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My Personal Housing Crisis

Do Not Sell My Personal Information

Scrote Squad

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In 2010, I bought a home and paid my mortgage, on time, for nearly four years. On May 12 of last year, a major storm came through the Akron area. The surrounding flood damage caused a wall in my basement to collapse, completely ruining my basement and all of its contents. I contacted my insurance company (State Farm) and they ruled that hydrostatic pressure was the cause and that they weren't responsible for helping in repairs. I had to pull my electric meter that night to avoid a fire and haven't spent a night living there since.

In the coming days, I had contractors out to assess the damage and got repair quotes in the range of $30k...$30k that I didn't have. I bought my house for around $150k and still owed about $120k. I maybe could have begged, borrowed or stole the money to get the repairs, but then I'd have to pay back that debt on top of still making my house payments which wasn't a realistic option. Instead, I contacted the bank and tried to set up arrangements in which they would:
a. drastically reduce the principle and suspend monthly mortgage payments so that I could make payments on the repairs
b. meet me in the middle, pay half of the repair costs and I would resume my monthly payments

I submitted paperwork with the bank and found out that there's a cookie cutter process that all issues like this have to go through. There aren't programs available to outliers like myself. Fast forward to now and I was just denied loan forgiveness/deed in lieu by the bank. My options are currently that I wait for the bank to give me the short sale amount that they will accept and I find a buyer at that number, I file bankruptcy to avoid being sued for everything I have, or contact HUD and hope that they can come through.

I've lived at my uncle's house for the last year. I have a well paying job and have no blemishes on my credit outside of this incident.

I'm curious if there is any advice anyone could provide? Also, I'm wondering if there are any writers that anyone is aware of that might be interested in hearing this story and potentially publishing something about it? I want to do the right thing but I'm getting bent over without having any say in the matter. Any help would be appreciated. @Lee and @natedagg I think I remember you two being in housing/law.

Thanks guys and gals.
 
I know this might sound horrible, but its really not the banks problem. If they denied you for loan forgiveness, then you didn't fit the protocol for it. Its like buying a car that gets totaled in an accident, its not the banks fault that you still owe 20k on a car now worth 10k.

Back to the issue, you can let the house go in foreclosure or in a bankruptcy which might be cleaner. You wont be eligible for a mortgage for 3 years after everything is final, and even then it will be a fha loan. That said, its still the best way to go most likely.

In all of this the real crime is the insurance company is able to get away with denying you. Why have insurance? Now both you and the bank are harmed (you more than the bank, the bank can afford it, but still). My uncle had 4 properties in NOLA during Katrina. Even the flood insurance didn't cover much of the damage.

As for your story, working at a bank I have heard it 100's of times. This is why the bank really cant do much, the cost is to great, and most likely they really aren't the investor, just the servicer. I cant imagine too many publications too interested because it is such a common issue.
 
I know this might sound horrible, but its really not the banks problem. If they denied you for loan forgiveness, then you didn't fit the protocol for it. Its like buying a car that gets totaled in an accident, its not the banks fault that you still owe 20k on a car now worth 10k.

Back to the issue, you can let the house go in foreclosure or in a bankruptcy which might be cleaner. You wont be eligible for a mortgage for 3 years after everything is final, and even then it will be a fha loan. That said, its still the best way to go most likely.

In all of this the real crime is the insurance company is able to get away with denying you. Why have insurance? Now both you and the bank are harmed (you more than the bank, the bank can afford it, but still). My uncle had 4 properties in NOLA during Katrina. Even the flood insurance didn't cover much of the damage.

As for your story, working at a bank I have heard it 100's of times. This is why the bank really cant do much, the cost is to great, and most likely they really aren't the investor, just the servicer. I cant imagine too many publications too interested because it is such a common issue.

If it's so common, why doesn't the bank care? If I file for bankruptcy, the bank is stuck eating the loan. Had they helped me up front, we wouldn't be in this position. I'd be living at my house and the bank would be back to making interest on every payment made. They would have more than come out ahead in the long run if they would have just helped me from the start. I'm being punished for something totally out of my control.
 
If it's so common, why doesn't the bank care? If I file for bankruptcy, the bank is stuck eating the loan. Had they helped me up front, we wouldn't be in this position. I'd be living at my house and the bank would be back to making interest on every payment made. They would have more than come out ahead in the long run if they would have just helped me from the start. I'm being punished for something totally out of my control.

I don't really understand your point. Are you saying the bank should help you fix your house because you borrower money from them? Why is this the bank's problem? If they gave you money, it just opens the flood gate for more people trying to extort money from them. They are not an insurance company, they didn't cause the damage, and the bank didn't defraud you on anything. They are as much the victim as you.

And PS, banks don't typically make the interest on the money, the investor (fannie, fredie or ginnie) typically makes the interest. The bank makes a very small service fee for collecting your money(on a 130k mortgage about $25 a month)

By giving you money on a loan you took out they bank is rewarding bad behavior. I get you don't really see it like that but think of it like this. You lend someone $1,000 to buy a motorcycle. They have an accident and ask you for another $150 to fix it, split the accident with you. Now you had nothing to do with the accident and they stopped paying you back. You can either pay the $150 bribe or take the bike back, fix it yourself and sell it too someone who has a better track record of paying you back.

You know you don't want to agree, but the bank has nothing to do with the problem I get there is a problem, but helping you would be rewarding bad behavior and it sets up 1,000's of other people trying to get money to fix their houses. Banks lend money, they are not in the business of insurance those assets against damage, that is State Farms problem.
 
I am a financial advisor, so Lee probably is the better person on this one. Given the facts, I am doing the following:
1. Going at State Farm again. Make sure that you know what was covered for your policy, and know that their determination that the cause was hydrostatic pressure is verifiably accurate/truthful. If it's simply "your policy didn't cover floods and this was clearly flood induced," then don't spend too much time on it...
2. Before exploring any sort of BK, figure out if that BK would affect your job in ANY way. You need to keep your job for any solution to work...
3. If you have a 401(k) with any sort of $ in it look into borrowing. You might be able to borrow 1/2 of your vested balance, then chip away at paying YOURSELF back with interest TO YOURSELF, without penalty, over the course of 5 years. Remember, the payback comes with after-tax dollars though, but that's ok, it could be the right fit.
4. Look for government aid. I found this http://www.needhelppayingbills.com/html/mortgage_assistance_from_the_h.html which is a link to Ohio's "Hardest Hit" fund. It does sound like an unexpected emergency, so I would at least google "hardship mortgage ohio" like I did and don't just read a bunch of shit. Make a folder of favorites or print out the websites that are good and highlight shit and get organized.
5. Call a few BK attorneys and set up 20 minute phone consultations just to hear their perspectives. They might have different ideas about what you might consider and why. If you just do the phone call, you really aren't wasting their time so much.
6. Get a loan and fix the shit. It just kind of depends on your family situation to try to make it work, and whether it ultimately is worth it. Like $30K loan to fix it, plus one roommate or airbnb traveler might not be the end of the world. Shit, if you fix it up, turn it into a rental and buy another house with low % money down, if you can get it to cash flow properly.

Shouldn't have removed the electric meter - should have packed up the memories and watched the place burn down. That would have been covered... amirite?
 
I don't really understand your point. Are you saying the bank should help you fix your house because you borrower money from them? Why is this the bank's problem? If they gave you money, it just opens the flood gate for more people trying to extort money from them. They are not an insurance company, they didn't cause the damage, and the bank didn't defraud you on anything. They are as much the victim as you.

And PS, banks don't typically make the interest on the money, the investor (fannie, fredie or ginnie) typically makes the interest. The bank makes a very small service fee for collecting your money(on a 130k mortgage about $25 a month)

By giving you money on a loan you took out they bank is rewarding bad behavior. I get you don't really see it like that but think of it like this. You lend someone $1,000 to buy a motorcycle. They have an accident and ask you for another $150 to fix it, split the accident with you. Now you had nothing to do with the accident and they stopped paying you back. You can either pay the $150 bribe or take the bike back, fix it yourself and sell it too someone who has a better track record of paying you back.

You know you don't want to agree, but the bank has nothing to do with the problem I get there is a problem, but helping you would be rewarding bad behavior and it sets up 1,000's of other people trying to get money to fix their houses. Banks lend money, they are not in the business of insurance those assets against damage, that is State Farms problem.

I understand your point completely. My point is that whomever's money is at risk should step up to the plate and help. I know that the bank isn't at fault. But I'm not either, so I don't get the "track record" argument.

Someone paid a considerable amount of money to buy my loan to get the rights to the interest that accumulates, hoping it outweighs the risk of default. In this case, they are going to be out their original investment, plus whatever else they could have made in interest. If someone would have stepped up to the plate from the start, money would be coming in to the bank and Freddie, Fannie, etc. would be back to collecting. On the flip side, they're going to have to pay roughly $50k to fix it up and then hope that they can sell it to recoup those costs.

Don't get me started on the insurance company. When they denied the claim, I went off. Asked them if they cover negligence but not water damage. They argued that they didn't, but when I asked if the covered someone burning their house down because of a lit cigarette left burning, the mumbled over their words and took that one on the chin. Homeowner's insurance is the biggest rip off any homeowner will ever encounter.
 
I don't really understand your point. Are you saying the bank should help you fix your house because you borrower money from them? Why is this the bank's problem? If they gave you money, it just opens the flood gate for more people trying to extort money from them. They are not an insurance company, they didn't cause the damage, and the bank didn't defraud you on anything. They are as much the victim as you.

And PS, banks don't typically make the interest on the money, the investor (fannie, fredie or ginnie) typically makes the interest. The bank makes a very small service fee for collecting your money(on a 130k mortgage about $25 a month)

By giving you money on a loan you took out they bank is rewarding bad behavior. I get you don't really see it like that but think of it like this. You lend someone $1,000 to buy a motorcycle. They have an accident and ask you for another $150 to fix it, split the accident with you. Now you had nothing to do with the accident and they stopped paying you back. You can either pay the $150 bribe or take the bike back, fix it yourself and sell it too someone who has a better track record of paying you back.

You know you don't want to agree, but the bank has nothing to do with the problem I get there is a problem, but helping you would be rewarding bad behavior and it sets up 1,000's of other people trying to get money to fix their houses. Banks lend money, they are not in the business of insurance those assets against damage, that is State Farms problem.

what about a refi into an interest only loan?
-Borrow money from expensive source --> fix house--> have bank appraise house at full value --> refi to interest only and pay back expensive loan? I know there's a reason this won't work I just don't know it...

Also, you should be aware that retirement accounts, Life Insurance Cash Values, and Annuity cash values are all exempted from creditors, should you go that route: http://www.assetprotectionsociety.org/pdf_files/APS.50.State.Summary.pdf
 
Yeah the bank has nothing to do with this. Contact an attorney and see what they suggest. Probably will be bankruptcy/foreclosure tbh. Sucks that that happened. I havent really seen this situation yet (work in banking) but I've seen all types of shitty situations. I would try to contact your insurance company again and see what they suggest.

Where is your mortgage at?
 
Shouldn't have removed the electric meter - should have packed up the memories and watched the place burn down. That would have been covered... amirite?

Hindsight being what it is, I wish I would have let that motherfucker burn to the ground.
 
Yeah the bank has nothing to do with this. Contact an attorney and see what they suggest. Probably will be bankruptcy/foreclosure tbh. Sucks that that happened. I havent really seen this situation yet (work in banking) but I've seen all types of shitty situations. I would try to contact your insurance company again and see what they suggest.

Where is your mortgage at?


Bank of America.

I've been 10 rounds with the insurance company. They have given me the double bird all 10 times.
 
what about a refi into an interest only loan?
-Borrow money from expensive source --> fix house--> have bank appraise house at full value --> refi to interest only and pay back expensive loan? I know there's a reason this won't work I just don't know it...

Also, you should be aware that retirement accounts, Life Insurance Cash Values, and Annuity cash values are all exempted from creditors, should you go that route: http://www.assetprotectionsociety.org/pdf_files/APS.50.State.Summary.pdf

Interest only almost never happens anymore. Frank/Dodd all but made it illegal.

Further the house is not refinancable. Remember there is an investor not the bank you have to satisfy on the appraisal. Houses that need repair cannot be refinanced. Further, he stopped paying the loan, so that prevents him from being eligible for a new mortgage of any type.
 
Contact an attorney..

They're probably going to suggest filling for bankruptcy
 
I understand your point completely. My point is that whomever's money is at risk should step up to the plate and help. I know that the bank isn't at fault. But I'm not either, so I don't get the "track record" argument.

Someone paid a considerable amount of money to buy my loan to get the rights to the interest that accumulates, hoping it outweighs the risk of default. In this case, they are going to be out their original investment, plus whatever else they could have made in interest. If someone would have stepped up to the plate from the start, money would be coming in to the bank and Freddie, Fannie, etc. would be back to collecting. On the flip side, they're going to have to pay roughly $50k to fix it up and then hope that they can sell it to recoup those costs.

Don't get me started on the insurance company. When they denied the claim, I went off. Asked them if they cover negligence but not water damage. They argued that they didn't, but when I asked if the covered someone burning their house down because of a lit cigarette left burning, the mumbled over their words and took that one on the chin. Homeowner's insurance is the biggest rip off any homeowner will ever encounter.

Hate the system, but the investor really wont be able to step to the plate. Your loan is sold as part of a bundle, their is even probably a default credit swap to insure against default. BofA will have to eat some costs if you foreclose, but unfortunately it has been proven to be more cost effective to allow the foreclosure to go through than help those in need.

Now let me explain. Right after the crash in 2009, many banks were doing principle reduction ore loan mods on interest to help home owners in need. A typical modification costs about 5,000 in man hours for a bank plus the principle or interest lost on the new loan. What happened was well over 50% of those that were helped still defaulted on the loan costing 10-20k more in foreclosure costs and further lost money.

Banking is a tough business. In the end the bank wont be your source of help, look into government programs. Banks are capitalistic and there is nothing in it for a bank to throw good money after bad. Right now you are just another non performing asset for BofA. You need to find a socialistic solution and the government or a charity will be the best option.

Most likely you will end up in BK though, the quicker you do it, the quicker you can recover.
 
In 2010, I bought a home and paid my mortgage, on time, for nearly four years. On May 12 of last year, a major storm came through the Akron area. The surrounding flood damage caused a wall in my basement to collapse, completely ruining my basement and all of its contents. I contacted my insurance company (State Farm) and they ruled that hydrostatic pressure was the cause and that they weren't responsible for helping in repairs. I had to pull my electric meter that night to avoid a fire and haven't spent a night living there since.

In the coming days, I had contractors out to assess the damage and got repair quotes in the range of $30k...$30k that I didn't have. I bought my house for around $150k and still owed about $120k. I maybe could have begged, borrowed or stole the money to get the repairs, but then I'd have to pay back that debt on top of still making my house payments which wasn't a realistic option. Instead, I contacted the bank and tried to set up arrangements in which they would:
a. drastically reduce the principle and suspend monthly mortgage payments so that I could make payments on the repairs
b. meet me in the middle, pay half of the repair costs and I would resume my monthly payments

I submitted paperwork with the bank and found out that there's a cookie cutter process that all issues like this have to go through. There aren't programs available to outliers like myself. Fast forward to now and I was just denied loan forgiveness/deed in lieu by the bank. My options are currently that I wait for the bank to give me the short sale amount that they will accept and I find a buyer at that number, I file bankruptcy to avoid being sued for everything I have, or contact HUD and hope that they can come through.

I've lived at my uncle's house for the last year. I have a well paying job and have no blemishes on my credit outside of this incident.

I'm curious if there is any advice anyone could provide? Also, I'm wondering if there are any writers that anyone is aware of that might be interested in hearing this story and potentially publishing something about it? I want to do the right thing but I'm getting bent over without having any say in the matter. Any help would be appreciated. @Lee and @natedagg I think I remember you two being in housing/law.

Thanks guys and gals.
Why is getting a new loan for the repairs not an option?
 

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