If you are 100K plus underwater in your homes value…do you think it would be a good idea to further encumber the property? Aurora Bank thinks so.
I was on a call with a client when she contacted her bank yesterday to see about what options would be available for her to stay in her home. She is four months behind in her payments…equaling around $10,000.
We went down the usual path of talking about a loan modification (which she does not qualify for as her husband recently lost his job), and forbearance…which she was considering.
After all of that, the customer service agent told us that she had another option to become current. They (Aurora) have a third party lender who would lend her the money at I think he said 15% interest so she could become current and “save her home from foreclosure”. WHAT!!??? I almost fell off my chair!
Even the suggestion of further encumbering the property is ludicrous. Additionally, she can not afford her payment now…what is the “third party lender” thinking? How do they think they will ever get their investment back?
Of course I see Aurora suggesting this as they get some of the back payments and can avoid foreclosing on the home. For awhile anyway. This is like the biggest BANDAID solution I have ever heard of!
But I would be willing to bet that some folks will take them up on it. Possible ramifications? Of course!
I recently saw a worksheet showing the financial “truth” about a home’s future value. All said and done…the folks were $100K plus underwater. I do not remember the exact figure…but this jest of it is that IF our market began a recovery and appreciated a modest 4% per year…it would be SEVENTEEN YEARS before they reached an EVEN equity position. Most folks do not even stay in one home for seventeen years.
But…the bank thinks it is a GREAT plan to get further underwater. WHAT?? Am I missing something?