By Gary M. Singer, Sun Sentinel –
QUESTION: We have never been late on a single mortgage payment and have great credit, but as active-duty military, we can’t live in the home because we’re being assigned elsewhere. Every refinance option we have explored makes current residency a requirement for the program. Is there any refinance or modification option for an underwater mortgage in which the owner is not currently living in the home?
ANSWER: Probably. You are correct that most, if not all, of the government-sponsored programs require that borrowers live in the homes as their primary residences. I am assuming that you are renting the house to a tenant in your absence and that’s why you are being turned down.
If the house is sitting vacant while you are deployed, then it still might be considered your primary residence. I suggest that you call your lender and explain the situation. Many lenders have internal programs that may help you to lower your payments through a loan modification.
Also, if you bought the home using your Veterans Affairs loan benefit, you might be able to refinance via the Interest Rate Reduction Refinancing Loan program. There are a lot of programs out there, so I strongly recommend that you keep trying.
Q: My partner owns a condo that is worth much less than the mortgage. I am not on the loan, and we live together but are not legally married. He is retired and on limited income and barely makes ends meet. We hear horror stories about how banks will not talk to you about modifying your loan unless you have not paid for at least two to three months. We would like to stay here but cannot unless our lender reduces our monthly payment. In addition, at our age, we will never live long enough to pay off the mortgage. What can we do?
A: Call his lender and try to obtain a loan modification. I have experienced some situations in which a lender has told my client that he or she will not be considered for a loan modification while current on the payments. But I also have negotiated plenty of loan modifications when the borrowers are current. The point is that you have to try to get it done.
Also, even though your partner may not have enough income for a modification, the lender may also consider your income if you are helping to support the household expenses. I would suggest that you try to get the modification while staying current on the payments, if at all possible.