Upside down-Can we still refinance?

Denniskb1031 · #1 (**permalink**) 02-04-2009, 12:03 PM

My wife and I purchased our home 2 years ago for $240,00.00. Because we had little down payment cash,we obtained an 80/20 interest only loan. Now, 2 years later our home is only valued at $207.000. We are not in trouble nor have we ever been late with a payment but we would really like to refinance if at all possible. Both mortgages have been sold since the original purchase. CitiBank has offered a refinance with several different options for the $47,000 loan. My question is: is there any way we can refinance the first loan ($192,000 with IndyMac Bank) or combine them for a conventional 15 or 30 year mortgage while we are upside down like this? We were told outright by a very rude "customer service rep" (and I use that term loosly) at IndyMac (probably located in India) that "it's our own fault, we made a bad financial decision". Can anyone help us here?

Andy · #2 (**permalink**) 02-12-2009, 12:00 PM

That's a problem many, many people are facing now Dennis. Like you they feel awkward to be paying on a $240,000 loan when their house is only worth $207,000. Realize this tough, if you want to refi for $207K you are asking one or both of the banks to take a $33K loss, which one do you think will be willing to do this especially when you are a model borrower, never late on any payment?

The bailout programs should make it a little easier for people like you to get some relief though. I suggest you call your lenders and ask for a loan modification. A modification usually does not include a reduction of the principal, but some banks have done it. Check into this option and see how far it takes you.

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