# how to get out of a up side down mortgage ??



## gt45 (Feb 6, 2012)

For now I will not give out specfic numbers, but I can say I'm over 50 Grand up side down on my mortgage when factering in market value assment and my last mortgage statement.

I bought with 0 down (five years this oct 2012) maple trust, than scotia bank bought them out.

This oct 12 my five year term is done( 27 years left) I pay 277.25 every week, 5.8% Im unsure of my pay out penality, to renogate early.

Two facters work against me, Location of my ressidance, and I will have to subsadise a renter as I can't rent out my town home to cover full mortgage amount.

I have a place to live othier than mine and I have work to do on paying down my non mortgage debit, I want out of my place and I'm not prepared to give advance money to the bank, I want out with out going into bankrupcy.

I lost my great paying job in march 2009, and the market pretty much crashed, during the last three years, credit and savings have kept me going, now I have cashed out a rrsp to pay down debit and start over.

( credit cards, living expenses are more than what my mutual fund is earning )

I know I'm not the only one working threw this, as Im up side down, I don't have a lot of options from othier banks, I hate scotia bank as thier really un willing to work with me until oct 2012.


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## Rusty O'Toole (Feb 1, 2012)

Sounds like you made a mistake and want someone else to pay for it. If the house went up $50,000 would you keep the money?


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## stephenheath (Apr 3, 2009)

I hate to say it, but it sounds like your post covers all the options (keep the house, rent the house, sell and pay for the loss, declare bankruptcy) and you don't like any of them. I don't think it's in your power to change any of the circumstances, and obviously your bank doesn't want to take your loss to make you happy, so there's no potential relief there except perhaps if you were to stay and "blend and extend" your mortgage to get a lower rate, maybe roll in any other debt you have, to make your debt repayment a little easier.

Beyond that the only solutions will take time... whether it be time for a bankruptcy to leave your record if you go that route, or time where you keep paying down the mortgage until you're back above water and get more options, or time for the market to hopefully some day bounce back, or maybe even time for you to find a better job once again.

In any case, good luck with whatever you decide to do, it can't be easy having a situation where you were careful and planned everything and then something outside your control (job loss/market drop) blows your best laid plans to pieces.


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## Chad (Jan 30, 2011)

If its any comfort there will be a more people like you in the near future. Mabey you could form your own support group where you can get together with other underwater mortgage holders and all cry about your current situations. 
Hey but dont worry, should you choosebankruptcy that CHMC insurance you had to pay for because you had $0 for a downpayment, will cover the bank from any loss courtesy of the taxpayer


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## the-royal-mail (Dec 11, 2009)

Unless I've misread the OP, I think the responses here might be a bit harsh. This sounds like someone who is going through an unemployment crisis and has been without work for 3 years. He therefore needs to get out of the mortgage somehow. I do not sense any irresponsible past behaviour here and 3 years without a job will wipe out even the best savers. Assuming I've read this right we should try to help the OP who seems to be down and out.


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## MoneyGal (Apr 24, 2009)

Sounds like he too on WAY too much risk: no downpayment, a house with a poor location (?) that he can't rent out at a rate that covers his costs, job loss (and he can't find another job for nearly 3 years now - sounds like he didn't factor the volatility of his employment into his overall financial plan), and too much equity exposure. 

This is an example of how people don't understand risk. If your job is so specialized but also volatile, you need to hedge your human capital with (liquid) financial capital. If you have human capital you can't monetize, you better have another way to pay the bills - and buying a house with zero down is just adding more of what you don't need to the pile. 

(This isn't intended to be a harsh post! I don't know why the OP doesn't want to declare bankrupcty. His options are relatively limited: get a job that pays the bills and subsidizes the rental loss on the house / sell the house and find a way to make good on the mortgage / declare bankruptcy.)


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## Berubeland (Sep 6, 2009)

I almost never recommend this but in your position, I would rent out extra rooms. It's the most lucrative way to rent your house, if you continue living there, you don't have to worry about Landlord Tenant Law and it could tide you over until you find other employment. 

Having said that, I'm not sure how it has come to pass that you have been unemployed for 3 years. I'd be focusing on this ASAP. It may very well be that you're in an area where there is little employment, in that case move. If you are in an industry that is declining, change. Even a job at minimum wage would be be better as you would get out of the house, see people and not be stuck hanging around your white elephant house thinking about how broke you are. I've been there and it's no fun at all. 

I don't think this is an attractive option at all, but you do what you have to do. You can't save your face and your *** at the same time.


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## MoneyGal (Apr 24, 2009)

Brilliant as always!!!! Berube, you are a role model for straight shooting.


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## marina628 (Dec 14, 2010)

Typically you can do your mortgage without penalty 3 months prior to renewal date which will bring you to July.If you are upside down $50,000 you have two choices just renew with same bank so they won't ask for appraisal or walk away and declare bankruptcy on all your bills.It will take you a long time to save $50,000+ without a job.


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## Young&Ambitious (Aug 11, 2010)

Bankruptcy shouldn't be taken so lightly... It has long term financial consuquences that the OP should consider. 

The unfortunate bit about this is a lack of planning and short sightedness in the first place and not considering great/good/neutral/negative possible future circumstances and making a decision on the house purchase and other life decisions around the different possible outcomes. Bankruptcy expenses feed down to society and unfortunately others bear the brunt of others' decisions.


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## marina628 (Dec 14, 2010)

It should not be taken lightly but if OP has been out of a job 3 years and the house is in middle of nowhere and underwater $50,000+ plus all his other debt things are not looking too rosy for him.He cashed out his RRSP to pay off debt so obviously he was not out to take advantage of anyone.
I am curious though since he had a great paying job in 2009 can he get that sort of pay by moving .


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## OhGreatGuru (May 24, 2009)

Let's see:
- 0 down mortgage;
- 32-year term (meaning you have practically no principal paid off after 5 years);
- Mortgage larger then current FMV;
- poor location;
- monthly mortgage payments higher than market rental value;
- you have another place to live.

You made an investment decision that was either unwise, untimely, or unlucky. It isn't the bank's fault. Ask to see the mortgage and/or loan specialist at the the bank to review your situation and see if they can propose solutions. Tell them otherwise it may be bankruptcy and you may have to walk away from it. Leaving them holding the bag.


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## the-royal-mail (Dec 11, 2009)

How the heck can someone plan for being out of work for 3 years? Have a three year emergency fund? Hardly seems reasonable.

I don't believe the OP did anything that anyone here does almost daily: buy a house. Heck, there is no shortage of people in this country ready to egg people on to do this, even if those people have bad credit. At the end of the day, the OP has to live somewhere but suffered some hard knocks in life. I still don't appreciate how everyone seems to be talking down to the OP. Minimum wage job won't pay this kind of mortgage and moving isn't that easy either when you're tied down to a property.

The OP has done nothing wrong. He is a victim of our system which emphasizes real estate, credit, debt, cheap products and yet can't supply enough good-paying average jobs to allow us to pay for all this stuff.


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## Xoron (Jun 22, 2010)

the-royal-mail said:


> The OP has done nothing wrong. He is a victim of our system which emphasizes real estate, credit, debt, cheap products and yet can't supply enough good-paying average jobs to allow us to pay for all this stuff.


The lending institution certainly didn't do the OP any favours by allowing this deal, but I don't 100% agree. Rentals should NEVER be cash flow negative. NEVER. Ask Rachelle. 

That was an unwise investment choice. 

Can't blame the OP too much for losing their job. But to be out of work for 3 years makes me think there are deeper problems here that we don't know. Even taking a job with a 50% haircut to salary is better than not working.


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## Homerhomer (Oct 18, 2010)

I am with RM on this one, some of the posts were uncalled for, especially given the fact OP had savings to get by on for 3 years. There is some very good advice given especially by Berubeland, after all if it's not working one has to adapt and quickly, but the post by the dude suggesting to form a support group was definetely uncalled for.


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## MoneyGal (Apr 24, 2009)

the-royal-mail said:


> How the heck can someone plan for being out of work for 3 years? Have a three year emergency fund? Hardly seems reasonable.


If your employment is volatile, don't make large financial commitments you can't be sure you can service. And if you don't have a lot of financial capital, don't buy a house. Then you don't NEED a 3-year emergency fund.


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## Four Pillars (Apr 5, 2009)

I think the OP has to take some responsibility for what has happened.

That said, there isn't a whole lot of value in pointing out what he did wrong or should have done given that it's too late. I'm pretty sure he knows that not buying the house would have been a better choice.


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## the-royal-mail (Dec 11, 2009)

OK MG, but look around right here in CMF. Nearly every day we're seeing people jumping into houses, fueled by the RE industry, cheap mortgages (addressed today), HBP schemes and other shell games. The people buying houses these days are pouring every last cent into their "home", have no emergency savings, no cash, no retirement money and student loan and credit card debt. Over and over I've tried urging them not to do it but it falls on deaf ears. Look at the recent thread by Montrealer about the guy who was able to buy a house after paying back only 35% of their debt they had previously run away from. This is rampant.

And what is volatile? Everything is volatile these days. I have seen very few people admit they felt their situation was volatile, yet all of us are. Even postal and gov't workers have volatile situations. We all do. Nothing is guaranteed.

So while I 100% agree with what you are saying, we don't know enough about the OP's background to know if he was one of these or was simply a family man who needed a roof and who fell on hard times.


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## Berubeland (Sep 6, 2009)

Honestly we all make the best decisions we can at the time we make them. Here at CMF we are a bunch of bears but in reality a lot more people do not realize how much money you can lose in real estate or how the market can change on you. 

Still everyone makes mistakes and there is no way to avoid that. Its the human condition. I don't know of any way to be gracious about it either. 

However having said all that there comes a day of reckoning where you must sit with yourself in a cold dark depressing spot and admit you messed up, cry if you have to and pick your *** up off the floor and figure out what's next. 

Only apply your energy to things you can change. In this case, the real estate market won't change, and the bank is unlikely to change. What will have the greatest impact in the Op's life is getting back to work. That is something he can change. 

And if I mention minimum wage jobs and moving it's because both of those are options. My point with the crappy job is that after 3 years of being unemployed it seriously affects your self worth and not having money is isolating because almost everything costs money. The worst option is to do nothing and continue.


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## MoneyGal (Apr 24, 2009)

TRM, I guess I just see the value of discussing these things. If people are jumping into unwise situations, as you describe, fuelled by industries who stand to profit from those situations -- then shouldn't CMF be a place where alternate perspectives are discussed? 

I don't know whether the OP is ever going to come back. I realize there's no way to un-make the decisions he made in the past. But I was responding to the underlying issues. If you want people to make different decisions than the OP, how do you think that's going to happen?


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## gt45 (Feb 6, 2012)

I lost my great paying job, yes I did, but I'm working, have been for the last three years, to get back to the income levels Im used to, sorry if that threw some issues out thier.

I'm by no meams complaining, every day the bills are paid, this saves the snorty crowd with their dim wited comments, if I ring up the bills and walk away, all of you will pay higher intrest rates, or I could just walk away right now and justify that the banks can eat it better than I.

The irony here is I have a hell of lot of credit, more so than I really should have, becasue I pay my bills on time, had savings and I'm not in over my head, not bragging abought my credit skills, only sad thats it is a evil in this day and age.

The market crashed hard in march 2009, thats not by my hands, I lost in mutual funds and down grade in property assments, **** just happened!

Since than I'm no longer singel, two adults paying mortgages is a hard one to work arround, I have put some repairs into my place and continue to do so, but thiers a limit, as the bank owns my house.

I'm attempting to rent out my place, so thier my first step, quality of renters to date are not who you would want in you house, I don't care abought the phyiscal space of my property, only the mortgage payments.

I posted this so in my mind, all comments are fair game.


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## gt45 (Feb 6, 2012)

Chad said:


> If its any comfort there will be a more people like you in the near future. Mabey you could form your own support group where you can get together with other underwater mortgage holders and all cry about your current situations.
> Hey but dont worry, should you choosebankruptcy that CHMC insurance you had to pay for because you had $0 for a downpayment, will cover the bank from any loss courtesy of the taxpayer


CHMAC will not desolve you off any debit incured in bankrupcy, its a tax, all it is, rolled into your mortgage payments, bank will come after you with 0 down or 24% down, and Im paying my tax just like every one else, if you put 25% down, you dont pay CHMAC


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## stephenheath (Apr 3, 2009)

With your update of paying bills it doesn't seem like carrying it is actually a concern, it just seems like it comes down to it being a bad investment and how do you get out of it. Bank adjustments might adjust the interest if they cooperated, but they won't reduce your principal for sure. So basically now it comes down to one of two issues... Either you wait and keep paying it until the market turns around and it is higher or you cut your losses now one way or another.

As for the first, everyone is now talking about real estate in Canada being in a bubble... not just people like Garth Turner or the bears on this board, but even the mainstream media is running with it. I have no idea what the likelihood they are right is, but assuming they are, your property might continue to go down magnifying your problem down the road. Then again, by continuing to pay the mortgage, perhaps at a much lower rate when it renews in October, things might eventually go back up, even if takes a couple decades. If you rent it, even if you are subsidizing the renter, it will make it a lot less than the 277 you're paying now, and possibly over the years you'll have opportunities to raise the rent too.

As for ditching it, if you sell it, it might be worth investigating if you can get some tax benefit out of the loss... perhaps by renting it for a few years first and making it an investment home while your new place becomes your primary residence, and then applying the loss to previous years? You'd need to talk to a tax expert on that, but if you could find some way, maybe that would make it even less than $50k (unless property values go down even more down the road). Even if you just sell it and take a $50k loss, by living where you are and busting your hump you could pay it off in a few years and then you don't have the bankruptcy on your record.

If you give up and go the bankruptcy route, your saving grace is that your new partner won't have, so she will be able to get credit and put you on hers if she trusts you and you stay together, so you can have a semi-normal life until it clears. Although if you go this route it's really too bad you didn't do it before you cashed in your RRSP's, since I believe RRSP's are protected (don't quote me on that though, it's just something I heard once).


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## gt45 (Feb 6, 2012)

Paying down the debit I have now is my goal, mortgage and car payment are going to be left alone. ( just pay monthly) 

When I bought my place the assesed value was 196,000 I paid 200,000 + CHMAC, this year 2011, it was assed at 155,000, I owe 195,000 on the mortgage, not including buy out penalty.

Druing the last five years, lows have been 155,000 highs 196,000, last year 2010, it was 176,000.

My property is a older town house in Calgary (now thier really is no good or bad areas in this city in terms of chrime ) 

At best, I wanted to break even when I bought, that was my goal.

When My mortgage is due, Im going to kill for a lot better mortgage rate and find some one to assume my mortgage at the best possible intrest rate I can get.


Scotia bank could be in a real pickle as they bought out mapple trust who were pushing hard on 0 down mortgages for people with good credit.

I delt with Mapple trust, not Scotia bank, who in turn forced me into thier banking system, so as far as thier concerned, its best to milk me until oct 2012.

Tuth be told, theirs a lot of people in canada who are really up side on their mortgages, thier just in better areas with nicer homes with no equaity

Cashing out and moving up drove the real easte market here in calgary to insane levels, I was building thease new homes until market went south.

In the in term, all I can do is pay the bills, find a renter.

I have pulled out all my mutual funds and have began to pay down my debit, 100% of mywork wages are going back back into my RRSP, I reasoned it was cheaper to borrow from my savings and pay it back than getting a consoladated loan.

Thanks for all the advice!!


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## Cal (Jun 17, 2009)

Sounds like worst case scenario you made a bad buy and are out 40K, if you sell now. Hopefully for your sake it would be less.

I agree w Berube...rent out a room or 2, whatever you can to get some income. Cut all cable or whatever expenses you can. Sell some stuff that you aren't using/don't need to make up some of the difference....

Hopefully you will be able to renew at a decent rate, that will ease some of the pressure. However when it comes for renewal time in 5 years or whatever, expect and plan for higher rates.

Even get a part time job and consider that your punishment of sorts for making the poor decision.

Never buy an investment with the intentions of breaking even.

It is a crappy lesson to learn.


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## gt45 (Feb 6, 2012)

yup buying a place to live in was a bad move and yup, finding a girl friend two years into home ownership who also owns ahome was abad move, and hell, even trying to stay a float was and could be a bad move, the breaker is off when Im not thier so I'm not shy abought living cheap, Cable ? have never paid for it in my life time.

This never was abought a investment, it was abought finding a place to live, now this is a investment thats gone south, so oh what the hell, THe bank can forclose on me while I venture forward on EI with all may cash hidden away and the bank can take my 500.00 pos when I trade down.

Part time job is funny, I take any OT I can get at work, Revenue canada is number two on my support list, my bank number 1.

Now that I have ranted a wee bit, I really feel great as my little sum of 50 grand is alot less than the sum of most peoples battles.


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## Jungle (Feb 17, 2010)

FYI Scotiabank will allow a 6 months early renewal with no penalty.


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## marina628 (Dec 14, 2010)

Assuming you live with girlfriend now , could she sell her house and you guys move into your upside down house until you get things figured out?Not sure how serious the relationship is but if it is a long term relationship you may want to have this discussion as a couple.


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## gt45 (Feb 6, 2012)

I have a twown house, girl friend has a4 bed room house and dbl car garage, so No, her in my place is not practical or senseable, I do have the expensive option of being releagted to the dog house (my place ) when we tire each othier out.

For now, my place is up for rent.


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## marina628 (Dec 14, 2010)

Trying renting out the extra bedrooms ,keep one for yourself.You may net more with renting rooms over entire house but be careful to screen for neat tenants and set firm rules like no overnight guests etc.I say this as you will get a better quality of tenant this way.


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## gt45 (Feb 6, 2012)

I understand waht your saying, however I don't have mega space for anothier room mate, let alone room mates and I will get more renting out the whole town house, and not having the bills in my name, its only abought 850 sq feet 2.5 bedrooms with a singel car garage.

One option I might look into is porting my mortgage to anothier property + additional cash, if I go this route, it will be as investment (100% rental property) if my place has lost in market vaule, I might find a better place that has also lost.

Bankrupcy is not a option, as I will have to pay back a % of my mortgage debits any how, and thats not enough money to truly make it worth my while.

I can't ring up a 100 grand + in credit card debit and than bail, thats just not right. I'm a small % that feels this way even thow 5 grand or 105 grand, your still bankrupt in the courts.


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## the-royal-mail (Dec 11, 2009)

Maybe this thread should be mandatory reading for all the young CMF newbie RE specuvestors who think that owning/renting a house is the magic bullet to riches.


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## Causalien (Apr 4, 2009)

gt45 said:


> I have a twown house, girl friend has a4 bed room house and dbl car garage, so No, her in my place is not practical or senseable, I do have the expensive option of being releagted to the dog house (my place ) when we tire each othier out.
> 
> For now, my place is up for rent.


This doesn't make sense. Renting out the gf's place will net more income. If it's in a student area, you get 4 students. In cities where housing doesn't cost as much, that's $500 x 4 = $2000. In cities where housing is insane, that's $700 x4 = $2800.

Two people and 1 baby can fit into a 800 square feet townhouse. I've done it before and it's not uncomfortable.


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## gt45 (Feb 6, 2012)

GF wants to see my place burn to the ground before she moves in and she has kids, trust me when I say GF moving to my place is not a option, nor dose she want to be a landlord, any rental income I can get will off set my mortgage amd help her out a lot quicker as I can contrbute more to her mortgage payments, and if we become longer term, its better to be in a 4 bedrroom home than a 800 sq foot home.

On the + side, a lot of owners are now fixing up thier properties in my area, as thier no longer rentals, so if they hit the market and thiers a demand with in the next year, it will help.

been a year since a unit has sold in my area.


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## gt45 (Feb 6, 2012)

the-royal-mail said:


> Maybe this thread should be mandatory reading for all the young CMF newbie RE specuvestors who think that owning/renting a house is the magic bullet to riches.


yup and to every one who invests in non real estate stocks, bonds, money market funds, mutual funds, penny stocks, bears vers bulls,leeman brothiers, fanny ma, the US. grean back, bails outs for the us. auto industry and so on and so forth.

March is going to be a interesting month, as grease (sp on purpose) has to come up with a repayment plan ...

Some how some place you just have to live your life and ask lots of questions.


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