I’m underwater, any chance of a loan modification under Obama’s new bailout programs?
Curious to know if there is anything for me to do other than doing what I am doing now, nothing. Here are the numbers:
-Note holder is American Home Mortgage Servicing Inc
-2005 Purchase price, $375K, down payment, $75k (20%), improvements, $20k
-Loan balance after 4 years of negative am, $313k
-Current market value, $260k
-Full interest payment, $1,700, there is no 2nd
In summary, to date I am upside down $135k. I am gainfully employed, and have no other debt other than my primary residence mortgage (which I am in the black on) and the rental mortgage.
I originally bought the home as a primary residence but made it a rental a few years back. It has been continuously rented to college kids attending a nearby university for $1,650/month. After all is said and done, I kick in about $100 per month (after deducting the tax advantage I get each year).
About one year from now, I will have to start making full P&I payments amounting to $2,200 per my most recent statement. This will up my ante to about $500 per month.
So knowing that I will most likely never get any money out of the house, I have a couple of scenarios that maybe some one can help me with.
Scenario 1: Keep the house for at least another 5-7 years until the market improves. Under this plan, I will have kicked in an additional $24-36k (difference between rental income and full P&I payments). My rational mind tells me that the home will have to increase in value that much in order for me to be in the exact same situation I’m in today.
Scenario 2: Try to sell the home now. Say it sells for $260k. After I pay off the real estate agent, I net about $245k. That leaves a deficit of $68k, cash I simply don’t have, plus the fact I already plowed $100k into the house.
Scenario 3: Is there a scenario 3? Any chance of a loan modification under Obama’s new bailout programs? Should I make it my primary residence again (risk here it puts up for grabs my current healthy residence in the event of a bankruptcy)? A friend told me she hired a lawyer who found an error in her purchase agreement which knocked off $65k from her balance. Should I hire a lawyer to review my contract? What if I walked, is it likely a judgment will be made against me? Is there any other alternatives I should look into?
I figure I have a year to come up with a plan and found this site to be most helpful to others, hopefully it’ll do some magic for me as well.
Thanks for your interest.