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kyoung

Is there a loan like this?

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I know I am a sucker so please don't rag on me too hard.... I am opting to try and help these people keep their house rather than try to buy it from them.

 

Met a couple today whose sole reason for talking with me was to see if I could offer them a back up plan for thier current situation. They are in need of a new mortgage to pay off an upcoming ballon payment. They have impeccable credit. At last check (last February) the husband has an 813 FICO and the wife has 782. These people have never had any 30's, 60's, 90's, judgements or write-offs. Basically they are freaks. ;)

 

If they cannot get a new mortgage they will need to sell the house - hence the reason they called me. The problem is their debt-to-income ratio. It is HUGE. They owe 82k in credit card debt alone. :lol: 90k on an owner financed mortgage (only about 10k-15k in equity) and 9k on a vehicle. They are not in danger of default on anything but they have been having trouble finding a new loan due to the debt-to-income ratio. Even a no doc stated income loan would require they lie about their income. Not acceptable.

 

If the minimums on their credit cards weren't so high they could easily qualify for a new loan. My rose colored glasses have me thinking that there HAS to be some sort of help for people like this. You don't get credit scores that good for no reason. It is clear that these people intend to pay what they owe.

 

Don't laugh but are their any bleeding-heart millionaire types out there that would be willing to make an 85k unsecured loan to people with spotless credit?

 

Seriously, is there ANY loan product that will allow them to consolidate all that unsecured debt into one larger (ouch - also unsecured) loan? The theory being that one larger loan at say 9-10 percent (30 yr am)will give them a lower monthly payment than they have to make on the credit cards thus allowing them to get a loan to pay off that ballon.

 

-Kay

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Perhaps the homeowners should contact the note holder to see if the loan can be extended. If the original note had a 3 year balloon, maybe the note holder will extend the note for another three years. If the buyers have had no late pays, the note holder may go for this, especially if the interest rate on the note is higher than the banks are offering for new loans, or better yet, if the interest rate is higher than the note holder might get from other investments.

 

If the note holder goes for this, then the homeowners need to get into some heavy credit counseling. There are very few acceptable reasons to have $82K in credit card debt. How many credit card do these people have? What are the interest rates on their balances? The minimum monthly credit card payments must be around $2500.

 

Have these folks attack their credit card debt by calling all the card issuers and asking for a lowered interest rate. Have them make minimal payments on the lower interest rate cards, and as much additional principal payment as they can afford against the card with the highest interest rate (not the highest balance). After that card is paid off, then attack the next card with the highest interest rate.

 

If possible have them apply for as many new cards as they can get with 0% interest on transferred balances. If their credit scores are as high as you say, they should be getting these offers in the mail routinely. Don't let them use the new cards, just pay off the balances.

 

Every six months, have them call the credit card issuers and ask for a rate review and see if a lower rate may be available for their cards.

Edited by Dave T

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Dave's response is perfect, only thing I would add is if the Noteholder does not want a long term hold on a note, have them do a 30, 25 or 15 year loan with no balloon at a market interest rate (I would suggest. If the borrower is 75% as good as you say that note will be very easy for them to sell to cash out and not have to deal with these borrowers any more.

 

Mike

:ninja:

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From what I gather they have done all that you suggest.

 

Note holder is previous owner who "never wanted to owner finance in the first place but was nice enough to make an exception". No extension.

 

Has been tackling highest interest cards first. Not able to put much over min due. Said something about the new way min due calculations are changing. (higher min pmnts/mo)

 

As for getting new cards, the husband says they do get apps a lot but the last few he tried either gave him a higher APR than was on the mailer or they ended up getting a tiny limit citing high balances for the reason.

 

From what the wife says calling the card companies has done no good. They told her you have to be in default to get assistance - said they could (would?) do nothing until then.

 

I used to sell mobile homes at a dealership where I would often sit and discuss all that you mention with buyers I couldn't get bought. I sat with these folks for quite some time going over the same stuff and then some. I appreciate you taking the time to comment. If your sure there is no magical loan fairy that can help then I think these people are S.O.L. :ninja:

 

-Kay

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Mike,

 

We never discussed the ex-owner selling his note. If they were to draw up a new note w/o a ballon so he could sell it would the lack of seasoning on the new note be a problem? Also, if the payoff is approx. 90k, about how much (best guessimate) would the note holder end up walking away with?

 

-Kay

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