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Home > Ask The Get Out of Debt Experts > We Can’t Afford Our Mortgage and Bank of America Said They Can’t Help. – Anne

We Can’t Afford Our Mortgage and Bank of America Said They Can’t Help. – Anne

“Dear Steve,

My husband and I purchased our first home 2 years ago for $745k and put down 20%. The current balance on the loan is about $550k, and our interest rate is 6.875%. Our payments are $3800 per month.

We just lost our business that provide about 50% of our income. Because of this we cannot afford our mortgage any longer. Due to the housing market slump, our house is now worth no more that $500k.

We have been trying to refi, but no one will do it with out puting down another $150k in the house. Sadly, we cannot afford to put that much more down. Our loan is not owned by Fannie or Freddie, so we have been told that we do not qualify for the new homeowner help. I called my mortgage servicer (Bank of America) for options, but they say there is nothing they can do to help. As of now, we are current on our mortgage.

Is there any help out there for people like us? Should we continue to deplete our savings in order to remain current on our loan knowing that in about 5 months we will not be able to afford our payments any more?

Or should we stop making payments now so that we will not be completely broke? We do not want to lose our house. Also, will defaulting in our loan force the bank to work with us, instead of just blowing us off like they have been every time I call?



Dear Anne,

You are wise to be looking at this situation now.

I can only imagine how frustrating it is for you to see the probable brewing, reaching out to Bank of America for assistance, and have them say there is nothing they want to do to help.

I think the situation has answered question. Without any expectation of being able to replace the missing income in the next five months, simply pouring your remaining savings into the mortgage is not going to alter the situation at all.

I know you don’t want to lose the house, but it might be a possibility. And that is not caused by your actions at this point, but as a result of the loss of income.

As hard as it might be, stop sending payments you can’t sustain, makes sense. If Bank of America refuses to provide you with any meaningful help when you are delinquent, and things change for you, you could always reorganize your debts in a chapter 13 bankruptcy to save the house. But until bankruptcy judges get the legal ability to modify mortgages, even in bankruptcy you’d have to pay at least your regular mortgage payment and then some.

This is a bad situation brewing, I’m sure you’d agree with me on that. It is unfortunate and regrettable. But the best thing you can do in this situation is to be the ones to take action instead of waiting for others to determine what they will do to you.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


    • Coralee1955

      Bank of america is where my mortgage is currently with-  I have just  recieved the paper work and am still leery of what the worst that can happen by applying ?

  • Hayes

    Man, I feel everyone’s pain here. I am in the same situation. I tried to buy within my means, and at the time I had a partner that helped out, but we have since split, and I am having to try and make up the extra $600 on my own. I have thought about renting a room, but I can’t compete with apt rentals these days. There is no way anyone will pay $600 to rent a room.

    I bought a foreclosed home for very cheap at the time, $99k. It was valued at $138k right out of the gate. It needed work, so I took out a heloc of $14k to replace the furnace, do some electrical work, and put in a kitchen floor. When it came time to refinance into one mortgage, the house appraised at $102k, and I owed $114k. Now with all the other homes in foreclosure in my neighborhood, my home is valued at $70k. I no longer want to live there, and I don’t want to screw up my credit, but I can find a much better apt for less than half my current mortgage.

    I would have to do a lot more work to the house to be able to rent it out, money that I don’t have as I have burned through savings, trying to stay afloat since the breakup.

    I was very disheartened to hear that Obama’s plan only helps the dishonest, and not those of us trying to do right and figure out how to make things work before they get out of hand.

    • Steve Rhode

      I think the statement that the Obama plan only helps the dishonest is a bit of a reach. The plan is better summed up as one that can provide some relief to those that have a lender that will participate and have a shot of pulling the mess out.

      If you owe $114K on a home that is worth $70K, you don’t need a loan modification. You need to probably hand the house back and go bankrupt.

      You’ve burned through your savings and safety net and now you are out of other logical choices. It’s time to go and meet with a local bankruptcy attorney and talk through what bankruptcy will mean for you.

      Big Hug.


  • Lynn

    Similar situation: My husband’s company relocated us less than 2 years ago from LA to GA. Great paying job and we bought the $450k house for $410 with PMI. We refinanced to a 1st & 2nd to remove PMI in April and found out the house value had declined to $435k. My husband was just laid off in August – but has found another position with the same company in TX to begin in Dec so we have time to sell this house, get ourselves relocated and purchase another home in TX. The value of our current home is well below the mortgage balance and the market is so slow, we don’t know how we will get out of this house and not lose the ability to purchase in TX. Our credit is great at this time and we don’t want to hurt our credit or throw away our move money. No idea what steps to take. With our credit history would the bank be encouraged to work with us on our GA home if we agreed to mortgage with them in TX? OR Is it best to not contact the bank until I absolutely have to?
    These days it’s hard to say if honesty is still the best policy. For folks who have done everything right for all these years, it just seems when you really need help before things get bad – there is no help in sight.

  • Rika

    When in this situation, bankruptcy might be even worse–try to get a job in the financial services industry with bad credit! Can you just give the house back to the bank? “Deed in lieu”? If you do, do you take a hit on your credit report? How does that work?

    • Steve Rhode


      If you are talking about a specific job that might be precluded by a bankruptcy then a died-in-lieu of foreclosure, or foreclosure will all be viewed just as negatively.


  • Jen

    wow….i feel soo bad for all these people who lost/are loosing houses. no one could see the economy’s future. its sad. and good people are doing short sales, which pays what you owe left, and then you wasted any money you put into it up till now. as well as being broke. and having to move. or buy another house, if possible. its crazy! i am just thankfull from my end that i am going to buy a home now, while the prices are down. just my age, i wasnt ready to buy a house a few years ago. if i had i would be forclosed by now. when we buy a home now, we are making sure that its cheap, and we can afford the monthly payments even if my husband looses his well paying job. because i may have to work at mcdonalds, but at least that pays the mortgage payment. it has to be under 1300 a month. anyhow, i was very sad to hear your story. hope it works out somehow.


  • Hollis

    I’m in exactly the same situation only I’ve given up and moved. I’m waiting for my bankruptcy attorney to decide on the next move. B of A says I could try short sale but they will have to approve. Is the Obama plan going to force lenders like B of A to deal with us, or should we just plan to foreclose?
    Thanks for all your support and information,

    • abso-hopeful-lutely

      YES! Totaly know and understand where you are coming from. This situation has affected everyone all over, from our families,friends,teachers living out of their cars to finding someone to stay with and bouncing around with children from help to help. We also havetried to midify with B of A and it was just a run around. It’s a blessing that my husband found a J O B after seven months of being out of work, but know the bank wants a new hardship and the games and excuses go on and on. But we did get behind and part of our retirement went to help us continue to pay timely mortgage payments and yet we sacrifice with a family of seven to meet our responsibilities. I don’t understand banks rather see you loose the house can’t get what it’s worth when they sell, and in the mean time the yard starts to go then they start to vandalize the homes we have seen this happen around us and all over the area we live in. “Why is it so hard to help the home owner” They talk about homeowners need to accept the fact that it’s not the banks fault well it’s not the homeowners fault if when they bought they had good decent jobs to pay the mortgage then jobs became scarce and employers began to let go of people by the numbers, big Co. closing down and leaving many unemployed with no income to support their families or minimal income to at least try and pay their mortgage their roof over their head and bills along with food. This is just horrible and if banks gave out bad loans they should try and help fix the situation, they were given monies to do so. A bad loan is a bad loan, weather people could or couldn’t pay these loans the criteria they are asking for now should of been asked then. But banks are greedy people and very selfish, they are in a business to make money I know but no need to be dishonest and hord when help wagiven to them to help all as best they can.

      • abso-hopeful-lutely

        Excuse my spelling for the above comment it’s late and am tired.

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