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Underwater $100k + on investment property


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Are there any loan modifications available for investment properties? I have a house that went from $160k to $44k. The house next door -- slightly smaller than mine -- was just put on the market for $12k last week. I want to keep this property but I have two other mortgages -- my primary residence, and the mortgage on my mother's house (after she passed away). I have to make the payments or lose her house which is not an option. Neither house is ready to rent -- they both need some degree of work, which requires money that I do not have right now. Also, cannot sell without taking a huge loss and I would still be responsible for the balance.

 

Am seriously considering bankruptcy (Chapter 13), but thought I would see if a modification might give me some relief. I am with Bank of America, if that helps. Any ideas, thoughts? Thanks in advance! :unsure:

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If I let it go, won't I still be on the hook for the difference in price when it is sold? Is there any such thing as really walking away from a house? I am so depressed over this situation. I can't sleep at night, I can't concentrate during the day, and my stomach and head hurt all the time from the stress.

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Depends what State you are in? There are I believe 7 non-recourse states (don't know them all), which if you are in one of the states you are not liable for the difference between the balance and what the bank is able to sell the house for.

I believe you could also walk away and file BK, and still be alright. It's a financial decision, and if you are saying you have little money, i'd give BofA a half peace sign and walk.

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  • 2 weeks later...

Thanks, ronnieron. I am in a recourse state (GA). I met with a bankruptcy attorney. He confirmed what you just said...a Chapter 13 would enable me to "surrender" the property so that the bank can't come after me for the balance of the mortgage. It might be worth it for 5 years of peace of mind, too. If BofA won't give me a modification to help me balance things out, then I will be going the Chapter 13 route.

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  • 4 weeks later...

Thanks Xevox. I have been talking to my lender, and they have agreed to consider me for a modification. If they refuse to work something out for me, I have a bankruptcy attorney ready to file my papers. Depending on the outcome, I will probably post what happens here...or in the Bankruptcy forum.

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Thanks Xevox. I have been talking to my lender, and they have agreed to consider me for a modification. If they refuse to work something out for me, I have a bankruptcy attorney ready to file my papers. Depending on the outcome, I will probably post what happens here...or in the Bankruptcy forum.

Please do. It will probably be helpful to others in similar situations.

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  • 1 month later...

Update: I had to surrender it in the BK 13. BOA refused to let me modify the mortgage; I really tried but they kept asking me for additional documents and I could not get anyone in the esclations department to call me back, and the foreclosure sale is scheduled for the first week in December. My BK attorney's appraiser said the house was now only worth $9k !! When I asked if I could keep it with a cramdown, they said that the payments would be too high. When I asked if I could keep the mortgage where it was and just put the arrears into the BK (and to keep trying to get a modification), they could not make the budget work for that either. So, sadly, we had to let it go. Bottom line: It just didn't make sense to keep paying a $150k mortgage on a house worth only $9k! On the plus side, they can't come after me for the balance on the note. DH and I were upset at first, but we think we did the best thing. :cry2: Hopefully someone will come along and lovingly finish the work that we started, and the house will go to a good new owner...

 

Will post more details in the BK forum.

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  • 3 weeks later...

Update: I had to surrender it in the BK 13. BOA refused to let me modify the mortgage; I really tried but they kept asking me for additional documents and I could not get anyone in the esclations department to call me back, and the foreclosure sale is scheduled for the first week in December. My BK attorney's appraiser said the house was now only worth $9k !! When I asked if I could keep it with a cramdown, they said that the payments would be too high. When I asked if I could keep the mortgage where it was and just put the arrears into the BK (and to keep trying to get a modification), they could not make the budget work for that either. So, sadly, we had to let it go. Bottom line: It just didn't make sense to keep paying a $150k mortgage on a house worth only $9k! On the plus side, they can't come after me for the balance on the note. DH and I were upset at first, but we think we did the best thing. :cry2: Hopefully someone will come along and lovingly finish the work that we started, and the house will go to a good new owner...

 

Will post more details in the BK forum.

 

Too bad you can't go back in and buy BOTH houses - $25K for the notes, max - own two instead of one!

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We thought about that. In fact, my BK attorney said that DH could buy the house if he could come up with enough money at the courthouse steps. If I thought we could scrape together enough money for the sale, I would try it. But right now, the BK has stopped the December foreclosure, which gives us a little bit of breathing room.

 

Interestingly, the week after I filed, I received another modification package in the mail from the bank. When I called to tell them I was in BK, they told me that my application would be forwarded to someone in another department and they would assign me to another contact person. So according to the bank, I am still being considered for a modification in spite of my filing. My attorney said that if they give me a good modification, she would see what they could do about working it into my plan. I know it is crazy trying to hold on to a house that has lost so much value, and we may let it go after all and take our chances on the courthouse steps. But that may not happen for a few months...

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