Cash is King – Upside Down Mortgage Solutions

May 4, 2008

I have an Option ARM Mortgage that is Upside Down? What do I do now?

Listen in on a Interview I did on Loan Modifications and the Fannie Mae and Freddie Mac Streamline Loan Modification Program



I received a great question that I am sure applies to several people.  The answer will make you question what you know about your own Option ARM.

“I have an option arm with countrywide. They say that I don’t qualify for a loan modification……”

Now this particular person has this loan on an investment property but the help I gave him will help many more people understand their loan a little better and what the next steps would be to avoid any undesirable situations.

Here is my Response:

“Thanks for the email!

I think that you should stick with that loan!

Changing that loan on a non-owner property will only go from bad to worse.  Let me Explain….

In the eyes of a bank you couldn’t be more of a high risk.  An investment property with no equity in an option ARM is a bad place to be in, IF YOU DON”T HAVE A PLAN!

I suggest making the Interest Only payment as often as possible as that will be one sure fire way to keep the property.  I know that the interest rate is high but you have no other solution if you want to keep the property.  If you want to sell the property and it is an investment property I would suggest contacting your CPA before you move forward with that process so you know the consequences from a tax perspective.



If you don’t know the answer then you could be caught off guard when your loan “Maxs out” (recast) because once hit that point you won’t have any options left but making the interest only payment.

The obvious next question is how do I find out where my recast point is?  You will need to review the paperwork you signed for the loan on that property.  You will be looking for a “Note” and “Riders” and within those documents look for recast in terms of percentages (110% – 125%).  Once you know the percentage you need to multiply your percentage against your original loan balance.  That outcome will be the “Max out” point for your loan and if you reach that number your loan will have a new minimum payment of interest only.  There are some other rules and tricks that will come up but if you are under 5 years into the loan you are good with just these basics.  If you are over that point you and I will have to talk!”

IF YOU ARE A HOMEOWNER and this is your PRIMARY RESIDENCE….. Additional Rules apply.

You can find out more about those rules in my FREE REPORT!

“Refinancing SECRETS for an Upside Down Loan that Banks Don’t Want You To Know because it will Cost them THOUSANDS of Dollars!”

JUST SEND ME AN EMAIL with “Refi Secrets for Upside Down Loans!” as the subject to

More California Mortgage Solutions……




  1. Hello I am in the same situation I was wondering what other options do I have I am on an upside down mortgage and on an arm I have talked with three different lenders and I want to see what other options do I have.. please help!

    Comment by vero — May 9, 2008 @ 4:22 am | Reply

  2. I too am in a majorly upside-down loan… the current FMV is 383k… last appraisal was 625k. Ouch. My ARM min payments end in a year, don’t see any possible solution except leaving it for the bank to deal with. Did find this site which has plenty of info.
    This is going to dwarf the “sub prime” crisis, for sure.

    Comment by gary dempster — September 4, 2008 @ 5:07 am | Reply

  3. I am in the same situation. But my ARM has already kicked in. Please help

    Comment by Matt — February 5, 2009 @ 10:25 pm | Reply

  4. I every time used to read piece of writing in news papers but now as I am a user of web
    thus from now I am using net for content, thanks to web.

    Comment by — September 23, 2013 @ 7:22 pm | Reply

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