Mortgage Forum

Joel Fraser

I am in quite a mess and its a long story, but I will try to keep it as short as I can. My husband and I have been buying and selling real estate for almost 8 years. We would buy one, refinance (we live in Santa Cruz near silicon valley where homes appreciated 20%) and buy another. Two and a half years ago, we owned ana condo we bought for $450000 that was our home, a condo we rented near by, and then two four plex apartments and a duplex in Boise. We had also owned another condo and house in California but had sold them. Our four plexes were fixed at 5 and a half percent 30 year loan and our condo we lived in was an interest only loan which was all we could afford. We moved four times in five years from a 500 square foot condo on up.We sold the second condo in California and then had a second child and wanted a house instead of a condo (mind you the condo was 2 bedroom 1000 square feet. When my second baby was two weeks old we found an amazing property on an acre with a 2000 square foot house and two legal rental cottages to help pay the mortgage. The price of the house was $800,000We went to our mortgage broker whom we had used for all these years, to see what we could afford with our money from the recently sold CA condo and wanting to sell one or even two of the Boise properties to finally have a real home. Our mortgage broker, a supervisor for American Home Mortgage, convinced us not to sell anything, but to refinance all the properties pulling out roughly 120,000 in equity for the down payment and putting all the properties into negative am variable loans. I had never heard of such loans and was wary, but he convinced me it would allow us to cash flow so much money and that the rate equity goes up we would still be out ahead and that in a year or two we could refinance. I was post par tum and I trusted him having worked with him for years and he did a fine job convincing me, plus he put us into four American home mortgage Loans so he probably made a pretty penny on us. So we got into neg am loans with interest rates going up and us owing more each month. He lied to us about the prepayment penalty, did not explain at a certain point we would be forced to pay the fully amortized payment, and inflated our income by almost double.We remodeled this house and the cottages from top to bottom, my husband using a year of every spare second nights and weekends. Well when we went back to refinance and get out of this loan, our broker said he could not help us, nor could any other brokers. We then tried for 7 months to sell not only our home but the three properties in Boise. But of course between the market and the neg am, we didn't have enough equity to sell without having to come up with huge sums of money to close. We tried to give the property back no luck and I spent hours waiting on hold with AHM and got no where trying for a loan mod. EMC told me there was no point in a loan mod when I told them I couldn't afford much more than the current payment. Both our home and the Ca condo (which we had hoped to move back into) have a first and a second. Our home has a first of 680,000 and a second of 55,000 and our condo has a first of 505,000 and a second of 20,000 (the condo is probably not worth this much now.) Our home is with AHM and our condo is with EMC.We can't afford even the interest only payment nor could we afford an interest rate of 5 or 6%, so we were told there is no point in a loan mod.We went to see a bankruptcy lawyer and he advised stopping payment on all properties and letting the banks foreclose and then filing bankruptcy as the secondary loans will come after us. So we are three months into the foreclosure process and I feel I have exhausted the options, but I thought I would bounce it off all of you for some advice and see if you think I have a chance. We haven't yet declared bankruptcy but are figuring we will be doing so in the next two or three months.OUr house the payment we have been paying on our first the minimum neg am is 1890, plus the second of 400, taxes are 800 a month and insurance is 100. We rent our studios for 1450. The new payment we have to pay is 4200 on the first. With the condo the neg am payment was 1275 for the first, 200 for the second, 450 for taxes, 285 hoa and 50 insurance. The fully amortized payment came due in May and is $3200.We bring home about $6200 a month, so you can see the problem. We are currently 3 months behind on all properties but I hold out a glimmer of hope that there is some way to save our home. I can let go off all the investment props, even though we put every penny for 8 years, remodeled them all with our own hands and bought only used clothes and took no vacations to make it all happen, its just money and time, but our home is really something special and I hate to loose it.I would so appreciate any help, advice etc....Is bankruptcy the way? Will it help us with our loan? Is there any point in trying for a loan mod for 4%, the max we could afford? Anyone have any luck with AHM?Thank you it is encouraging to hear of those of you who have won.Thank you