Is this part of the new stimulus/bailout plan?
 

A friend of mine is getting divorced. As a result of the divorce he has two choices. He can either A. Help pay about half of his soon to be ex wife's rent so she stays in the area and he can see his daughter or B. he doesn't and she moves back in with her parents for a while about 300 miles away and he won't get to see his daughter that much. He could C. move the 300 miles with her, but he is in a good established job here so financially it doesn't make a lot of sense. Yes, there are legal options that could force her to stay since he will be getting 50% custody, but those would do nothing more than cause more headache/heartache and make more money for lawyers.

So because of this there is no way for him to keep his house. The problem is that he can't sell it because it is now worth about 50K less than when he purchased it 5 years ago. So he calls the bank and explains the situation to them. Maybe they can work with him to rework the mortgage or come up with some kind of plan to ward off him missing payments and causing issues. The bank told him to stop making payments, get into default and they would then let him short sell it, but until he was in default there was nothing they could do for him.

It struck me as odd that they would tell him there is nothing they can or will do until he is behind and in trouble. I guess so much for trying to fix a problem before the problem gets worse.

I agree. That's why there's so much outrage out there against the "moral hazard" the mortgage plan encourages.

:2 cents:

ummmmmmmmm sounds good it gives me good idea......

same response I got. Keep paying for a home that is now down 175k bellow what I bought for or lose my credit.

just as in healthcare, our country does not understand preventative measures.

What banks was this?

banks will fuck you quicker then a 2 dollar...

tell your friend to get everything in writing or they'll snatch that house quicker then his ex will move.

I'm in a similar situ... got divorced last year... condo now worth 175k less than purchase price. Least I had no kids.

Banks won't work with you unless you're in default, or near default. So best option for leverage is to make late payement, fuck with them a bit, and screw your credit. Who gives a fuck about credit anymore anyway?

If I were the dude, I'd want my daughter close by... last thing I'd want is for my ex to move home, and hook up with some speedfreak pedophile... and watch her go down the dumps like the Sharon Stone character in Casino...

1/2 her rent is cheap insurance to stay in sight of the daughter.

That is pretty much his same thought. His soon to be Ex has a job, but doesn't yet make enough to fully support herself (I guess in then next 1-2 years she will be getting more raises and then be able to support herself, just not right now) so if he doesn't pay she will take the kid and move 300 miles away. To him it is worth wrecking his credit and paying for her rent if he can keep his daughter close by.

I'm not sure which bank holds the mortgage.

I told him if they are willing to let him short sell the house (meaning he can sell it for what it is worth and the bank will eat the difference between what it is worth and what is owed on it) and the new value of the house would give him a payment he could afford he should just buy it from himself. :)

I will tell him though to get anything they offer in writing so they can't re-neg on it later.