Quote:
Originally Posted by DianaR
I think he has two years before he has to refinance or deal with that mortgage jumping by at least 50%. Do you think the credit market will be a bit looser by then? He's now sweating the possibility that he won't be able to refinance.
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Ouch!
In then end of 2009, a second wave of foreclosures will hit. That is not a good time to refi. I discussed why and how here:
Investment Musings: US Housing Market Crises caused by Mortgage Backed Securities
Most lenders have programs to do loan conversions. He should talk to his lender about delaying the recast by 2-3 years or he should talk about converting to a fixed loan. The lenders are willing to deal. Especially if the property will be upside down after the recast. They do not want to add another foreclosure to their books.