Thursday, July 08, 2010

WTF, bank? No wonder you're having such a crisis

OMG you guys. You would not believe what happened when Ben and I went to our bank (where we keep all of our money and send all of our mortgage payments) to find out if there was any way they could help us get the frick out of our upside down (but only a little upside down!) townhouse.

At first the manager didn't know what the hell we were asking him. "You mean like a short sale?" he asked. We were all no dude, we can afford our payments, we just want a bigger house. He started at us, not able to believe our stupidity. We went on to explain that we have enough money to either lose it on the sale of our home or make a down payment on a new house, but not enough cash on hand to do both of those things, and he still looked at us slack-jawed.

"Is there any program available to help people in our situation?" I asked. "An unsecured loan, even?" He seriously almost laughed at me. Then he asked us how much we made and how much we wanted to spend on a new house. We told him, and he waved his hands at us. WAVED HIS HANDS AT US. He waved his hands at us as if to dismiss our problems.

"We'd approve you for that mortgage no problem," he said. "You could keep your current house. Maybe rent it out?"

WTF? First of all, why the HELL would we want to compound the very worst financial decision we have ever made (buying a house) by DOUBLING it (buying a house on top of our house)? Second, does he KNOW how much money we have contractually agreed to pay for fancy schmancy preschool? Third, WTF, bank? How does it make any sense for us to have 2 houses when we could have one? Why is there no help for people like us who were victims of the market in the best sense-- can afford our house and would actually like to buy
another one-- but may never be able to unload House A because we overpaid for it and even if the market rebounds 1 or 2%, we'll still owe more than it's worth and will have to pour buckets of money onto our mortgage or bring buckets of money to the closing table or will have to own this house for the entire 30 years of our mortgage?

WTF?

Then I spent a few hours looking at the MLS and was pretty much ready to call a realtor immediately. But still. 2 mortgages sound like half the fun and twice the worry. And tenants? I don't know if we can handle the responsibility. We might just leave this house empty, I guess. Which seems really wasteful, even for us.

Anybody have experience with either of these scenarios? Advice? Should we just suck it up and keep saving, so we can lose money on both ends of the deal (depressing thought)? Foreclose on our house out of spite (not really an option, but I kind of think that if every consumer who is upside down on their house just said fuck you to the banks, it'd be pretty awesome. Also devastating). We'd like to move before H starts kindergarten for a whole host of reasons, but we don't *have* to move. We just want to real, real, real bad.

In other news, I need to relax and step away from the appliances (I was "taking a nap" with all of these devices last weekend).

And Ben and Harry are adorable.

8 comments:

Misty said...

Indeed. I strongly believe this is the problem with all our "relief" programs. You have to have failed spectacularly to qualify for any sort of help. I had the same flash of rage over Cash for Clunkers. As bad as I wanted a Jeep Cherokee back in 1996, I bought a Chevrolet to save on gas. Despite that Chevrolet's myriad problems that had run its gas mileage into the toilet, it didn't qualify for the program.

Perhaps it's an explanation for why the country is tilting to the right these days. Those of us who made good, responsible decisions are paying to bail out others, who bought mcmansions and Hummers -- with the help of all to eager banks.

I feel for you girl. Good luck.

Becca said...

Ugh. On Ryan's salary ALONE in grad school (about $12000/year) we qualified for a $150K mortgage. OMFG. My sister worked briefly for a bank in the mortgage department and quit in disgust because she was encouraged to loan people more than they could afford. Good for you for knowing your limits and sticking to them.

And you can hire a property manager to take care of all renting details for you--maintenance, finding tenants, collecting rent--and they take a percentage of the rent. It would be a better option than letting it sit empty until Harry needs a bachelor pad for college!

Amy Bullock said...

I'm in the same scenario. Three years ago, I bought the perfect one bedroom condo for a single person for a great price for the market(at the time). Then I met Joe, the market tanked, and its' three years later, and we are crammed into a place that is too small and I owe a little more on my mortgage than the condo is now worth.

I do a lot of work in this area and banks are generally NOT HELPFUL AT ALL. Especially because you are not in default on the loan, they have no incentive to help.

Our plan is to (1) try to pay down the principal on our second mortgage as much as possible - if we didn't have this sucker we would not be upside down. After the wedding, we are going to try to make one extra payment on this a month to bring down the principal owed and try to create equity that way. While paying it down we will still save some for a down payment on a new place (since the monthly on the second mortgage is small, I'm hoping this works), and (2) wait it out - we are just going to try to wait out the market as long as we can, and if when we can no longer wait the market still sucks we will just rent. There are books and forms and stuff that will show you what you need to do. If you study up on it, being a landlord might not be so bad.

In the end I think the only answer is to wait it out. I'm thankful that at least my mortgage rate is fixed.

Tiffany said...

we are 1,000% in the same situation...upside down, able to make payments, wanting a bigger/better house. we too qualify for nothing because we're able to make our payments. the whole "making home affordable" program is a joke. it helps no one.
i also owned a condo in nashville when i lived in los angeles and rented it out. i hated that experience. if nothing goes wrong with the rental, it's totally cool. if however, anything goes wrong, it's a huge pain in the butt and very costly. if you hire a prop. mgr, it's a little pricey - usually about 10% of the rent. plus, if you have a hard time renting it out, you have to suck up the mortgage payment for those months that it's not rented. that happened to me three times. UGH!

sarah said...

We are right there with you. We still own our house in VA & I have no idea how we'll ever be able to sell it. Thankfully we do have tenants, or we'd be paying our mortgage there AND our rent out here in California & we'd be eating ramen noodle every night & donating blood to make ends meet. It's pretty crappy.

I have no idea when we'll be able to buy another house & it's SO depressing.

Anonymous said...

nothing to suggest, in1951 we bought our first house for $12,500.00 a little under 800 square feet on the first floor, unfinished attic and full basement ...but I like Ben's buzz cut...Bomma

Kim said...

I think it is wiser to pay extra towards your current mortgage to try to get to a break-even point rather than having 2 mortgages.

We're stuck here until our house sells because we need to a) make enough to pay off the mortgage, b) pay off some bills, and c) still have a down payment (it won't be 20% though) for a new place. However, if we had the extra money, we'd be paying off bills so that we could take less on our house.

We are definitely out of room in our 3-bedroom ranch with 5 people (well, in one month) and a bigger dog. The baby will be living in our room until we move so that the girls don't have to share. Unless we are here for another year, that is.

Cathleen said...

I asked my husband about your situation. He said he would recommend 2 different options. First, you could try and sell your house without a realtor (not what he would recommend and isn't too successful in this market). Or, if you are willing to buy a new construction house for 2x the value of your current home, you can approach a home builder to do a guaranteed buy on your home. I despise rental properties. We have 3 (not by choice - couldn't sell investment properties in the shitty economy). Some tenants are awesome and others suck. Like the other day our tenants called that they had no hot water, we sent someone over to fix it. Well they dumbasses didn't pay their gas bill!