Expert: Dick Dennis - 11/26/2008

Question
QUESTION: Hi

we bought a condo at the wrong time and have an upsidedown mortgage we owe about 70,000.  my question is is can we negotiate with a bank we are interested in buying a foreclosure for 200,000 and was wondering if the bank would allow us to mortgage the foreclosure for 270000 so we can pay our current bank 70,000 we would owe.  we are able to provide 20% down and are not too worried about credit we don't owe or use credit cards.  is there any way wecould negotiate with bank that owes house - shortsale or being foreclosed to help us leave condo and move into a house as we could not afford monthly payment of both

thank you

ANSWER: I'm sorry, Jas, but your question is not understandable the way you wrote it, especially the question part that starts with, "is there any way wecould negotiate with bank that owes house . . ." If you will rewrite your total question and please make sure it is understandable, I am sure I would be able to help you.

Dick Dennis



---------- FOLLOW-UP ----------

QUESTION: Sorry about that
let me truy and rephrase the question
is the following feasible

i have a condo with a mortgage of 275, 000 but it is now 230,000 if i sell the condo i would owe the bank lets say washington mutual 45,000.  but i do not have 45,000.  i am interested in buying a foreclosed house owned by bank of america.  bank of america is selling it for 200,000.  I know that i can afford the monthly payments on a mortgage of 260,000 if i did not have the condo.  can i do a deal with bank of america, ie i will purchase the forclosure house for a motgage of 245,000 which is more than what they are asking for if they let me use that extra 45,000 to pay washinton mutual what i owe for the condo if i sold it at current market value of 230,000.  basicaly im borrowing 45,000 from bank of america so i can get out of the condo using the forclosed house as collateral  i hope this makes sense

Answer
You were a little clearer, JAS, but still a bit confusing, like where you say, "I have a condo with a mortgage of 275,000 but it is now 230,000 if I sell the condo . . ." What you meant to say is that the value of the property is 230,000 with an upside mortgage of 275,000 making it 45,000 that you would have to pay separately to WAMU.

With that assumption, Bank of America is going to ask how you are going to be able to afford the payments on the foreclosure AND the condo. You would have to show where you could indeed afford it. If the value of the foreclosure is $200,000 (because that is what you would have paid as the buyer) why would B of A lend you an additional $45,000 without securing it with a mortgage against it for $245,000 even though you may be using a down payment in buying it?

They see you are negative on the condo (even though you may have been current with your payments) they would likely wait until you actually sell the condo on a short sale. A short sale is a negative against your credit record. And it would hurt your chances of buying the foreclosure with the terms for which you are hoping.

Jas, you would be better off to get an investor to buy the foreclosure. Then when you have sold the condo, then you can pay your investor his profit and costs for accommodating you.

If you have the $45,000 in the bank somewhere, then you are better off, also, to pay off the difference of the condo when you sell it. Then you are going to hope that B of A will hold the foreclosure for you . . . which is highly unlikely because they are more interested in getting it sold as fast as they can. They would get a buyer somewhere, someplace as soon as they can.

I hope I have answered your question. I wish you well.

Dick Dennis