How To Negotiate Arrears With Mortgage Lender?
Is it possible to negotiate arrears with mortgage lender? If so, how? Seller owes $14,000 in arrears, has a 4.5% VA loan. It's written on top of Security Deed that loan isn't assumable w/o VA approval. Any way around this legally? Great house in great area, but no equity: $159K owed, $170K FMV. Mortgage payment $1088/mo., rent supports at least $1250/month. Mortgage lender has given seller 'til the 19th of this month to pay the $14,000, and she's REALLY afraid of having a foreclosure on her credit. She's starting to panic. Is this worth pursuing? If so, what's the correct way...or do I drop it? Can I help her in any way even if I get nothing out of it?
Thanks for reading this, and for any help you can give me.
Sincerely,
Marc
You can attempt to work a forbearance with the lender on the owner's behalf. I'm not sure if this would work for you because typically the lender will say that you can put $XXXX down and an extra $XXX per month along with the regular payment. With $14,000 in arrears then you will likley have to come up with a few grand plus pretty high montly payments for 12-24 or more months. I can't remember how long the typical forbearance agreement lasts. I believe it may be permanent.
Another option is to work a short sale but this likely won't give you the property cheap enough to retail---only to finance yourself and sell it creatively.
Is the 159K owed included the 14K she is behind or is the grand total 173k owed?
[ Edited by scarywoody on Date 08/16/2004 ]
Myfrogger,
How would a short sale work? Would this enable me to keep property as rental?
Scarywoody,
That would be $14,000 to get current. Is there no way to discount this with the lender? They wouldn't be interested in discounting this even though property is in danger of foreclosure?
Thanks for the help, guys.
Marc
Scarywoody,
Sorry...$173K total. No way to discount, then?
Hrrrmmm
Owes 173K and FMV is $170K. I think it would be hard to short sale the loan unless the house is in bad condition or there is some other reason it won't sell for $170K. Might even be harder since it is a VA loan. In my experience the VA does not like to lose money or give someone else money. Maybe somone with more experience can give there opinion on this one.
One option I'd see if there is anyway she can make up the 14K to get the loan current and buy it "subject to". Possibly get the lender to work with her somehow to make up the payments. Nothing is really striking me a s a good way to handle this.
No1b4him,
You could try a short sale, but with it being VA insured, you are only looking at discounting to 87% of the fair market value. The best thing for the seller is for you to negotiate a forebarance agreement. Depending on the lender, they will put the 14K at the end. Depending on the laws in your state, you can also charge a fee. Also, if you are successful, chances are you will get referrals because you saved her house.
[ Edited by bnorton on Date 08/16/2004 ][ Edited by bnorton on Date 08/18/2004 ]