My wife was out of work due to illness for nine months. Many of our bills fell behind. To make matters worse my mortgage with Option One was purchased by Litton Home servicing. This new mortgage holder has essentially doubled my adjustable rate mortgage, making it extremely difficult to pay. We are behind now which eliminates the possibility of using the eqiuty in the home. I was given the idea of selling the home to a trusted friend or relative, for a temporary period of say two years with the idea of buying the home back once our credit and financial situation is better. Is this a viable alternative?
P. Baker
The new mortgage holder did not double your loan payment. The terms of the loan are set out in the loan documents that YOU signed when you obtained the mortgage. This is a legal contract with all of the terms spelled out. If the loan has adjusted it was because the loan terms called for the adjustment. The owner or servicer of the mortgage has no leeway in this.
Have you contacted the mortgage company to determine what options that you may have? Many companies would consider modifying the loan terms if the mortgage allows in case of hardship.
If you sell the home to a friend there is no guarantee that you would be capable of buying it back in two years. If you do go this route you should have everything spelled out in writing before doing so.
8)
It sounds like your "friend" wants you to sell it to him "subject to". If this is the case he is no friend. ST would mean that he will/might/may/might not make the payments, because he would be on the deed, BUT YOU WOULD STILL BE ON THE HOOK FOR THE UNDERLYING MORTGAGE.
Tell us more before you step in a trap.
all cash
Hi pbaker,
I've moved your post over to a more appropriate forum.
Sorry to hear about your situation.
As Rehab says, it was your loan itself that doubled the payment, and a new servicing company would not have mattered. Lots of people are in the same situation about now where their teaser rate has expired and the real loan payments are kicking in. Or, you had an option ARM that you were making minimum payments and you've now hit your cap.
If you have not already, you should call your mortgage company tonight or tomorrow and have a talk with them about working something out. Maybe they can offer you some sort of workout program. This is your best bet for staying in your house. Do not wait, please do this ASAP.
You should think very seriously about selling your house outright. If you actually have some equity in the house, that is, its worth more than you owe the bank, you may be able to sell it through a realtor. If you don't have any equity, you may be able to work with an investor to do a "short sale" and get the bank to accept less than you own for the house. If you bank has filed a "notice of default", or whatever its called in your area, you've probably had numerous phone calls, letters, or people knocking on your door already.
If you do try a sale leaseback like you describe, I'd recommend you do it with someone you don't care to stay friends with. Because these often go badly. You friend will either have to take over your mortgage or get a new mortgage themselves. They will have to charge you big enough rent to cover their payments and make a profit for themselves. If there's no profit for them, why would they invest the time, credit and money to do this? Its very likely your rent will be higher than you're paying now for the mortgage. If you're having trouble with the current mortgage, you may well have trouble with new rent. If you miss a rent payment, your friend will be in a position of making the mortgage payment on his own. If he has to evict you to try to get someone else to make up part of his losses, your friendship will really go south.
If your financial situation has improved to the point where you can handle the current payments, and some extra, you may well be able to work something out with the bank. Getting their payments, plus some extra to pay off the back payments and charges, is by far the best solution for the bank. If you're not in a position to do that you're probably going to have a hard time making your friend whole. In that case, selling and moving to something cheaper will be much better for you.
Jon