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Not paying mortgage...to force a bank's hand

 
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victorgbishop



Joined: 03 Oct 2016
Posts: 25

PostPosted: Thu Jan 19, 2017 2:29 pm GMT    Post subject: Not paying mortgage...to force a bank's hand Reply with quote

Just a quick question because I'm a novice here. Has anyone heard of anyone doing this?

I've heard of new home owners getting a pre-approval for an amount just out of their range (ie can usually afford 500k but can get a mortgage broker to finagle a 660k loan). Getting into the home (making sure all large purchases such as a car, etc*) and make a few payments, then stop paying the mortgage. Submitting a hardship letter to the lender stating the payments are too much money, and forcing the lender to re-negotiate the terms of the loan.

* holding off purchasing/leasing a car until after house closing - but before halting your mortgage payments.

Now the homeowners credit would be destroyed, but they'd be in the house and have a new(er) car. I would NEVER try this but is this common in this housing market???
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PostPosted: Thu Jan 19, 2017 2:46 pm GMT    Post subject: Re: Not paying mortgage...to force a bank's hand Reply with quote

victorgbishop wrote:
Just a quick question because I'm a novice here. Has anyone heard of anyone doing this?

I've heard of new home owners getting a pre-approval for an amount just out of their range (ie can usually afford 500k but can get a mortgage broker to finagle a 660k loan). Getting into the home (making sure all large purchases such as a car, etc*) and make a few payments, then stop paying the mortgage. Submitting a hardship letter to the lender stating the payments are too much money, and forcing the lender to re-negotiate the terms of the loan.

* holding off purchasing/leasing a car until after house closing - but before halting your mortgage payments.

Now the homeowners credit would be destroyed, but they'd be in the house and have a new(er) car. I would NEVER try this but is this common in this housing market???


It varies depending on current housing market and down-payment. For example, if u put 0 or little then you will just loose that + credit. If the house has appreciated then the bank will kick out the owner and sell the house to recoup the loss.

This is a reason why 20% is now norm. These 3% down loans are backed by the government and some insurance so the bank gets compensation if the owner walks away.

What u describe was very common in 2000's hence the reason for high lending standards now
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victorgbishop



Joined: 03 Oct 2016
Posts: 25

PostPosted: Thu Jan 19, 2017 2:53 pm GMT    Post subject: Re: Not paying mortgage...to force a bank's hand Reply with quote

Anonymous wrote:
victorgbishop wrote:
Just a quick question because I'm a novice here. Has anyone heard of anyone doing this?

I've heard of new home owners getting a pre-approval for an amount just out of their range (ie can usually afford 500k but can get a mortgage broker to finagle a 660k loan). Getting into the home (making sure all large purchases such as a car, etc*) and make a few payments, then stop paying the mortgage. Submitting a hardship letter to the lender stating the payments are too much money, and forcing the lender to re-negotiate the terms of the loan.

* holding off purchasing/leasing a car until after house closing - but before halting your mortgage payments.

Now the homeowners credit would be destroyed, but they'd be in the house and have a new(er) car. I would NEVER try this but is this common in this housing market???


It varies depending on current housing market and down-payment. For example, if u put 0 or little then you will just loose that + credit. If the house has appreciated then the bank will kick out the owner and sell the house to recoup the loss.

This is a reason why 20% is now norm. These 3% down loans are backed by the government and some insurance so the bank gets compensation if the owner walks away.

What u describe was very common in 2000's hence the reason for high lending standards now


I also meant to add that the homeowner STAYS in the house with hopes of renegotiating terms of the loan. The situation that I'm referring to has the individual putting down 8-10% and then 'claiming' hardship.
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PostPosted: Fri Jan 20, 2017 12:14 am GMT    Post subject: Re: Not paying mortgage...to force a bank's hand Reply with quote

victorgbishop wrote:
Just a quick question because I'm a novice here. Has anyone heard of anyone doing this?

I've heard of new home owners getting a pre-approval for an amount just out of their range (ie can usually afford 500k but can get a mortgage broker to finagle a 660k loan). Getting into the home (making sure all large purchases such as a car, etc*) and make a few payments, then stop paying the mortgage. Submitting a hardship letter to the lender stating the payments are too much money, and forcing the lender to re-negotiate the terms of the loan.

* holding off purchasing/leasing a car until after house closing - but before halting your mortgage payments.

Now the homeowners credit would be destroyed, but they'd be in the house and have a new(er) car. I would NEVER try this but is this common in this housing market???


Go try it. What do you have to lose? Worse case scenario, you get to live rent free for a few years if the bank says no and you fight them in court.
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PostPosted: Fri Jan 20, 2017 2:31 am GMT    Post subject: Reply with quote

Right now it's still a seller's market. I highly doubt it would work.
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PostPosted: Fri Jan 20, 2017 3:33 am GMT    Post subject: Reply with quote

Quote:
I also meant to add that the homeowner STAYS in the house with hopes of renegotiating terms of the loan. The situation that I'm referring to has the individual putting down 8-10% and then 'claiming' hardship.


If the home price was $500,000, 8% is 40,000. That person is willing to risk 40,000 of his own money, also willing to potentially destroy his or her own credit record? The risk is too high compare to the potential gain. You can figure out from here.
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PostPosted: Fri Jan 20, 2017 1:00 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Quote:
I also meant to add that the homeowner STAYS in the house with hopes of renegotiating terms of the loan. The situation that I'm referring to has the individual putting down 8-10% and then 'claiming' hardship.


If the home price was $500,000, 8% is 40,000. That person is willing to risk 40,000 of his own money, also willing to potentially destroy his or her own credit record? The risk is too high compare to the potential gain. You can figure out from here.


If you are going to scam the system and destroy your credit, why not get 200k in credit cards, max them out and file for bankruptcy? You can repeat the process every 7 years.
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PostPosted: Fri Jan 20, 2017 4:54 pm GMT    Post subject: Reply with quote

If a judge saw you do this, they wouldn't grant you chapter 7 (no wage garnishment). If they did, you would either be foreclosed, or at least have a lien on your property.
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