Pacun Posted July 30, 2007 Report Share Posted July 30, 2007 Last year, at age 70.5, my friend and new client qualified for a 450K house. 13 month later, he was behind on payments and I decided to help him (I advised him NOT to purchase a house because of his age, but wife, 51, insisted and made him sign). 3 month later, she purchased a second home under her name. Her house is gone since she stopped making payments 3 months after purchasing it. Anyways, I am trying to help him save his house. He is behind 15K, plus attorney fees (total now is $17,613.17) on mortgage and the bank sent him a letter stating that they were going to foreclose his house next month. He has until August 7, to pay full amount. Anyways, I called the mortgage company and I said, can we negociate with you? and they said sure. I said, we are going to send you 9K now and we want you to add the rest to the amount owed. They start asking financial questions and they said... no, he does not qualify for the adjustment. This was the situation when he got approved for the house. He was working, that was the only thing he had and he qualified for the loan. Now, he is STILL working, he is now collecting social security and a Union pension. (He was not collecting before because he thought that while working he could not collect but I filed all his ss forms and pension forms as soon as he became my client). Anyways, I told the person helping us over the phone... so, he doesn't qualify now... but his income situation has imporved 100%. He politely reply that he was not the original person who qualified my client for the loan. I guess banks are now doing their job and stopping people to enter into debt that they cannot afford. A BIT TO LATE for greedy people that thought the house market was the place to invest. In this situation, we are going to pay the full amount and continue to make payments for the next 6 month and then we are going to sell the house. Quote Link to comment Share on other sites More sharing options...
JohnH Posted July 30, 2007 Report Share Posted July 30, 2007 Pacun: I think it has less to do with lenders becoming more responsible and more to do with the meltdown in the sub-prime lending market creasting more heat on lenders to follow good business practices. This, coupled with declines in housing prices in many markets has suddenly shone a spotlight on the problem. As for what to do next, why would your client want to hang onto something he clearly can't afford for 6 more months? Even if the value of the home remains stable or increases a moderate amount, the interest payments he is making are just digging a deeper hole for him. If he can't afford the home now and there's no prospect for a significant increase in its value, why not have the place on the market before the clsoe of business today? Quote Link to comment Share on other sites More sharing options...
Pacun Posted July 30, 2007 Author Report Share Posted July 30, 2007 I thought about it and I think that we will put it on the market as soon as lawyers have their hands off the property. I was going to wait until April, but there is no reason because the value wont be any better, and you are right, interest will eat him. Quote Link to comment Share on other sites More sharing options...
Mel in Hawaii Posted July 30, 2007 Report Share Posted July 30, 2007 Also interest rates have changed, that may have pushed him over in the qualification process. Quote Link to comment Share on other sites More sharing options...
jainen Posted July 30, 2007 Report Share Posted July 30, 2007 >>interest rates... may have pushed him over in the qualification process.<< Oh, you don't suppose the fact that he now has terrible credit might have anything to do with it? I mean, if he can't make his current payments, why would the bank lend him more money with HIGHER payments? I haven't sorted out my feelings about this scenario which we will see more and more of. "Predatory" is a pretty heavy word. If he was tricked or forced then of course he should seek remedies. Otherwise, he has some personal responsibility too. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted July 31, 2007 Report Share Posted July 31, 2007 I'd have to say that the WIFE sounds like the predatory one to me. Quote Link to comment Share on other sites More sharing options...
Pacun Posted July 31, 2007 Author Report Share Posted July 31, 2007 Yes. Wife is so..... smart. Trust me, I have seen realtors that get loans approved when the client has filed with an ITIN number reporting 10K gross on Schedule C and 3K as profit. To me, somewhere they bend the rules to get that person's signature on the closing date and get their money. Anyways, predatory is a hard word and I will not use. It is funny, how some realtors have sent hand written letters to my friend stating something like...my wife has fallen in love with your house and we would like to purchase it. Call me or email me at [email protected]. Today, since the wife doesn't speak English (but believed she could make a forturne on the house market), she called me and said "someone from the bank is here to repose the house"... I talk to the person and he said he was there to offer money so that we would save the house. I politely said, "we do not need any loans, we cannot even pay the ones we have". He started to persuade me and I said... no, thank you. Quote Link to comment Share on other sites More sharing options...
jainen Posted August 1, 2007 Report Share Posted August 1, 2007 >>they bend the rules to get that person's signature on the closing date<< Whatever happened to get your friends into this mess, the past isn't likely to help get them out. There is a weak legal theory that real estate agents and lenders are liable for loans that the customer can't really afford, but it is a long, long shot. Unless you can prove breach of fiduciary or fraud or forgery or something very serious, there is no going back. On the other hand, the future doesn't look any worse for your client who owes the money than for the lender who hopes to get paid. Mortgage news is all bad these days, and the banks are really afraid of racking up too many defaults. Some are going to end up explaining themselves to their insurance companies, the state licensing boards, and even the SEC. I would advise the homeowners to call their lender with a real tough story and see what they can shake loose. I'm not talking refinance. I mean debt forgiveness, rate reduction, negative amortization. Perhaps the borrowers can offer additional security by pledging retirement funds, or more reliable payments with automatic withdrawals, or something. Quote Link to comment Share on other sites More sharing options...
JohnH Posted August 2, 2007 Report Share Posted August 2, 2007 Good suggestions jainen. Maybe the wife should handle the negotiations. The fact that she doesn't speak English and already had the skills to make a fortune in the real estate business can only work in their favor. More or less like a Turkish business owner I worked for years ago. He & I would have great strategy sessions - excellent communcation and complete understanding of our negotiating postion. Then the bankers or suppliers would show up and this guy's English would go to the dogs. He would fake them out of their shoes by constantly pretending to have a different understanding of what they were saying - usually by the end of the meeting we had everything we set out to get and a few extra concessions as well. The first time this happened I looked around to see if he had been replaced by a twin brother who just flew in from Ankara. After a few of these meetings I realized his Jekyl & Hyde command of the English language was a great negotiating ploy, and a very successful one. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted August 2, 2007 Report Share Posted August 2, 2007 I think he was being a bit sarcastic about the wife making a fortune in the real estate market, unlike your Turkish friend! Quote Link to comment Share on other sites More sharing options...
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