A friend got a crappy loan in 2003. Help?!

[David Mussaw]

A few of the facts. Any help or suggestions will be greatly appreciated. Thanks!

Hi David,

As promised, here are the specifics:

We purchased our house in 2003 for $332,000 with $0 down, interest only, and at a variable rate.

We've tried HAMP, HARP, etc multiple times over the years to modify the loan only to be told "the investors who hold your loan do not participate in those programs".

The loan has been bought/sold multiple times since 2003. We are currently with PNC.

We recently emerged from a 5-year bankruptcy payment plan. We now send a few hundred dollars extra each month to the mortgage principal balance.

Have we learned a lot? Yes. Would we do things differently? Yes, but we can't go back. We can only go forward.

If you need more specifics, please let me know. Thanks soooooo much for listening, for reading this and for putting this out there to the collective wisdom of the group.

Looking forward to hearing from you soon.

[Frank Jiang]

There's nothing inherently wrong with the loan.  In fact, without further details, it looks light a great loan.  It's hard to pay less money on a monthly basis than on an interest-only payment.  A variable rate loan should have also been highly favorable to them as we moved into an ultra-low interest rate environment.  It's likely that your friend didn't get a "crappy loan" but bought far more house than they could afford.  Perhaps they're one of those people who took out a loan at a greater dollar amount than the value of their house.  The answer is then simple.  Stop trying to claw onto an asset you cannot afford.  Allow the bank to repossess.  Use the interim time to live rent free and save enough for a place you can actually afford.  It's not like they're losing out on a great deal of equity in the home if they put 0% down and paid no principal at all over the years.