2nd mortgage question....

quinnpa · Joined: 05 Oct 2005 Posts: 16

Just curious, I have an 80/20 loan currently and was wondering if it was possible to refi just the second loan, the 20% one??

If I was able to do this I could correct my arrears and not have to move.

:lol:

chow · Posted: Thu Oct 06, 2005 2:56 pm Post subject:

If your first is one year seasoned, and the value has gone up some-you might be able to do a 90-100% one loan. How old is your mortgage?

The reason you went into the 80/20 was to avoid mortgage insurance. any loan over 80% of loan to value, will have a higher rate, or mortgage insurance. You may be money ahead to stay where you are-after the cost of the refinance-even if you have a little equity. You have to sit down with someone and let them look at the whole picture. There is no yeas or no answer to this question.

quinnpa · Joined: 05 Oct 2005 Posts: 16

Ok, here's the skinny.

I live in Minnesota. My financials are the same as the topic "Life after Chapter 7". I have had this loan since 4/30/04 but like I said in an earlier post, I missed alot of payments when I was unemployed.

My biggest fear is that I'll have to go back to renting and give up the freedom I've gain since owning a house. I'm in the process of putting together a materials list to finish my second level and add a half bath as that should greatly increase my value thus giving me equity (sweat equity).

chow · Posted: Thu Oct 06, 2005 6:40 pm Post subject:

The Underwriter in me tells me-You had better give up with the attempt to refinance your way into more debt.

and did I just read this???

"I'm in the process of putting together a materials list to finish my second level and add a half bath as that should greatly increase my value thus giving me equity (sweat equity). "

After reading this:

"If I was able to do this I could correct my arrears and not have to move."

You already can't pay for what you promised the lender you would complete, and you want more-with the hope-and the key word is hope that what you currently have done to the structure of the building will actually be at least 80% of the original plan on the orginal 80/20 loan?

"Slowly I turn" :twisted: (please see the old Jackie G and Art Carney tapes)

You took out an 80/20 doing some construction or home improvement, and now you want more, and can't keep up the payment on what you have? :?: I guess the honest person with a 6th grade education in check book balancing would have to ask one question. How is refinancing the rate, going to help you if you take on more debt? You can't finace your way out of payments. There is no magic wand for the situation you just told us.

I assume you spoke to a few people, including your current lender(s) and thought there must be a way.

There isn't, not unless you want to pay the piper, and you will lose a lot.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Quote: How is refinancing the rate, going to help you if you take on more debt? You can't finace your way out of payments

That's what he's trying to do, Chow. Get the mortgage paid up so that he's current, and also it sounds like he's trying to lower the payments. If he has a lower CLTV then yes, his rate is likely to go down (Unless his credit profile now is lower than it was initially, in which case it could actually cost you more in the long run to refinance!)

Do what you can to get caught up, because once you're behind on your mortgage life becomes very very difficult and/or expensive. Neither of the options are very pretty.

Rather than working on your home, find a way to either produce more income (2nd job) or lessen your debt load so that you can get caught up. It's going to hurt you more than it's going to help you. Most people where I live think it will be a great equity builder to add things on to their home. Here, the only way you're gaining any boost to your value, is if you add rooms/bathrooms. Everything else you really get very very little return on (and often times you actually lose money.) Don't let that little surprise happen to you..

chow · Posted: Thu Oct 06, 2005 8:04 pm Post subject:

How is refinancing the rate, going to help you if you take on more debt? You can't finace your way out of payments.

That's what he's trying to do, Chow. Get the mortgage paid up so that he's current, and also it sounds like he's trying to lower the payments. If he has a lower CLTV then yes, his rate is likely to go down (Unless his credit profile now is lower than it was initially, in which case it could actually cost you more in the long run to refinance!)

revisit: this post my dear sweet haplo. (and if you know either one of us-u no we really like each other!)

" live in Minnesota. My financials are the same as the topic "Life after Chapter 7". I have had this loan since 4/30/04 but like I said in an earlier post, I missed alot of payments when I was unemployed. "
it's either 1 of 2 answers. yank, or last chance broker-please step up now!

quinnpa · Joined: 05 Oct 2005 Posts: 16

You know, for being a banker...you're not too bright.

I never said I wanted to refi to do the construction work, I can do that myslef with about $2,000 in materials. My house's valuation is based on 980 sq. Ft. and in my split level, that's just the upstairs. The downstairs is classified as an "unfinished basment". What I would be doing by finishing it is essentially adding:
1 Family room
1 Small maintenance room
1 Large (12x12) bedroom
1 Bathroom

After completion my house would be double the square footage. My neighbor did this before moving and his house sold for $215k whereas before this our houses are only worth $170k.

This is what I was referring to adding more value to bring up the value to qualify under an 80% LTV. I HAVE MOST OF THE MATERIALS ALREADY.

Why I need to refi is unless I do this, I'm about $14k behind in payments and no 2nd job will save this situation. That's why I filed Bankruptcy. The best I can do is the primary lender said I can spread the deficency over the remaining payments which would only raise my payment $30/mo. but the second lender, Wilshire Credit, wants their $4k and doesn't want to play ball. They are my 20% lender, hence why I only need to refi them.

whew! Understand now??

quinnpa · Joined: 05 Oct 2005 Posts: 16

Forgot to mention, the Wilshire balance is $35k and I would not be refinancing for more than that unless it was 5k to add a deck, that's it. Not taking on more debt, just want to refi the debt I have.

Thanks.

(sorry if I seemed harsh, I'm kinda frustrated with this whole thing as you can imagine.)

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

The answer is yes, you can. You can pay off the 2nd with a new 2nd. With a higher value overall that's going to help your rate, however with your credit scenario A) it may still be a high(er) rate (maybe higher than what you have currently) and B) you may be limited on what % you can receive of the value of your home. Without knowing your credit profile it is difficult to say, but if you're behind on both mortgages, it's not going to be pretty.

The question that you should be asking right now is not 'can I refi a 2nd lien on my house' it should be 'who will refi the 2nd lien on my house.' From what I recall it is difficult for a broker to do a 2nd lien only because of the fact that they make very little to no money on them. Most banks probably won't give you a second glance because of the fact you are so far behind on both mortgages.

My best guess is that if you increase the value of your home significantly enough you *may* be able to qualify for a single loan to cover both of them, but if you're $14k behind in payments, that's a fairly large if. Foreclosure bailouts are not a hot topic for most investers and that's essentially what it looks like with your scenario.

This is why I recommended getting it caught up, rather than refinancing, but it sounds like that's a very difficult option at this point.

chow · Posted: Tue Oct 11, 2005 9:15 pm Post subject:

quinnpa wrote: You know, for being a banker...you're not too bright.

I'm about $14k behind in payments and no 2nd job will save this situation. That's why I filed Bankruptcy. The best I can do is the primary lender said I can spread the deficency over the remaining payments which would only raise my payment $30/mo. but the second lender, Wilshire Credit, wants their $4k and doesn't want to play ball. They are my 20% lender, hence why I only need to refi them.

whew! Understand now??

I'm not the brightest lightbulb on the tree, But you're 14k down and want some one to do what-Loan you bail out money-????? You can paint your picture any way you want, and please hand me 200 prs of rose colored glasses. You PROPOSE that you can do all of this, with supplies on hand.

with a promise of the building materials you have-that you have not already done something with it??????????????????

Please kiss my furry nose! I'm not the bad guy!

You are shooting the messenger, and failing to acknowlege your own self made situation!

I'm sorry, we can't be the magical answer board. I would tend to call us "the more than too honest debate board!"

quinnpa · Joined: 05 Oct 2005 Posts: 16

:)

Yeah, I see your point. You're right, it's 90% my fault. I say only 90% because I was laid off which is when all this happened so I don't hold myself 100% responsible.

I've had these materials sitting in my basement for a while now (drywall, nails, mud, paint etc) and never started because I never had anyone around to help. Now that I do, I'm not sure if I'd just be wasting the money. I could always store the stuff for use in another house one day or sell it or something. I would be silly to do all this work if I cannot refi my house in anyway and have to give the title back to the mortgage company and walk away. So that's why I'm waiting to see what happens.

I know if I can do anything it will be at a high rate, my 2nd is already 9.5% anyway so I'm used to it. I can always refi out after I've re-established myself so the interest is not that much of an issue.

Thanks for the help.

chow · Posted: Wed Oct 12, 2005 1:08 pm Post subject:

Well, then get to work!

:idea: Try calling the appraiser who did your last appraisal and see if they can give you some market advice about what would be the best use of your time and material. I just saw a company that can do 75% loan to value refi's as long as you are catching up the payments with the funds.

If you don't know who the appraiser is, try calling the LO who wrote your original loan. If you walk away from the house, and sign the title back over, you can't get another loan for a few years without paying the piper.

:idea: The other thing you may try is- talking to each company about a loan modification. You keep the same lender(s) but you reset the terms with the existing balance and roll in any legal fee's they have incurred. Most consumers are not aware that some companies will modify a loan. Your loans are most likely being serviced by someone other than the actual company who holds the notes. Call the mortgage company-not the servicing company.

See-what happens there-and let us know. They may even send an appraiser out for you, to work with. They don't want your house back!

:idea: The other thing you can try is working out a "short sale" with the lenders. Most lenders have a real estate agent they work with, on these or the foreclosures.

quinnpa · Joined: 05 Oct 2005 Posts: 16

Hello there guys. I called the first mortgage co. the other day (GMAC) and they told me that they can spread out what I'm behind over the remaining payments which would only be an extra 30/mo. My problem is the second co. won't do any thing more than take a series of post dated checks.

I have one guy who wants me to call him after my bk discharge (yesterday) and have sent a letter to the CRA's ensuring all my accounts read discharged in BK. After I finish the lower level he says he will be sending out an appraiser and if I can appraise high as I think, he can do me a 80% LTV loan which will fully satisfy the first 2 mortgages.

Right now this is all I have. My other thought was to offer the 2nd company an arrangement where I make a double payment each month for 10 months and that will cure the arrears with them. At only $285/mo it wouldn't be hard to do. That with the proposal from the first company would work but it's a long shot.

Thanks for the input.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

I'm a bit more cautious about these kind of things, but i would personally try the double payment option. Consider what you know: Your 1st lender is willing to work with you. Your 2nd lender has it in their best interest to work with you (Can't get paid for the loan if it gets sold or FC'd.) If you make a promise to pay double payments until it's caught up, and can stick with it, you *should* be in much better shape, and I can't see them saying no to that.

Consider the alternative. You're *hoping* that your house appraises for enough to get it at 80%. What happens if it doesn't? You've put an investment of time and money into something that's not going to pan out (Appraisal fees, application fees, etc.)

The other thing to consider is that you may very well end up having a rate high enough on your new 1st mortgage at 80% that it makes your payment the same as it would be if you had a double payment on your 2nd anyway. You're going to be raising the rate on your first by probably good jump, and that 80% isn't going to come cheaply.

chow · Posted: Wed Oct 12, 2005 10:08 pm Post subject:

Please remind the second mortgage person. That they are on Third base at this point. You're doing what you can to improve the property, and working with the first mortgage lender.

(It's like this, when you're in second base postition with a mortgage, and the first is playing very good with you-maybe you need to remind them to "play well with others." Because-face it...The Second company isn't on first base!)

I've sold a ton of those 125% seconds in my time, and watched a few months of income stream vanish in the middle of the night with some "Asian Flu" in 1998, and then there was the second attack of the death of the Tiitle 1 with HUD.

Keep up with payments on the first, make the second come to terms with what they have, what you can do. There is another little dirty secret I will tell you...And don't tell anyone I told you this.

In the world of collections, if you make a threat to do something to a borrower, then you had better be in the place to carry it though. It's a little known fact of the FDPCA, that once you demand action-as a collector, and request a termination of the contract by repossession or FC, then the collector has sealed thier fate unless they carry though with it.

I'm not an attorney, and you can'[ use this as legal advice...I'm just telling you what I have seen, been there, and watched a few servicers suck some sand.

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