Advice on Refi options???

[Joe Edwards-Hoff]

So, this is a inquiry on behalf of my father.

He owns a house in the town I live in. He bought it with the intent of someday moving there and renting it to college students in the mean time.

He bough for 225k, owes around 195k @ 7% (!), and it is currently worth 175k.

So, he lost his job about a year and a half ago and is having trouble finding work. He had decent reserves and unemployment, but all that will come to an end sooner or later. Either way, he would really like to refinance that house to lower the payment, to reflect the current interest rates, but obviously has no real income, so the debt to income ratio is out of whack. I've tried explaining it all to him, but he still has a hard time understanding how he doesn't make enough money to afford a lower payment...

His credit is perfect (800+), and he has never missed a payment. He has looked into some government programs for his Fannie Mae loan which is held by Wells Fargo (or so I understand), but he does not seem to qualify for anything. The house isn't upsidedown enough to qualify for certain options and other options require that you are behind in payments.

So, does anyone have any suggestions other than selling? Although it is against his character, he has considered just missing a few payments in order to see if it opens any doors. I told him is isn't a solid approach, but he feels like maybe if he actually missed payments, Wells Fargo would consider working with him...

Again, any ideas?

(I appreciate all of your help. These are hard times in our country.)