What happens if I strategically default on my FHA mortgage in Michigan?

I am barely getting by now since my divorce. The home is in my name, I can make the payments, but it is leaving nothing over at the end of the month. I am strapped. Can’t put money into my 401k or kids’ college plans now. Even though my credit is nearly perfect, my house is worth about 30% of what I owe now, through no fault of my own,,,when I requested assistance, the bank would only allow a “FHA Streamline” modifaction, which reduced my payments about $ 100 but extended my loan another 7 years!
I personally hate my home, it is the “divorce” house, and have no problem “Walking away”. I am just worried that I will be garnished in the future. I’ve been told that FHA PIM insurance guarantees that the bank cannot come after me, but the government can. I need answers. I am considering buying a cheaper home in the Detroit metro area in CASH, but I don’t want that seized by the IRS or HUD. I am thinking of puttting my cash purchase home in my father’s name. Any ideas or suggestions?

I have a VA loan on my primary residence. I’ve had it for 2 years, never a late payment. Interest is 6.5%. I received a flyer back in February of this year from 1st Mortgage Corporation about a VA streamline. I proceeded to get things set up with a streamline refi at 5%. I would skip March and April payments.

In March, I found out from the loan officer that I had an outstanding education loan. I paid it off in March and everything was set to close in April. Loan officer said I would skip April and May payments. End of April and loan officer said that they couldn’t close the loan. A few DAYS before my April payment would go 30 days past due, he says to pay it. I had the funds to pay it so I did. Loan officer said we’ll skip May and June payments.

May rolls around and nothing from the loan officer except excuses. During this whole ordeal, loan officer is extremely difficult to get a hold of. Numerous emails and phone calls unanswered. End of May and again they say couldn’t close but for sure in June. 2 days before May’s payment goes 30 days, we had funds to pay so we did. We’ll skip June and July payments now.

Documents were sent to senior loan officer and between the two of them, communication was subpar at best. No returned phone calls on status and no returned emails. End of June and they say we should close. I let them know that I won’t have funds to cover June’s payment if they do what they did the previous 3 months (which is to tell me 2 days before going 30 days past due to make a payment). Sure enough, we didn’t close in June. I ask questions after questions on why it is taking so long and loan officer keeps making excuses. Says my refi packet is with the bank and should be funded any day. Loan officer says not to make June’s payment that we can still do refi with 1 30-day late and that we should close first week of July.

Middle of July and we STILL have not closed. Loan officer says that we need to redo paperwork and try going through a different bank. First copy of the paperwork and they spell my wife’s name wrong. Second set of the SAME paperwork wasn’t sent to me for another week (something about a printer scan problem). Oh, and by the way, make June’s payment and now since we’re going through a different company, we can only get 5.5%. At this point I am absolutely drained and upset of the lack of communication. I look for other lenders. I contacted 2 of them and they tell me we can get you 4.75% and have you closed in a week or two. But, you can’t have ANY lates in your mortgage! I explain to them the situation but they can’t do anything. Any late on mortgages and I’m automatically disqualified.

So now, I’m definately stuck with 1st Mortgage Corporation. And, not only did I not get my first 5%, nor the 4.75% from other lenders, but I’ve got to pay 5.5% and that’s only if we get refi by the end of July.

I call the loan officer ALL last weel (end of July) and they say they are working on it (last I heard on Wednesday). No call back thursday and no return phone calls or emails on friday. So here we are today. I now have a 2nd 30 day late on my mortgage which will disqualify me from this refi. I can’t refi with anyone else because of these lates and loan officer is yet to be heard from. I’m stuck with a 6.5%, I borrowed money to pay last month’s mortgage thinking that when the refi goes through and I can skip 2 payments that I can pay that money back in that time. Now I don’t have a refi, money is tight so I can’t cover July’s mortgage and I owe for June to someone else. I’ve got a 2nd 30 day late which disqualifies me from ANY streamline refi program. All from this lender.

Do I have any recourse?

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