Mortgage Crisis, Part 2

The two recent immigrants are my parents. Because they are the best parents you could imagine, because they've supported me all my life, because they came to United States to provide me with a better future, because they're the best people I know, and because of a million other reasons, I feel obligated to help them get out of this mess. My husband and I decided to take the matters into our own hands and help them research their options. Here is what we have done and what we plan to do:

Try to sell the home – The first thing we did is put out a "For Sale By Owner" sign in their front yard. Because the home value went down in the past two years and they now owe more than the home is worth, they cannot hire a realtor to sell their home. They simply cannot afford to spend an additional 8-12% over what they already owe. The asking price is the exact payoff amount they owe to the bank.

Contact the lender – Dealing with their lender is a nightmare. Because they are current on their mortgage payments (and they have always been), their lender is anything but cooperative. When I asked what they can do without having to ruin their credit scores the person on the other line suggested that they cash out their retirement savings, pay down the mortgage with that amount, so that they would qualify for a refinance. I was shocked! What kind of advice is that? They have hardly saved up $20,000 for their retirement and they are both turning 60 this year. All other options will have an impact on their credit scores, which my parents are not comfortable with at all. The main reason is because they do not have enough saved for their retirement. As my mom put it: "what if we have to borrow money later in life for medical bills or God knows what…" I totally understand where they are coming from.

Help financially – Without question we'll have to help them pay their monthly mortgage. Currently 85% of their take-home pay is going towards their mortgage payment. They have depleted their savings and I have no idea what they even eat. It's a shame that they have to go through that… They came to this country to allow me to have a better life, and it is my responsibility to make sure that I do anything I can to help them. So, my hubby and I decided to help them pay their second mortgage (which is really what is causing the biggest issue). We'll pay as much as we can each month to help lower the balance. If they could pay off their second mortgage, they would be able to hire a realtor to sell their home. Of course hiring a realtor is not a guarantee that a home will be sold, but the chances of making a sale are a lot higher…

How this will turn out, remains to be seen…

Just to be clear: I am not blaming the system for allowing them to borrow more home than they could possibly afford, or my parents for buying a home without a down payment. I am just sharing my parents' story and the lessons learned.