Author Topic: Condo HARP Refinance Question + Long Winded Personal Story  (Read 3915 times)

freelancerNfulltimer

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Condo HARP Refinance Question + Long Winded Personal Story
« on: September 20, 2012, 01:41:26 PM »
Bought a Condo in 2006 to live in with the generous help of my Aunt and Uncle. They lent me $30,000 for the down payment and co-signed the loan. Total purchase price was $177,000. It was of course the worst possible time to buy, but I had no idea. The current estimated value of the condo is $80,000. I owe around $123,000. My interest rate is 6.25%.

We bought the largest unit with the idea of renting out the extra bedrooms. Which I did successfully for 6 years. This also means I have the highest condo dues in the community having the largest model. Currently around $340 a month.

Living in the condo was horrible for me. I had very creepy neighbors. They harassed me and I called the cops repeatedly on them. They chain smoked and my unit smelled like smoke all the time. The condo itself was cute enough and big (1800 square feet) but I felt very unhappy there. Then I got a very good job. I got a new salary which is currently $60k a year. I also freelance a lot (to the tune of an extra $1000 at least per month but normally $1800 a month). I wanted to refinance the condo but nobody would touch it.

Frustrated, and with my new salary burning a hole in my pocket I decided to buy a house to counteract my bad buy in 2006 with a good buy in 2011. I get a discount on professional Property Management services through my mom so I got the Condo professionally rented and I'm currently loosing $353 a month on the renting of the condo no including incidental repairs.

I bought a single family home (wohooo no condo dues!!!!) in a historic neighborhood for $245,000 with an FHA loan with 3.5% down at 4.25%. It has a detached one bedroom, one bath apartment which I rent out for $700/month. I also have a room mate who pays me $450 a month and my fiance who recently moved in contributes $750 a month. Net cost to me for my mortgage/pmi/insurance/taxes (not including utilities) is like $12/month. That's going to go up next year when I ask room mate to get the fuck out. I'm looking to refinance this property to take advantage of the new interest rates.  I'm getting the paperwork together for that and may switch to a Conventional mortgage because it looks like with the FHA streamline refinance my PMI would go up too much and I wouldn't see any decrease in monthly costs even with a lower interest rate.

Bringing it around back to my condo. I desperately want to refinance the sucker. Actually what I really want to do is walk away from it now that I'm in my house but I can't do that to my Aunt/Uncle's credit who are the co-signers.

I qualify for HARP2 in every way even considering this is now a rental property and not my primary residence. I can't find a lender to touch it. When I finally talked to someone at Wells Fargo who said they'd be able to do it, it turned out I couldn't due to too many investment properties owned by my Aunt/Uncle.  They would need me to refinance in my name only. Which I'd love to do but bad luck that my Aunt writes the mortgage check every month and I pay her back every month. (She insisted on this arrangement as a stipulation of co-signing) Wells Fargo said I'd need one year's worth of checks coming from me before they would do it. Which I've started doing three months ago (9 months to go). HARP2 expires in Dec 2013.

Are there any OTHER possible avenues for refinancing the Condo NOW that I have not considered? I'm concerned that come May 2013 another roadblock with Wells Fargo will pop up. I know I did it to myself but losing $353 every month hurts. A refinance would most likely bring that down to $153 a month with the new interest rate.

AJ

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Re: Condo HARP Refinance Question + Long Winded Personal Story
« Reply #1 on: September 20, 2012, 02:17:40 PM »
I don't have any suggestions on the condo refi. It may just be best to wait and see how it goes in May. Unless you can get some equity quickly, I don't think any conventional lenders are going to touch it.

I'm curious why you plan on kicking the roommate out, though. Bad match? Or, you just want to live alone when you are married? DH and I had roomies for years when we were first married. Or, could you live in the apartment and rent out the main house?

freelancerNfulltimer

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Re: Condo HARP Refinance Question + Long Winded Personal Story
« Reply #2 on: September 20, 2012, 02:24:55 PM »
It's a bad match and I want to live with my Fiance without a roommate. While Financial Independence is important to me, I'm not on as fast-tracked a plan as most MMM people seems to be. I don't want to get my expenses as low as I possibly can.  Knock on wood I like my jobs and have good job security so I want to continue what I do for a while.

Between my Fiance and I we have three dogs. Living in a 650 square foot apartment is not an option.

I spoke with the President of the Condo board recently (about my Tenants not following dumpster rules) and she told me that she had two unit owners successfully refinance who were just as upside down as me because of something to do with QE3. I'm not sure exactly what she meant which is part of my asking this question. Is there some new program out that I'm unaware of? She said these two owners got a balance forgiveness too.

Another Reader

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Re: Condo HARP Refinance Question + Long Winded Personal Story
« Reply #3 on: September 20, 2012, 02:43:02 PM »
Is Wells Fargo the original lender?  Usually HARP is easiest through the original lender, because they don't have to meet the same lending standards a new lender does.

However, what I see here is an alligator that is a problem for everyone.  First, your aunt was probably taking a mortgage interest write off to which she was not entitled but was part of the deal you made with her.  I'm sure she's not happy about losing that.  Second, it sounds like you owe a total of $153,000 on the condo - $123,000 to the bank and $30,000 to your aunt and uncle.  That's for a condo that's worth $80,000. 

Mortgage principal relief under the banks' settlement agreement is for owner-occupants only.  I would be talking to the aunt and uncle about what to do with this property.  Maybe they can refinance with HARP under their names and you can sign a promissory note for the $30,000.  If that gets them cash flow neutral, maybe you can deed off the property and they can wait for the market to recover.

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Re: Condo HARP Refinance Question + Long Winded Personal Story
« Reply #4 on: September 20, 2012, 03:04:55 PM »
To follow up, the HARP rules do not disallow refinances for owners of more than 4 or 10 financed properties.  However, lenders are allowed to superimpose their own lending guidelines, and many lenders won't do HARP loans for owners of more than either 4 or 10 properties.  Chase wouldn't do an investment property of any kind under HARP the last time I talked to them.  Yet Suntrust was very accommodating in refinancing one of my properties under HARP last spring.  They were not the loan originator, but they were the first and only servicer.

The current loan servicer for a Fannie/Freddie loan has to meet less strict "representations and warranties" and therefore has less risk of being forced to buy back the loan if something goes wrong.  Therefore, it is generally easier to deal with your current servicer in a HARP refinance.  Perhaps your aunt and uncle could approach the lender/servicer if it is someone other than Wells Fargo.

freelancerNfulltimer

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Re: Condo HARP Refinance Question + Long Winded Personal Story
« Reply #5 on: September 20, 2012, 03:06:17 PM »
Wells Fargo is the original lender.

My Aunt and I currently split the mortgage interest deduction. She's happy to get her name off this property in any way possible. Her losing out on the home interest deduction is not a deciding factor on what we're going to do. I will pay her back the $30,000 some other way if I can't get it out through the sale of the condo. There are no time limits on when I repay her though the original goal with this condo was to sell it six years after purchase and get my Aunt her down payment from the sale.  As it stands now even if the stars aligned to allow my rent to increase 3% a year, the condo to appreciate from its current value 3% per year and the condo dues to never increase a dollar from where they are now I STILL wouldn't break even on the property if I paid off the loan on its repayment terms. My Aunt will probably be dead or elderly before I could pay it down enough to sell it and get her down payment out and meanwhile I would have lost tens of thousands of dollars in carrying costs.

My Aunt and Uncle are in the middle of a contentious divorce and re-financing in my name is the best possible solution. My Aunt is very helpful but my Uncle is not.

I'm not going to throw any extra money at paying down the mortgage. If I can refinance I can stomach the loss for a while to see how the market places out.

Most likely I'm going to have to wait until May 2013 and see what happens. I was grasping at straws wondering if anyone here maybe had another idea.

freelancerNfulltimer

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Re: Condo HARP Refinance Question + Long Winded Personal Story
« Reply #6 on: September 20, 2012, 03:09:11 PM »
I wonder if it would be worth talking to SunTrust even if they're not my lender?

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Re: Condo HARP Refinance Question + Long Winded Personal Story
« Reply #7 on: September 20, 2012, 03:29:54 PM »
Suntrust was the servicer on my mortgage so the entire process was very easy and stress-free.  In your situation I would try to run this through an experienced broker that can shop this loan around to see if anyone else will take it on.