Trading an FHA loan to bank for an REO

Question

I hope this is the right location for this question. I couldn't find a section that better fit this question. If this is not the right place please let me know.

I got a house 3 years back using an FHA loan using the T.R.I.P program that helps first time home buyers get a house. after living in the house for 3 years I have determined that I hate the area. I hate the municipality that runs the area. I hate the bums using my back yard as there personal bathroom. I hate the corrupt cops that harass everyone because they have nothing better to do. I hate the random assortments of trash left around my house by passerby's. I want to move but the T.R.I.P program states that I must live in the property for no less than 5 years.

I thought maybe I could call up my mortgage holder (wells fargo) and ask if I could negotiate a trade. Maybe they have an REO that I would want that is in the same price range as my current mortgage. Would they be willing/able to trade my property for the REO and have everything transfer to that or is there a way I can do something that gets me a place I would want to live in and get rid of this burden of a property I ended up with?

I don't know much of the lingo of the banks I only know very little about REO and hope they would show me a list of REOs they have in a better location could help me. Also do banks have Condominium REO's? One of my friends just got a Condo and it looks far better then owning a full house.

Answer 1

What you are suggesting will not work. Banks have strict guidelines about what they can and cannot do with an FHA loan property. Remember the FHA is only an insurance policy to the bank saying that if you default they will cover a high percentage of the loan.

The bank won't take the risk of violating their insurance policy and the government refusing to pay them off if you default.

Instead, consider doing a creative sale on your property, maybe a rent to own deal or owner financing. As long as you pay the mortgage the bank won't even know you don't live there and you can rent the house out to someone who eventually will buy it after the timeframe expires.

Meanwhile you can go and get a new home or condo either thru regular financing or owner financing(search the internet to see how to do this) and you can use owner financing until you complete the sale of the first house.

Otherwise just tough it out in the house you are in until the time expires and then sell. You made no mention of the property value but I am assuming if you bought it 3 years ago that you may have a little equity. Pleas note that if you sell at that time though you will likely have to come out of cash because your equity won't cover the realtor fee and closing cost. But if you do the rent to own I suggested earlier you can sell at a slightly higher price making sure you can cover those cost.

I realize this answer is a little out the box but I deal with people who don't want properties all day and I have completed transactions like this many times.

Good Luck and God Bless!