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CalAttorney2, Lawyer
Category: Real Estate Law
Satisfied Customers: 10244
Experience:  I am a civil litigation attorney with experience representing HOAs, homeowners, businesses and others in real estate matters.
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My elderly mother living in Montgomery Alabama surviving on

Customer Question

My elderly mother living in Montgomery Alabama surviving on a fixed income is subject to a whopping 12.380 mortgage interest rate serviced by Wells Fargo Home Mortgage. Yes, (12.380) Is this acceptable in 2016? what avenues can we take to get Wells Fargo to reduce this extremely high interest rate. Their home modification program doesn't work. It's fools gold! My mother is retired and living on a fixed income of approximately $1500 per month. Wells Fargo has denied her for a home loan modification in 2016.
Please Help!
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  CalAttorney2 replied 1 year ago.

Dear Customer,

That interest rate does seem extremely high for the current market. While you cannot force the lender to reduce the interest rate, you can certainly try to find another lender that will offer a lower interest rate for your mother.

Good places to look are with a local bank or credit union, as well as working with a home loan broker (these brokers can help by running your mother's credit, income, and resources against several different lenders and programs at the same time).

You should "shop" several lending sources prior to settling with one, but only have the first one actually do a credit report for your mother (they will run a report for all 3 of the major credit reporting bureaus, and give her a copy, she can then take this to each of the other lenders who can use this to give her preliminary numbers - this will minimize the impact on her credit and help her with maximizing her loan portfolio).

Customer: replied 1 year ago.
This home is up side down and we do not think we will find a lender that will refi thiis property. She have been living there for over 30 years and do not want to leave and paying this extremely high lnterest rate on this home is very debilitating to her health.
Expert:  CalAttorney2 replied 1 year ago.

Dear Customer,

Unfortunately, if the property is in such a position that it is worth less than the value of the mortgage, and your mother is not able to pay the difference, there is not a lot I can offer to fix the problem.

The lender is entitled to enforce the loan as it is written, as I noted initially, there is no mechanism to force the creditor to change the loan terms or to accept a reduction in interest (this is true even if your mother were to declare a Chapt. 13 "repayment" bankruptcy).

If your mother is unable to make payments on the property, she can consider a "strategic default" where she pays little or none of her payments until the creditor finally decides to foreclose on the property. This will allow her to live in the home for a period of time without making payments on it, but eventually she will need to vacate.

Alternatively she can attempt to sell the property (either in a straight sale - which may be difficult as you say the property is underwater, or in a "short sale" - which would likely require using a short sale realtor specialist to help her negotiate with the bank).

I am very sorry, I do wish I had a different answer for you here, but I want to be clear and direct so that you can move forward appropriately.