Underwater loan

[starduster67]

I'm really red faced to even ask but if anyone has any ideas I'd be happy to hear. Like many seniors we bought a new Class A when retiring. Things were good back in 2001and we were full timing. Put a large down pmt although it never seemed that way. Illness struck we haven't used it in three years . Still paying big mortgage on it and have another 8 yrs to go. Hate to see it languishing in storage lot and with ins and storage fees too. I have been trying to figure a way out of this.No dealers can help we are $50 thou. Under water. I don't have that much in savings to pay it off. We've always PD our debts and repo scares the heck out of us. Anybody been in this spot or knows anyone who found a solution? Want to get a small one eventually that I could handle I admit I'm afraid of the big one. I'd appreciate any ideas and please no sarcasm I know I'm in a stupid situation of my own doing just asking for any input. Believe me 2 dealers actually told us in different wording let them take it back but I'm sure that would be a nightmare. We over paid but we signed and are responsible. Thanks hope someone will reply.

[time2roll]

OK here are some example numbers. No actual data, just pulled off the sky hook.

MH value $35,000
Debt 85,000
Current payment $1381 ($85,000, 8 years, 12% rate)

Sell MH, put $15,000 cash, $15,000 on credit card, $20,000 Home equity line, $35,000 cash from sale = $85,000 paid.

Remaining debt $35,000.
CC minimum payment 4% of balance $600 per month ($15,500 debt including advance fee)
HELOC 10 year payment $242 at 8% rate.

Apply the $1381 + $100 (storage & insurance) minimum to the HELOC and the balance $1249 per month to the credit card.

CC is paid in 14 months
HELOC is paid in 30 months total

A decent banker could do the same calculation with your own numbers.

[time2roll]

If you are NEVER going to use the RV... sadly it is probably best to sell it now. The value will only go down and the maintenance, insurance and storage fees will only add up.

I would consider arranging low interest credit cards, home equity line of credit, some cash (not more than 30% of savings) or a combination of all to be able to pay off the RV loan at the time of sale.

Once some of the debt is paid (RV cash value) and you start to apply storage fees and insurance to the debt (in addition to the previous regular payment) it should get paid off faster with less monthly pain.

Probably too many details and personal info to discuss here. But put this plan in front of a banker or personal finance person and see how the numbers drop out.

There have been plenty of posts over the years of similar situations.
You are far from alone on this. Best of luck.

[Gale_Hawkins]

I think reaching break even is not going to be easy. Being 70 with health issues coming up with $50K to pay for something that no longer exist any longer could be very hard.

[winnietrey]

well, You could let the bank take it. Then put it in your will they get paid back when your kids sell the house. Probably would tick the kids off though.

[dennislanier]

I think you have already answered your own question. As long as you can afford to continue making payments that is the way to go. At some point in the future you will reach a "break even" point and then sell it as fast as you can to pay off the remaining balance. At our age, the years go by really fast and the break even point will get here sooner than you think. Sorry to hear of your situation but don't keep beating yourself up about it. You are obviously a decent, responsible person who made a poor decision, but you can work you way out of it. Hope your husband's health improves soon. Good luck.

[Water-Bug]

It hasn't been mentioned yet but the OP is at considerable risk just having the RV sit in their back yard. Should something happen to it, their insurance is going to pay book value. They will be stuck for that $50K that they are under water.

[dennislanier]

Maybe I'm wrong, but I think in order to sell the MH to someone else and give them a clear title, she has to pay THE FULL AMOUNT SHE OWES RIGHT NOW. She cannot sell something she does not own - the only way she can own it is to pay off the entire balance immediately.

[monkey44]

If it was me, I'd sell the RV first, THEN take out a balance loan (Home Equity or whatever), for the difference after it sold and pay it off as fast as you can. That way, you don't have two loans.

IF it's sold for a reasonable amount, then your loan will only be for what is unpaid on your original financing.

[westernrvparkow]

You get a personal loan, without collateral, yes like a credit card. Or use a home equity Line of Credit, anything to get out from under the massive amount still owed on the RV and get to a more manageable debt amount. It will be unsecured, but the current RV loan is unsecured by $50,000 since that is the amount the OP is telling us they are upside down. Apparently they must owe in excess of $100,000 on their rig to be $50K upside down on a 2001 Monaco Diplomat Pusher. Much better to be trying to pay off $50K than $100+K. As for a rate, a personal loan at a credit union is likely to be a lower interest rate than the rate they got on the RV in 2001.

[atreis]

westernrvparkowner wrote:
If you want out, go to your local bank or credit union and get a loan to cover the difference between what you can sell it for and what you owe. Then sell the sucker.

Such a loan would either use the RV as collateral or effectively amount to a large credit card debt. In the former case, she still wouldn't be able to sell the RV without paying off both loans - it would have two liens on it instead of the one it currently has. In the latter case, she's stuck with a 50K high-interest loan - not a good idea.

Trading it in has the advantage of potentially getting something useful, but would immediately result in the new RV being VERY under water. All that happens when someone trades in an under-water vehicle on a new one is that the new loan is made for the outstanding balance of the new vehicle plus the loan amount less trade-in value of the old vehicle. It's only good in that it gets something new - in the long term it creates an even bigger problem.

Probably the best option is to over-pay on the RV loan (as much as possible) in order to pay it down faster and get it back above water, then sell.

[starduster67]

The purpose of my question was not to be a deadbeat nor trying to get out of paying what we owe. Firstly no I do not want to live in a resort been there done that. My husband cannot live in there. I have a bad hip and knees so no we don't want that. Maybe I was just looking to find a soul to commiserate with. I notice how easy it seems to be to pass judgement when you don't know me or have walked in my sandals LOL. If you say give up your home then your home doesn't mean much to you mine does. Not everyone in there70's as we are wants to be a full time RVer. An example my friend the RV resort we lived in for the past few years when we couldn't drive anymore was $6000.00 a year in rent and it wasn't a classy place either. Its cheaper here in my double wide manufactured home. So as we are all sitting around the campfire chatting I'm still smiling and I will pay my bills but it would have been nice to hear perhaps from another foolish person who was within in the same puddle of mud LOL I just wish I was as smart 10 yrs ago as I am now. Yes our coach was expensive too expensive. Thanks again for your input

[bigdogger]

timmac wrote:


Also don't feel bad about giving it back to the bank, that's the risk they take and they know this.

No!!! Actually, that is not a risk they take. They came to the bank to borrow money to buy an RV and they agreed to pay it back. The credit risk the bank took was if the customer somehow became UNABLE to pay it back or the bank makes a bad credit decision based on the customer's character.
Just not wanting to pay it back is not a legitimate reason to default. We would seek a judgment and pursue repayment of every penny plus any and all fees if we found a customer who decided not to pay only out of convenience. It is totally unfair to our stockholders, our depositors, and our other loan clients to allow people to just not pay because they don't want to. People who allow foreclosures and repossessions when they have the ability to pay only because they suddenly don't like the decision they made of their own free will are nothing but deadbeats. Thankfully this person realizes their obligations and have indicated they have no desire to do anything like that. I agree with some of the other posters that they should look into borrowing the difference between the sale price and the amount owed. It appears they have a reasonably valuable rig, so even if they only get half of the loan balance, it is easier to pay $50,000 than it is to pay $100,000 when they are getting no value from having the rig.

[timmac]

I would think since your 12 years into a 20 year loan most of your payments should be going towards principle now and the balance should be going down fast, can't understand how after this long into loan your still $50,000 upside down, did you really pay that to much.

Also don't feel bad about giving it back to the bank, that's the risk they take and they know this.

[gotsmart]

starduster67 wrote:
I thank you all for your responses. All were pretty much what I already knew but it never hurts to ask. I will never give up my house that's why I got out of the big RV we couldn't handle it anymore. Why would I take another loss. No I'll just keep paying because we come from a generation of folks who pay our bills. Mistakes must still be paid for in the end. I knew all along there's no honorable way out don't know why I asked. If any good comes out of my mess its maybe other RVers might think twice before getting into my situation. Bigger and newer is not always better. Do not fall for that 20 yr loan it costs so much more in the end and with the new owner excitement you wont realize it till about a year later when you see holy cow all my payments are interest and only a few measly $$$$$ went to the principal. The tax deduction isnt worth beans. Haha maybe some day I'll hit a lottery or I'll live long enough to pay it off, I hope so. I do have a sense of humor folks. Who knows 🙂

You've pretty much answered your own question. You have an asset (in the form of a home) that you could liquidate to pay off the MH. It can provide relief of your debt, but it would seem that you would rather stress yourself with worry.

Have you thought of this?

- sell the home
- buy/lease a site in a really nice 55+ RV resort
- pay off the MH
- move the MH to your site at the RV resort - and never drive it again
- build a nice deck right off of the coach door - so you don't have to deal with those flimsy retractable steps anymore.

You'd keep the RV lifestyle, pay off the MH, live in a resort of your choosing, and no longer have the stress of the MH loan over your head.

4 walls does not make a home. The memories of/in that place is what makes it a home. Selling the home is a way out of the debt. A bankruptcy judge would even point that out to you.

[Dtaylor]

A lot of suggestions here, and many are good. But first, you need to talk to your bank. Explain your situation and ASK if they have any options that will help you. Keep in mind their priority is protecting their interest.