I have a friend who is getting in a very desperate situation. she had fallen behind on some bills a few years back, and refinanced her home to get cash to pay them. The lender had trouble getting the loan for her because she had very little equity. They got a drive- by appraiser to inflate the value and thus she over-borrowed. To make matters worse, she took a balloon loan which pays 100% interest. the loan is due in 12 years.( and paid outrageous closing costs. 4k+.) She is trying once again to refi and is running into this same problem again. Housing prices in this area haven't increased much. this is a rapidly growing area with many new homes being built and the market is saturated. The appraiser didn't even come to her house, he called a local realtor and determined that the mortgage payoff exceeded the value by 10,000 already. I agree with his assessment, she however, fully believes that her home will appraise higher if she calls the right appraiser. Tomorrow she is paying an appraiser 300.00 out of her house payment money to do a full house appraisal. If this house doesn't appraise 15-20k higher, she wont get the loan, and will be 300.00 short on her mortgage payment. THe closing costs this time will be over 6K !!!! I thought this was a bad idea the first time and even worse of an idea now. I am very worried that she will lose her home. These lenders make this all seem ok to her. I agree that she needs to refi with a 30yr fixed at a decent rate eventually, but with her credit as poor as it is, and being upside down in her mortgage I am out of ideas for her can someone help??
coral- What can we say??? she has already turned unsecured debt into secured debt once and paid 4K!! and now she is using the mortgage pmt to finance another shady deal....geesh...my grandmother was a southerner and I can hear her now "why throw good money after bad" "once burned twice shy" and her real favorite "pigs get fat and hogs get slaughtered". This friend sounds like she is running down the path to foreclosure...maybe you should start educating her about bk...'cause she just might be needing the info soon to save her house. I think you already know all this....and it sounds like she is determined to do what you already know is a bad deal...just give her your good advice in a gentle way. My brother is a psychiatrist and he likes to tell his patients "I can help you but I can't save you"...if she is determined to self destruct on this there isn't much you can do to help her. clc
Where does she live? What state? I know in Kansas and Florida (there are a few more, if you declare BK you can keep your house. Seems to be why many stars move to Fla. buy a big house and declare BK. Sell the house and take the cash. Although your friend has already fooled the sytem once with an appraisal. Doubt she can pull it off twice. I feel for her, but sounds like BK may be the way. And, the $300 from her mortgage payment, now she is late on that account. Really in trouble.
Thanks for your input, WE already discussed the BK route. Its a no go cuz she doesn't want to RUIN HER CREDIT!! AAAAGGHHH!!! coral is pulling her hair out!! BYy the way I loved the phrase " throwing good money after bad" I will tell her that. Mabey she will get it. coral
Coralreef, your friend needs to talk to a good lawyer. It seems may have been a victim of predatory lending on the first refi. If they knowingly over inflated the appraisal, she may have a case. Gib
