ReFi Help- Anything available for underwater Jumbos?

marciab10October 13, 2011

We built our dream home 2007-08, and were unable to sell our previous dream home, built 2001.. we have very good income, so didn't need equity out of the old house(but sure would have preferred it)Rented old house and had to take Jumbo on new house- rate 6.875.

We have excellent income and very good credit scores- but closing in 2008, we owe about what house is worth. I tried to renegotiate with our local bank who holds the loan, but they will only reduce rate if we come with lots of cash to the table. We have been with this bank for quite some time, and have our business dealings with them as well.. I don't want to take out of savings..

It is really frustrating because I know sooo many people who stop paying their mortgage, and then the banks are more than willing to negotiate.. we have good credit and certainly don't want to do that. Are there any programs that will help re-fi a jumbo with with little or no equity? -for people who have excellent income and credit and pay their bills?

Am not sure if I'm posting this in the correct forum.. if there is a better one- please let me know. Thanks

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weedyacres

What percentage of your savings would you need to bring to the table to refi? And how long would it take you to replenish that through the reduced mortgage payment?

    Bookmark   October 14, 2011 at 5:52AM
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ncrealestateguy

My dealings have found that you need at least 15% of equity in the home. I have heard that there are some lenders out there that will do 10% equity.

    Bookmark   October 14, 2011 at 7:33AM
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pamghatten

I'm assuming your Jumbo loan is a privately held jumbo, not a Fannie Mae or Freddie Mac Jumbo? Unfortunately, the only programs out there for underwater loans officially are the Obama HARP programs ... for loan that are Fannie Mae or Freddie Mac loans.

Unofficially, many lenders will re-negotiate rates on loans that are currently in their portfolio ... you just need to find the right person to help you. If you have your business accounts with this bank too ... talk to whoever manages that relationship and see what they can do for you. Keep asking and pushing!

    Bookmark   October 14, 2011 at 12:25PM
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chispa

The banks need people like you to actually make some profit! Would you personaly lend money to someone with little or no equity? I would guess you wouldn't, which is why the banks don't want to either.

    Bookmark   October 14, 2011 at 7:40PM
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marciab10

It would not be a huge percentage of our savings to refi- but the majority is in retirement accounts I don't want to touch..

chispa.. while we don't have much if any equity in this home.. we also still own our last home with lots of equity and a commercial building with 60%+ equity.. all financed through the same local bank..

When going for this refi.. they led me to believe they could make something happen.. on my last house they adjusted my rate 4 times with a nominal fee.. until I got down to 15 yr 4.5 and then they sold that loan.. which is now almost paid for

pamghatten.. I think I will try writing a letter to the president of the bank.. it doesn't hurt..

If necessary I will just refi the commercial property and take cash out of that to lower the residential.. but was just hoping for an easier way...

    Bookmark   October 14, 2011 at 9:23PM
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chispa

They know you can pay the current bills ... they have no incentive or reason to give you a break. Threaten to move all your banking/loans elsewhere?

    Bookmark   October 15, 2011 at 1:30AM
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ncrealestateguy

If you just built the home, chances are you are underwater on this home. Combine this fact with the fact that home prices are falling still. The banks need to see a buffer. Put yourself in their shoes before you write that letter.

    Bookmark   October 15, 2011 at 8:00AM
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weedyacres

I definitely wouldn't cash out retirement accounts to do this.

While I agree with the others that you need to understand the bank's perspective, they've already got the low-equity risk, so refinancing doesn't increase their risk (in fact, it probably lessens it, because you'll be able to shorten the term and pay down the equity faster when less of it's going towards interest.)

Simpler than refi-ing on the commercial property or rental property might be to take out a second on one of them (whichever gives you lower rates) to pay down your home.

Alternatively, can you tighten your budget and throw a lot of extra money at your mortgage to get it to the LTV you need? How long would that take?

    Bookmark   October 15, 2011 at 9:22AM
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brickeyee

Sell the rental.

    Bookmark   October 15, 2011 at 10:24AM
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kats_meow

If the old house has lots of equity, can you sell it now and use that equity to pay down your current house loan and then refinance?

It sounds like most of our net worth is in retirement accounts and in the old house and the commercial building. So that sounds like really too much in real estate given that you have little equity in the current house. I would be inclined to sell either the old house or the commercial building (probably the house but it might depend on which one I could sell fastest and which would net the most) so I could pay down the current house and refinance.

    Bookmark   October 16, 2011 at 1:49PM
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marciab10

Update- after making a few calls today, I actually found someone who might be able to help.. am actually very optimistic..

I am very frustrated with my current bank, who I used to love!! From mid 1990s to a few years ago.. they were the best!. but currently they are in way more trouble than me! on the watch list and is behind in their government loan payments. I thought they would want to keep a great customer like us.. who borrows money and pays it back. I wasn't asking them to lower my rate to current rates, just lower it a little..

re: selling the other properties.. well on our last house if we could have we would have.. we never intended that to be a rental. At the time we first put it up for sale mid 2007, the real estate market in my neighborhood completely went to hell in a handbag! We waited about 2 minutes too long to list that house.. if we had listed 3 months prior would have sold at top $$..

After our last renters left in April we tried to sell again(at 20% below last asking price) had lookers.. but still no go.. got great renters again.. and they might buy in 2 years.

And our business is in our commercial bldg.. that keeps us able to pay the bills!

I have just heard sooo many stories about people who quit paying on their loans and the bank then will give you many options. My old next door neighbors lived in their 700,000$ house over 2 years without making a payment. Then the bank renegotiated their terms..with very reasonable terms. I think they must have paid a little bit on that, but then quit paying that and lived there at least another year before they foreclosed.

I realize banks are in trouble, and I'm paying for my neighbors, but I was hoping someone knew of a program to help lower interest rates for those who to pay their bills..

    Bookmark   October 17, 2011 at 7:51PM
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ncrealestateguy

So let us in on the name of the bank that may help you. It would really help me to know, as I am sure many others who read this forum.

    Bookmark   October 17, 2011 at 7:58PM
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marciab10

I am currently working with a broker, who specializes in commercial property, but has lenders who will refi all of the clients assets, including residential, so might not be applicable for everyone. I most certainly will tell details if all works out.. and of course this isn't going to happen overnight! I'm now in the process of gathering years of financials, and tons of paperwork.

    Bookmark   October 17, 2011 at 8:25PM
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