Is there a deal here?

[Robert Haworth]

48 y.o., seller in Elridge, MD 21075 bought the property for $102K in 1994 and still owes an undetermined amount on it. He said, however, that he is “upside down”, so he must have re-financed once or twice enroute to a total current tune of some $210-215K. The current FMV of the property (by both Zestimate and his guess) is $203K.

He claims to have fallen behind in his payments 2-3 years ago as a result of divorce and one year spent unemployed. He sent the lender several “good faith” payments – it demanded those payments before it would consider working with him to get himself current. The amt. of the payments was almost $6K each, to a total of $23K. However, communications with the bank were slow and uncertain and as a result they kept tacking on late fees and penalties which ate up a good portion of his good faith payments, such that he is still NOT good –in fact he’s 90 days and some $18K in arrears. His mortgage interest rate is 9 percent. His credit score was 510 “the last time [he] checked”. Bank recently told him that it plans to mail him soon a Settlement in Lieu of Deed (essentially, an instrument of consensual repossession) to get him out, which would be executed sometime in early 2014.

Despite making a good salary, he despairs of ever being able to get out from under the property and just wants out. The basement floods during heavy rains, and to fix it, water control companies have quoted him amounts he can’t pay. No bank will touch him b/c of his credit. He sees his best chance as walking away from the place under the terms of Settlement, and taking the add’l credit hit for this, but being able to start fresh somewhere else.

ACTION: I asked him to email me a few-sentence summary of what he owes, what the current state of play with the bank is, etc., and told him we’d look at the numbers and see if there was a way to help him.

He has plenty of motivation, but negative equity. You need both. Any ideas?