Refi question, bad credit

House appraised at $290k in Nov '05, I would expect it to be somewhere in the high $260’s at this point, low $300’s with a good kitchen update. Previously has done a ton of work on it and update much of it. Her and her husband owe $228k at this point including lates and atty fees as its pending foreclosure end of June. Balance was about $185k prior to fees. They are currently stuck in an ARM that’s killing them and recently filed for Ch13, trustee payment is $3500 month. They would like to refinance this home and keep it if at all possible and even borrow a little more than what’s due to fixup the kitchen for possible sale later. She thinks her FICO is somewhere down about 550, sounds about on par with the BK. They make good money, over $100k/yr but just got hit hard by an ARM and some family medical bills. If someone here thinks they can help her or offer any advice let me know.

If she gets a refi I lose the option to set her up in a nice lease option situation that will make me money but ultimately she wants to keep the house and helping her do so would make me sleep better at night.


Have they ever been late on the mortgage?

Yes, they are currently not making payments and it will go to auction June 30th. More info I got from them is that they don’t have car loans, credit cards, etc…other than this they are cash only people for everything so no tradelines.

How behind are they? If they are more that 1X120 then they are most likely toast. If they are still at 1X90 or better than there is hope for them.

Let me find out, I don’t know exactly how far behind they are.

I asked if she was 90 days or less or 120+ and she said she’s “way beyond that.” Btw, the lender is Option One.


They are toast. With the way the sub-prime market has shaken out they just don’t have enough equity to make it feasible for a lender to take a chance on them. Once you hit the 1X120 or worse your LTV gets capped at 80-85%. I can understand why they are in trouble if option one is their lender. For awhile there option one would take anything, and I do mean anything an approve it. However, you paid for it in your rate no doubt about that. I would start looking for a lease option for them.

or a deed transfer lease buyback…from the sounds of it, they would be lucky to get 75 LTV.


Scott Miller