CitiMortgage Told Me to Default on My Loan

By Paul Michael on 29 March 2010 130 comments
Photo: Final Notice

Only in the completely screwed-up world of the lending industry would this be a logical and serious piece of advice. But that’s basically what I was told after calling CitiMortgage to ask about help with my home loan.

Like roughly 25% of homeowners in the USA, I find myself owing more for the house than it’s worth. Now, before I get people screaming at me for biting off more than I could chew, that’s not the case at all. We did everything right: bought a modest home within our means, didn't cash in on equity (when the house had equity) by refinancing, never missed a mortgage payment, ever. And now, some seven and a half years later, our modest little home, which we have completely grown out of, has an even more modest value. It’s lost 25% of it’s value in fact, and we now owe more than it’s worth.

We can’t rent the home out without losing serious cash every month. That’s because we would have to charge rent based on what the house is worth. And that would leave us roughly $500 a month out of pocket on the mortgage.

We can’t sell without taking a serious chunk of money with us to the closing table. We’re talking $20k-$30k, which is money we don’t have to spare. Not many people do these days. But if we did, would we want to completely wipe out our savings on a piece of property we were leaving behind?

We can’t just stop paying and walk away. Trust me, I’ve never had a bad debt in my life, so I don’t want to start now. I was seriously considering it though. But in Colorado, the financial institution has every right to come after you for any money they lose on a property that’s been foreclosed on. We could not only lose our savings, but our cars, possessions, and everything else. This is called a deficiency judgment. Some states have it, some don’t. Mine has it, so it’s impossible for me to walk away from this money pit of a home without suffering some huge consequences.

What about a short sale then? Well, it’s possible, but there are issues with that too. Short sales are notoriously difficult to arrange. We’d have to put our home on the market and get an offer. And after that, we’d have to hope the lender accepts the offer. If they don’t, we have to start again. This could take months or years. And the whole time, we’re sinking money into a house that continues to lose value.

The whole “buy property, it’s a guaranteed investment” mantra is now just hot air. But what do we do? We’ve seriously outgrown the home, one which we bought as a single couple and now have two children. With no basement and a garage that’s bursting with stuff, we continue to give things away to charity, or just throw things out. Even with a regular spring clean, we're just running out of space.

We decided to turn to CitiMortgage and see if they could help us. After all, a recent article about Bank Of America gave us hope. They’re now helping people like me out by reducing the principal owed on the property! That’s right, they’re actually slashing money off the books.

Anyway, I went to CitiMortgage.com and filled out the form in the homeowner assistance section.

I was delighted to see that, after putting in my information, we were indeed eligible for some help. I just had to submit some proof of earnings, which was no trouble at all. I then got a call from CitiMortgage a few days later, asking me to call them back and talk to a counselor! Excellent, I could see a glimmer of light at the end of a long tunnel.

Then, the games of phone tag began. I called, was put on hold for 10 minutes, and the line went dead. I got a call back asking to call again. I did. I was put on hold for 10 minutes, then the line went dead. Argh!

I was not happy.

The third time I called, I finally got through to someone. As it turns out, there was actually no counselor assigned to me at all. No one was sitting behind a desk, filled with great information and some paperwork that could help me out. No, as it turns out, there really wasn’t much they could do, or rather, were willing to do for me.

“I was told I had a counselor,” I said.

The customer service rep, who clearly had no interest in me or my predicament, told me that no one was assigned to me and there’s really nothing they can do right now.

“What about this Bank Of America program that’s out there right now, helping people who are upside down on their mortgage?” I asked. “Do you have plans to help in that way?”

“No” was the cold and curt reply.

I did a quick calculation in my head and realized I had given CitiMortgage over $100,000 in interest over the last 7 and a half years. Actually, way more than that. And all I had to show for it was a house that requires many thousands more dollars just to walk away from. If I had dropped $100,000 at a casino, I would be getting the red carpet treatment. If I dropped 100,000 bones on a new car, the salesmen would be breaking their backs bending over to help. But CitiMortgage? Sorry, no dice. Which I find odd, because my tax money, and yours, went to CitiMortgage in the form of billions of dollars of stimulus money. They received 1 billion dollars from the government, and their parent company CitiCorp got a whopping 45 billion dollars!

“Is there ANYTHING you can do to help me?” I asked. I had read earlier that CitiMortage was supposed to be helping homeowners who are underwater, so I knew there must be something they could do.

And that’s when this salient piece of advice came over the telephone.

“We can’t help you unless you have defaulted on the loan for 90 days” was the almost robotic reply.

Wait, did I hear that right? Is this lady telling me to stop paying my mortgage? Isn’t that some strange advice? I double-checked.

“Are you telling me that there’s nothing you can do to help me out until I actually stop paying you?”

“Yes” she said, “but even if you default there’s no real guarantee we can assist you.”

“So, I could wreck my credit, have debt collectors calling day and night, risk being kicked out, and it could all be for nothing anyway?” I asked.

“Yes.”

So, that’s where I stand today, and I suspect many of you are in the same boat. Why, why, why would any financial institution want their customers to stop paying them? Why will they only help bad customers? Why is defaulting the only way to get help? Why are good payers being treated poorly, and people who can’t pay getting the royal treatment?

I’m now finding myself in a position I never, ever thought I would be in. I’m considering just stopping the payments and putting the money in the bank. I figure the worst that can happen is that I just have to pay that money back to CitiMortgage at some point, but in the meantime it can sit and collect interest for me.

If anyone out there works for CitiMortgage, or a similar lender, please let us all know why you won’t help people unless they stop paying you. And why the bailout money you received isn’t helping the loyal customers as well as the poor payers?

I, for one, am just completely thrown by this whole situation. And, for the time being, I may be living in my small house and tripping over my things, but at least I’ll be doing it for free. Hey, not my suggestion. It was CitiMortgage’s idea.

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Guest's picture
Mamamaura

We are in the exact same place and were told the exact same thing by Amtruat which then was bought out a month later by Saxon. We bought a 2 bedroom condo in a desirable resort area shortly after getting married when the apartment complex we were living in was bought out and was being sold out by unit. With no other rental complexes in the area we decided to purchase (under terrible financial guidance) a condo and ended up having 2 kids unexpectedly. I would LOVE to get out from under this mortgage and get more space as we are all currently sleeping in the master bedroom and using the downstairs room as the play/guest room. But my husband has done an amazing job at getting us very close to debt freedom and we are currently deciding to attempt to pay off our mortgage in the next 9 years. Granted our space is small and not the average size considered the norm in our culture but growing up as a child in a family of 10 in a 3 bedroom home I know from experience that it is very doable to live in close quarters comfortably. I am learning to appreciate these close quarters again as I did when I was a child by sharing meals, sharing tv time and bwing forced by the small spac available to interact with my family. Half the condos in our building are empty and forclosed, but we are current on our mortgage and I don't see it as a wise financial decision to go into financial hardship just to get the chance to purchase a larger home just to one day find myself thinking again that that home may not be good enough as well. My son and daughter will learn as I did to respect each others space, to kkeep our home organized and clean in order to live as sanely as possible in our small quarters and to take pride in the blessing we have to have a roof at all. We are learning to live within our means, stick to our commitments as homeowners who signed a contract and how to appreciate life without all the extra junk and items that really just collect dust and clutter our homes. We don't need more than a weeks worth of clothing, we don't need a tv in every room, we don't need a formal dining room AND a breakfast nook, we don't Need two full baths, we don't need to hold onto so much stuffthat could be put to great use and bless another family that could really use that box of craft stuff in our attic or those baby toys and clothes we are holding onto just in case. My kids don't need all the newest toys and movies, i find the fewer toys they have available the more playing they do. And if you really aren't ready to part with all these things, loan them out to people you trust to take care of your things and that can put them to good use. I have tons of kids clothes, baby items, books, movies etc out on loan to friends this way I don't have them taking up space I don't have and I don't lose them for the what if scenarioes that may require me to need them again.

Guest's picture
loanmod

I know how you feel buddy, i am in a same situation and i was told the same exact thing to stop payment and after sometime i decided to do it and finally i am getting some where with my mod. Sometime when you do everything right it does not get you anywhere. lets see what the final outcome is with this loan mod.

Guest's picture
Guest

OMG!!! I'm in the exact same situation and they told me the EXACT same thing. Blew my mind!!! We're considering the walk away option too!!

Guest's picture
miscel

I had read this article. I thank you the one who wrote that. I had read some articles as this one. Moreover I had watched some videos that are similiar to them on izlesene. While i was watching some videos on facebook I had seen many videos about that.

I thank the guy who wrote this article.

Guest's picture
JCB

Ditto for me. After 20+ calls to Citimortgage, faxing dozens of pages, speaking to Traci, Pam, Patrice, Hilda, Gabbie, Cynthia, Shanoni, Brittany, Tradell, LuAnn, Jordan, Curtis, and Avery - between April 13, 2010 and June 16, 2010 - I was told exactly the same thing: fall behind 90 days.

Guest's picture

Me and my girl, a young couple, living with my parents and sister in a small one-room apartment. We're both learning at the university, I have to finish next year. In Moldova, it is very difficult to find a normal job, average wages were eating enough even a single person to live. Parents have often reminds us what we want to have to live for yourself. Favorite very upset about this and suffers. I very much love my girl, tried to work several jobs to at least rent a room, the money earned on them and go for services and for the food lacked. In our country, unfortunately, impossible to live without the help of parents. I tried many times to take a loan to buy an apartment and live there with his beloved. But here, all the banks and private firms were denied due to the fact that I have nothing to leave on bail, no decent salaries, student and many, many others. reasons that they could not give me credit, mortgage is the same. Because of this, a lot of young guys are leaving the country and move abroad, in order that would at least like it, equip your life. Due to the fact that the rented apartments went into debt. To buy the same one-room apartment needed money, which we can not ever earn here, for us to 30000 euros is too much. If you had this situation or you have the opportunity to help us, we are very grateful to all of your financial aid.
hypercube.

USD:

Beneficiary: Tudorean Igor Constantin

ID(series and number) or account number: 0101238408143

Beneficiary's Bank: Banca de Economii S.A., Chisinau, Moldova

SWIFT code: BECOMD2XXXX

Account with intermediary bank No: 890-0260-785

Intermediary Bank: Bank of New York Mellon, New York, USA

SWIFT code: IRVTUS3NXXX
Euro:

Beneficiary: Tudorean Igor Constantin

ID(series and number) or account number: 0101239788197

Beneficiary's Bank: Banca de Economii S.A., Chisinau, Moldova

SWIFT code: BECOMD2XXXX

Account with intermediary bank No: 400886819201

Intermediary Bank: Commerzbank AG, Frankfurt am Main, Germany

SWIFT code: COBADEFFXXX

Any questions or respond to Email: igorirka@yahoo.com Ira and Igor, skype IgorIrkaT thanks in advance. Our site: http://help-me-please.ucoz.net/

Guest's picture
Don Madden

Wow...Paul Michael....you just told my exact story. I had the same situation happen with Bank of America. I did not stop paying my mortgage as they said I should, but they did put me into a 3 month modification program that turned to 6 months, then the letter came saying I was denied, and now in default of 6 months. I actually wrote to Obama pretty much asking "What's Up With That". I received a "form" letter from the White House saying, "Thank you for expressing your interest in today's problematic financial crisis and that they were working on bringing the country back." Wasn't that a load of crap....didn'e even respond to my aactual message. I guess he's been too busy giving parties at his white house that we are all paying the mortgage on! Thanks...Don Madden dam4210@yahoo.com

Guest's picture
Matthew

I understand and too have a mortgage with citi. Yes their customer service is terrible, and yes I'm in a similar situation. However, I ended up inheriting my father and my brother over a couple years ago. I rented a small 1 bedroom house which was all my needs were. In an attempt to save sanity I jumped into the housing market, and purchased a reasonable home for a reasonable price about 20k below others in the area and reasonable for rent if it were for that. Now two years later, my brother decided to vanish, I have my father i care for, and tooo much house. THe market continued to go down, rapidly in my sunny sunshine state. SO even paying more than the monthy payments, with the negative equity. My desire is to downsize.

Now, I am not complaining, or venting, but am asking for options on how to approach this. I fully recognize i moved into this decision to buy rapidly. And am willing to deal with the reprecussions myself. So I am trying to understand my options before i approach the lender (or at least what potential options there are if any for my situation)

1. I can sell the home at a loss, and tha tmoney must be taken to closing. correct?
2. Is there a way to sell the home at a loss, and purchase a smaller home in process.

Using the county tax appraiser this house has dropped in value from 215 k to approx 155k for the area. IS the county tax appraiser a good indicator of actual value of the house.

Where are some resources I can go to, to properly educated myself further on value, and selling a home? Is the bank mortgage department a viable source of info.

Again now i just pay the bills, and i have enough money for groceries afterwards so i'm grateful and thankful. But in a time of uncertainty, I would like to "slim" down in the event something happens to me.

I hope not to be flamed for my honest questions, and a request for info from people who have explored these avenues or are more knowledgeable than I.

Thanks in advance for any help or insight you may provide.

-Matt

Guest's picture
Guest

Here's what you should do, start looking around for a home that is big enough, and fair in price to rent. Once you find the right place to rent, move out of your house and put it up for rent. collect rent on the house, use the money collected to buy gold, and hide it. stop paying citi bank for your mortgage, and if they try to foreclose demand that they produce the original note, If they cannot, chances are you could get your house free and clear. This is happening with alot of citibank mortgages.

Guest's picture
Sharon

Go to atlantic mutual.com. or principalreduction.com. They have a Principal reduction program. You do not have to be behind in your mortgage. You must have a debt to income ratio of 40-45% and other qualifiers.

Guest's picture
kate

Please dont call someone who is behind on their payment bad customers or poor payers!! You could find yourself there real quick. To me being underwater is every bit as bad as being behind on a payment!

Guest's picture
Guest

Hmmm...sounds like maybe your parents didn't teach you that always fair, huh? Your situation stinks, as does 90% of America's-- but why should you get a break because you're investment turned out to be a bad one? My fiancée and I each bought a townhouse/condo when we were single and "did everything right" too-- put down payments, way "under-bought" our incomes, 30 yr. amortizing loans, didn't buy during the boom time, plenty of savings, etc. But as we got engaged we needed a place to accommodate the two of us and a future family. Of course we're too far underwater to sell either place so we are renting them out-- and taking almost $1,000/month loss!! (We're about $100k underwater on the two places). We bought a new house for the two of us and now have 3 mortgages. We have a wedding to pay for, could be investing for retirement, we each could use a new car, could use a vacation, etc. So yes, loosing $1,000/month makes me sick but walking away isn't right. You signed a contract that you would pay your debt-- there's no exception that you can "get out if it doesn't appreciate". If you bought a stock and it went down after you bought it, would you ask the brokerage to give your money back because you didn't think far enough ahead to realize it could go down? Did you ask your employer to give you your money back after your 401(k) went down?

P.S. When you pay a bank interest, it's not like that was $100k of profit they collected. They have to borrow the money they lend you (i.e. Cost of Funds) and there's a cost for the continued servicing and they have to reserve for defaults/loan losses, etc. so it's not the same as "giving" a casino $100k. A bank's margin is extremely thin so they make it up on doing large volumes; a casino's margins are extremely high. However, there is no excuse for bad customer service- any large institution should do better than that. My guess is those reps are just so sick of getting asked for hand-outs all day long.

Guest's picture
Guest

Yeah those margins are so thin that Bank of America's CEO only earned $29 Million last year. We are all getting creamed and your defending this broken and corrupt system, shame on you.

BR

Guest's picture
Guest

I have been dealt the same hand. They will forclose on you if you are not careful. You should look into wrongful foreclosures and law suits against them before you make the decision of what you will do.

Guest's picture
Guest

Easy solution to this whole epidemic:
(1) If you default with a standard bank loan, standard penalties apply

(2) If your loan is federally backed (fannie or freddie), then add a prison sentence for defaulting. People would stop defaulting and house prices would stabalize across the country.

Guest's picture
Guest

My advice is to not default unless you would like to be foreclosed on. It happened to too many others.

Guest's picture

SIMPLE SOLUTION to this nationwide foreclosure issue: This seems to me to be the way to begin a reasonable solution to solving our countries housing and foreclosure crisis.

The Mortgage Companies and Banks and Wall Street all made a “business decision” a few years ago to lend money to Borrowers who were NOT qualified to borrow the amounts of money that were being given. This “free” money policy began an extreme case of real estate inflation that lasted through 2008. By making this “business decision” to give out what was essentially “free money” to unqualified Borrowers, our country’s lending institutions started what ended up to be the total destruction of the real industry as we knew it prior to the relaxing and doing away with all of standard underwriting rules and policies that were utilized for many successful years.

Yes, the Borrowers also decided to take the money and now we are in a total quagmire with a completely destroyed real estate and lending industry, with NO leadership for solutions seeming to be coming out of Congress or from our President.

To me, the solution seems very simple…. Make the Banks and Wall Street participate in the losses with the Borrowers by forcing the Investors (Mortgagors) to write down the Principal amounts of all of the Mortgages by the loss in values that have occurred since the peak of the real estate values in 2007/2008. Interest Rates should also be automatically reduced to “current market levels”, this could be done by making all new interest rate and principal write down loans to be a 10 years fixed rate, with options at the end of 10years to become either fixed rate loans and the then current market rates or some type of adjustable rate loan that makes sense to both the Borrowers and the Lenders. This would then allow the property owners to stay in their homes and keep their investments in-tact and begin a new period of payments to the Lenders-Banks-Investors-Wall Street.

All of the lenders, bankers etc. are going to lose that amount of money or more by going through the Foreclosure Process anyway, so why not let the homeowners start over in lieu of forcing them out their properties and having all of this housing inventory on the market to sell to someone else at a very large discount.

The way things have been going with the Lenders not even cooperating or talking with the Borrowers is an INSANE policy that MUST BE CHANGED IMMEDIATELY!!!!!! I would be more than happy to meet you with you in person to talk further about this current mortgage and real estate crisis that we have been in since 2008 with no end insight.

Thank You – Thomas R. Monge, MAI – Real Estate Broker/Consultant

Guest's picture
Guest

I've got a similar question. I bought a house around 4 years ago at the peak of the boom before the crash. My mortgage was 170,000 and the home is now worth around 110,000. The current amount still on the mortgage is around 160,000 so we're 50,000 underwater. I've gotten married and promoted since and our combined income now is more than double what it was when I bought this house and we can comfortably afford much more of a payment. My wife and I both have wonderful credit scores above 800. We've saved around 30,000 in cash in the last 2 years trying to save up enough to get out of this house and buy a bigger one so we can start a family, but after you factor in realtor's fees, closing costs, etc. we're still a long way from having the cash to get out of our house. Our house is a townhouse and the association we are in does not allow renting the units in any way shape or form, and they've also got specific rules against contract for deed house sales so renting our current house and buying another isn't an option unfortunately (we've done a lot of investigation since it would be the "best" option but it just isn't allowed).
The way the local market is now, we could get a house as large as we would ever need for around 250,000. Is there any kind of situation where we could get a 300,000 loan for a 250,000 dollar house (with the extra $50,000 going to cover the amount that we are under water)? At current rates a 300,000 mortgage payment is only $100 more per month than what we are paying now (which we could very easily afford).

Guest's picture
Marcos

All I can say is this. Americans pull your money OUT OF BIG BANKS.....they have screwed us royally!!!! Take your money out of Citibank, Bank of America, Chase, Wells Fargo.....run to your local bank and deposit the money there instead. When you get a chance to re-finance do it with a local bank or credit union. . Stop feeding these corporate monsters!!!!!!!!!!!!!!!!!!
THEY DON"T CARE!!! You give them your entire life savings, month after month, year after year, and the next day it's gone. STOP SUPPORTING BIG BANKS!!! They stole our money, they stole the governments money, they control your interest rates. Let's make our local banks strong. Local banks support local causes and help your local community.....

Guest's picture
Guest

So, I'm in the same position, underwater, along with many thousands of others. From past education and experience, home purchases WERE an investment so to speak. It was a piece of the 'American Dream' in hopes of owning a home and making a little money for retirement when I grow older. There have been many irresponsible players out there, politically and financially, and their actions did not benefit me or anyone I know. In fact, many people I know lost part or all of their 401k's due to the crooks on Wall Street. I am a very responsible person, bought a house with excellent credit at the height of the housing boom. At 50, this is the second house I have ever owned. Didn't make any money on the first home sale, actually lost a few dollars but I wanted to move.

I guess what I want to say is, that the politicians, bankers, and corporations that were affected by all of the crooked crap, for the most part, came out smelling like a rose. Me and thousands of other RESPONSIBLE AMERICANS are frozen in the American dreamsicle. Its absurd to hear advertisements on Television encouraging people to buy a home to help create jobs and improve the economy when I did just that and I am losing my *ss. My subdivision is only 6 years old, but so many people walked out and the foreclosures have significantly lowered property values in my neighborhood and also attracted less than desirable buyers who do not care about the appearance of our neighborhood. This makes it even harder to sell your home and TRY to break even. That's my 2 cents!!!!!!!!

Guest's picture
Guest AE

Sorry, did I miss something - why do you have to rent your house based on what it's worth?? is this a state rule? I've never heard of that...

Guest's picture
Guest

How did you pay 100K in interest in 7 years, yet it was just a "modest" home.

Guest's picture
Guest

Why is only the homeowner who has to play by the rules and loose money on their homes because of unemployment caused mostly by our countries bad economic shape after the housing bubble. If the homeowners are not getting bailed out, then why should the banks get a pass and get bail out with those same homeowners tax monies? We couldn't make our payments after a year+ unemployment. We couldn't sell our house because no one was buying. We put 50% down on our house. We have loss 50% on the value of our house. The only winner here would be the bank if they foreclosure or short sale. We are still waiting on modification from the taxpayer bailout bank.

Guest's picture
MeHere

In the same boat as you. CitiMortgage said that I qualify for the FHA Traditional Modification Program in all respects EXCEPT the requirement that says the borrower must be 61 days or more delinquent on payments. Really? So stop paying my mortgage and I get a big fat reward in the form of a lower mortgage out of it? Seems too easy...... I don't trust it.

Guest's picture
Cameron Moors

I have a mortgage with Citi and since Citi bought it from ABN-AMRO and wasn't the originator, they won't let me refi even though I meet all of the HARP 2.0 standards and my LTV is almost at 100% Citi tells me Freddie claims it as ineligible since it wasn't a full docs loan. I provided 2 or 3 years tax returns and am self employeed so I don't know what else I could supply other than a w2........ I make more money now than I did when the loan was originated so you think I would be less of a risk. I haven't missed a payment, bought a house I could afford 7 years ago and never took a dime out of it when I could have. Citi has no real commitment to its customers, only its shareholders. I've found another lender willing to go up to 125% LTV so once I refi with them, I'll be done with Citi. Next loan around will be done with a regional lender, not a Wall Street Bank.

Guest's picture
maura

If you think 10 mins is bad try being on hold for 2 hours with no response. Then hanging and trying to call back later that night and still continue to be on hold for another 20 minutes. A representative called the following day asking if i was interested in speaking to a counselor? I told them only if i don;t have to wait for 2 hours, she responded she didn't know how long the wait would be. My husband and I live in Florida one of the worst hit by the economy. I have been unemployed for 5r years but my husband makes sure the mortgage is paid. I called one of the local realotors in my area and she suggested the same thing. Don't pay them and then they will work with you. Your credit will suffer but the bank will want there money and therefore work with you. I know where your coming from because my husband and I have worked very hard to keep our credit in check. You think a bank would understand that. They do, you see if your paying a higher rate that what it is today ,they get more money and if you can afford it why would the bank help us out. After all they may have a happy custome but the ban is losing money. M.Yansick Palm Coast,Fl

Guest's picture
Lisa

We also worked with Bank of America for 20 years. We were never late on one payment in 20 years and then my husband got laid off, but was collecting unemployment until he could find another job. As we all know unemployment only pays part of your pay check (don't get me wrong it was a blessing to get it). I called the bank for the next three or more months to explain our situation and asked if there was anything they could do to help us out. We just wanted them to reduce the payment a little or redo our loan. Their words to me were "The programs out there are not for people like you". I then asked what that meant and they said we were not behind on our mortgage and they only help people behind on their mortgages. They said they would not take my husbands unemployment as income as it is only temp. income. I called every week and talked to so many different people at Bank of America and the last one I talked to said very rudely that "we had better just move into an apartment because they were not going to help us." So my response to him was well then we are not going to be able to continue paying you so kiss my A!!!!!!. We put our house for sale as a short sale since we owed more then it was worth and sold it. We had the bank draft up a letter that we do not have to pay the difference of what was owed on it. It's really a shame that they will not help you when you have been a good customer and always paid on time. I feel for everyone who has to deal with the banks whether behind or not because they are not there to help you, we are living proof. Good luck to any out there in a bad situation and is asking for help, I hope you find some.......

Guest's picture
David Len Allen

I low balled the price of a home by $40K -- and got it at a steal for $265K. I mistakenly put $100K down thinking it would make the home never worth less that what is left owing on it. HA!!! That was in 2006. Today, the home is valued at $150K, the real market value is $120K and I still owe $158K. Now the county tax assessor has devalued it even further! Property taxes will be going down -- a small consolation anyway. I had to leave the area for work. We rent the home out for a $300 loss each month than our fixed-rate mortgage. What's the logical and sensible thing to do? Our realtor is trying to short sale it for $120K. It's worth less than 45% of it's original price -- even though it would cost more than $120K for the land and materials to rebuild it.

Guest's picture
Guest

We heard the same thing. You can always foreclose..... I to bought when We could afford the home. I lost my job do to cutbacks, had health issues going on. We were able to get the first mortgage modified. That was great. And that was through Green Tree. Citimortage however is another story. Regardless of outcome. I will never knowingly use Citi-anything again. They are truely evil...

Guest's picture

Many investors (banks, mortgage lenders) have the policy to NOT modify a loan unless the borrower is in default. The reason being, then more and more people would attempt to alter their deals whether or not they had a legitimate hardship.

Fannie Mae & Freddie Mac just recently decided to change their policies and allow for loan modifications like short sales for borrowers who are still current on their mortgage.

Will lenders follow suit? We'll see...

I have personally helped several borrowers through short sales, and write about it on my blog. You can see more here: http://go2mortgageguy.wordpress.com/2012/08/27/5-things-you-must-do-to-c...