It happened again this week. A GreatWest GMAC Professional received a call from an old friend, to say she and her husband were having difficulties with their mortgage(s), and were a little upside down on their home. They didn’t quite know what to do about it.

Real Estate Agents have increasingly seen this scenario - Homeowners who are in deep trouble because they either are in homes with mortgages, which are due to have their interest rate reset, or are in homes which are now worth considerably less than the amount owed on the mortgage(s). Some folks no longer have their job to help make the payments.

Still others have enjoyed the good-life, by taking up credit card company offers of 0% interest for a few months. They had ultimately ran up those credit cards, while buying boats, vacation trailers, and other expensive toys. When the interest rate reset on those credit cards, they found themselves in financial hot water.

Ultimately, they would attempt to put a Band Aid on the situation, by refinancing debt and converting it to a second mortgage on their home.
After the friend and the GreatWest GMAC professional spoke for awhile, she went over to pay the couple a visit, to explore what options they may have.

During the visit, it was determined, they had a first mortgage on the house, which was less than the current value of the home, but it was due to reset it’s interest rate substantially higher, quite soon. BUT, they also had a second mortgage for $50,000 more. The two mortgages together put them upside down in value to amount owed on the house.

The couple had talked with the first lender, to see if they could renegotiate the terms of their first mortgage, or refinance it. Yes, said the lender. BUT here was the kicker - the first lender wanted them to get the second lender to forgive the $50,000 loan, BUT never mentioned what motivating factor would create divine intervention and move the second lender to be agreeable to such a miraculous event.

So as real estate professionals, here is the question for those of you involved in our profession - What do you think the chances are the second lender is going to simply walk away from this, no questions asked??? And why couldn’t the first lender simply agree to NOT reset the existing mortgage as scheduled for a period of time? And if the lender agrees to not reset, why would it require a recording, which would move them into second place as far as liens are concerned? After all it is not the note that is recorded - it is the deed.

Spending further time with this couple revealed other things the GreatWest GMAC professional thought would help them, however.

Like it or not, it had been a rather robust lifestyle the homeowners had been enjoying these past few years. This lifestyle had ultimately driven up the debt on the house. For example, there was a new motor home. There were two late model SUVs. One vehicle was an almost new Ford Expedition, and there was a Ford Explorer. There were also a couple jet skies parked in the garage. The home had wonderful furnishings. And there had been delightful vacations.

Here’s what was suggested - These homeowners still have jobs, although one has a different job, which doesn’t pay as well as the previous one. It was realized that if they didn’t have the existing second on their home, they could actually be about $20,000 in positive territory on the equity of their home. And if they sold their motor home, the jet skies, and did a little juggling they could be close to paying off that second mortgage.

They still both enjoy good credit, and if that second was paid off, they would likely enjoy a number of options, which don’t appear available to them currently.

The couple called the GreatWest GMAC professional a couple days ago to state they had managed to sell the motor home. And were certain they were in realistic territory of paying off the second, and renegotiating the first. They are ecstatic. Our GreatWest GMAC professional won’t be representing this couple in the sale of their property. BUT, imagine the good will that has been generated, which will likely culminate in referral business down wind.

Written for GreatWest GMAC
By: Myrl Jeffcoat