Re-casting a mortgage

A family member in the biz told me about trying to do this with my underwater property in AZ.

Anyone know about it? I've gone on the internet to read up but it doesn't seem that I could do it.

He tells me to go to the branch of the bank that owns the loan and tell them I want to re-cast or they can have the keys and I will walk away.

That's one tactic I guess but he's a rebel and I know he means well but maybe its what I have to do. Recasting a mortgage is not very well known and not all banks would do it.

Re: Re-casting a mortgage

If I understand what you mean by "recasting a mortgage," you are talking about a loan modification (in other words, if you have a 30 year mortgage, casting it out to be a 40 year or some longer term in order to reduce your payments).

You would need to go through the steps of applying for a loan modification -- and I think it is really up to the bank to decide how they want to modify it (for example, they may lower your rate rather than recast the loan). I would contact your lender's loss mitigation department to figure out what you would need to do, but typically, the documents you submit for a loan modification are the same that you would need to apply for a short sale -- a hardship letter (explaining why you can't pay) and financial records (bank statements, tax returns, household expenses). If this is not your primary residence, and you have other assets, then you are likely going to have a tough time getting the bank to modify or accept a short sale. But you really have nothing to lose by seeking the loan modification.

I really don't know anything about your situation, so I can't advise, but at the very least, I would think you should consult with a lawyer and an accountant before you try to hand the bank the keys and walk away -- which basically means defaulting on your loan. I am sure there are other options that would be better for you (and your credit).

Re: Re-casting a mortgage

Re: Re-casting a mortgage

you have the option of giving back the keys at any time

it's called a deed in lieu (of foreclosure)

it's something you need to speak to the bank about

you would need to work out the terms ahead of sending the keys and deed back so that they do not come after you for the balance

and there is always a short sale

if you find a person at a branch that cares about these threats I would be shocked- I have dealt with loss mitagation managers that have no sympathy or compassion- nor do they care about the bank getting back 1 more property

I actually did manage to reason with a greentree mortgage loss mit manager that it was NOT in their best interest to take back a FL property worth $75k at best when my client owned them $275K

they gave her a mod- I told her to let the propety go....that would have been in her best interest

sometimes you just have to rip the band-aid off and deal with the short term pain for the long term reward

Re: Re-casting a mortgage

I can't do a short sale or a mod. I'm solvent. I would owe the short and the taxes on the short which would equal my mortgage. Lose Lose.

That is if a bank would even consider a short sale for me.

Re-casting a loan is sometimes done when the borrower puts some equity into the loan to recast the term or interest rate.