learn. Problem is... you already have the property, which is were you can avoid most of the mistakes... before purchase.

Good news is... hey! You're in your 30's and own 2 homes... how bad can things be?

What you have is not a Balloon Mortgage. It is a Fannie Mae Loan Product called a 7/23 . Its fixed for 7 years then it one time adjusts for the next 23 years. It is a very good loan product in normal times. THESE ARE NOT NORMAL TIMES! or maybe I should say these are the new normal times.
As to your loan, it is probably not owned by Navy Federal. I'm pretty sure it has been sold to Fannie Mae and repackaged with many others into a security and sold on Wall ST. As to the BLUFF, I would definitely try it! You have nothing to loose.
Good luck

try hardball

stop paying, equity strip

walk

Since you and your wife are pulling in $140k to $150k a year, I would keep the house as a rental since it is a hell of a good tax shelter. I expect that mortgage rates in 2 years will not be above 5.75% and so your fears of a massive rate increase are just that-fears. Cross that bridge in 2 years. As for walking away, that would be stupid at this point. The area that you are in is in the FtMeade commuting zone and I expect that in 5 years your rental will be back to what you paid for it and you can bail out at that time. Why have that default on your record with the possibility of creditors going after your other assets?

bayview6 says

I would keep the house as a rental since it is a hell of a good tax shelter

Only if one itemizes and if itemized beats a standard deduction.

I think he should simply try to negotiate with the lender, losing money every month isn't a good thing. Play hardball with these guys, they don't want that house since than they have to take on a huge loss. They would much better renegotiating, they aren't a big lender they don't get the bernanke bail out money.

What's there to negotiate?

bayview6 says

What’s there to negotiate?

lower my interest rate or i'm moving in and not paying you a dime. small banks don't like foreclosing, they aren't getting bail outs. Now if this was a large institution that has a deal with the Fed they make money either way.

Very astute Chris. True small banks because they are charged more for the money. They can't take the losses. Obama's mortgage rescue plan was nothing short of insane. The large money crappers won't put up with that. Thats like a migrane and a wooden leg to them.

ChrisLA says

bayview6 says

I would keep the house as a rental since it is a hell of a good tax shelter

Only if one itemizes and if itemized beats a standard deduction.
I think he should simply try to negotiate with the lender, losing money every month isn’t a good thing. Play hardball with these guys, they don’t want that house since than they have to take on a huge loss. They would much better renegotiating, they aren’t a big lender they don’t get the bernanke bail out money.

Wrong. Doesn't matter if one itemizes or takes standard deduction. Rental losses are reported on Schedule E which is a separate line item on the 1040. Fairly clear you have never own a rental.

ChrisLA says

bayview6 says

What’s there to negotiate?

lower my interest rate or i’m moving in and not paying you a dime. small banks don’t like foreclosing, they aren’t getting bail outs. Now if this was a large institution that has a deal with the Fed they make money either way.

This is a FHA loan, isn't it? I doubt that the bank still owns the mortgage. Probably has been packaged with thousands of others. Consequently, the original bank that made the mortgage has nothing to do with it now. But assume for the sake of argument that the original bank still controls the mortgage AND can adjust the interest in 2013. Since it is a federally insured loan, the bank is not facing any loss. The bottom line is that the bank doesn't have any skin in the game as opposed to tekkierich who is looking at the stigma of walking away from an obligation he is capable of meeting as well as the financial and emotion trauma of having to deal with collection agencies.

Of course, the situation would be different if this was his principal residence and both he and his wife were chronically unemployed.