Loan Modification Forum - LoanSafe.org - View Single Post - Wells 30yr $380k 1st & $48k 2nd

NegateEquity · 01-06-2009, 08:42 PM

This all started two weeks ago when I noticed how low mortgage interest rates had gotten. I immediately plugged the numbers in my spreadsheet and about fell out of my chair when I saw how much lower my payments would be with a 4.750% interest rate.

Both of my loans through Wells Fargo are good loans and never delinquent. My 1st is a 30 year at 5.99% with a $380k balance and the 2nd HEL is a 30 year as well at 7.75% with a balance of $48k. I bought this house at the age of 25 last year for $481k, my first house. Theoretically on day one I had 10% equity. At the time I knew what I getting myself into…

Just like everyone else, I had a rough 2008 financially. Around mid-year I took a pay cut and had my car and computer die in a period of a couple weeks. Not very rough by other standards. I financed my new car ($7500 2002 Focus) with what little cash I had without putting myself in jeopardy of missing any payments, and a $5k loan against my 401k, which I’m scheduled to pay off in 1yr on July of this year 2009. I did this for two reasons, 1) I don’t have a clean driving record and I didn’t want to pay to insure it, so I wanted to hold title, the 401k loan allowed me to do that, 2) I don’t like used car interest rates and 3) I knew my 401k funds weren’t going anywhere but down, I was allocated to >70% cash/bonds back in January 2008. To pay for a new computer (I build my own so $600 got me state-of the-art) I pawned off my Canon DSLR equipment for about $3k with the remaining funds going towards preparing for my property tax bills.

As far as the value of my house goes, the good news is, the county assessor “temporarily” valued the home at $415k, so my property taxes would be much less then anticipated. The bad news is my equity had evaporated and I was now underwater (got to love contradicting analogies). Coupled with the supplemental tax bill, property taxes for 2008-2009 would still be close to $8k. I paid my first installment exactly on time in December. The Zillow.com “Zestimate” values my home at just $385k, which could be representative of the low-end.

I explored the refinancing option two weeks ago. That was a complete bust. One lender I like needed LTV < 90%. Just to refinancing the 1st I would need to assess at $418k and the note holder on the 2nd would need to sign a subordination agreement. Both of which are not likely to happen.

After a few long rants containing the words, “Bail-out”, “AIG”, “TARP”, “ZIRP”, “Madoff”, “hedge fund”, “lower interest payment”, “mutually beneficial”, “fair” and “frustrated”, I discovered what could be the buzz word of 2009, “Loan Modification”.

Although it’s conceivable I could be just fine paying my current loans, I’m not very confident. My income is not what was expected and I’m just barely making the payments. As a result, I’m not able to save any money, let alone buy anything for my house, which looks like a warehouse. I have added a room mate which is helping, but it’s likely he’ll move because his company was bought-out and they’re relocating him. I’m out of stashes of expensive photography gear to bail me out when something breaks. If I’m laid-off, that’s it I’m toast and so are these loans! I think I have a secure job, but we’ve already cut 25% last year, and it’s not certain I won’t be next.

What I would like to do is lower the interest payment on my loans by lowering the interest rate to somewhere between 4.5 and 5% to give myself some breathing room. That would lower my payment by $500. The only brown spot on my credit report is my “outstanding loan balance, i.e. these mortgages”, my FICO when I bought the house was 755, and it’s probably not below 730 right now. I would think it would be mutually beneficial to both lender and borrower, i.e. give me some breathing room to help absorb my lost income and the default risk goes down!

Sorry to write a short-story, but I wanted to make my situation as clear as I could. What are my options for making the case for loan modification? I’ve read some of the stories of other people on hear, and I seems getting a loan modification isn’t exactly 15 minutes of filling out paper work. Before I even ask Wells Fargo about this I want to know how to approach them. Any advice here and I would be very thankful. Even if it's, "you're complete clueless dude"!

01-06-2009, 08:42 PM	#1 (permalink)
NegateEquity Junior Member Join Date: Jan 2009 Posts: 1 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Wells 30yr $380k 1st & $48k 2nd – No Equity, Loan Modification Advice This all started two weeks ago when I noticed how low mortgage interest rates had gotten. I immediately plugged the numbers in my spreadsheet and about fell out of my chair when I saw how much lower my payments would be with a 4.750% interest rate. Both of my loans through Wells Fargo are good loans and never delinquent. My 1st is a 30 year at 5.99% with a $380k balance and the 2nd HEL is a 30 year as well at 7.75% with a balance of $48k. I bought this house at the age of 25 last year for $481k, my first house. Theoretically on day one I had 10% equity. At the time I knew what I getting myself into… Just like everyone else, I had a rough 2008 financially. Around mid-year I took a pay cut and had my car and computer die in a period of a couple weeks. Not very rough by other standards. I financed my new car ($7500 2002 Focus) with what little cash I had without putting myself in jeopardy of missing any payments, and a $5k loan against my 401k, which I’m scheduled to pay off in 1yr on July of this year 2009. I did this for two reasons, 1) I don’t have a clean driving record and I didn’t want to pay to insure it, so I wanted to hold title, the 401k loan allowed me to do that, 2) I don’t like used car interest rates and 3) I knew my 401k funds weren’t going anywhere but down, I was allocated to >70% cash/bonds back in January 2008. To pay for a new computer (I build my own so $600 got me state-of the-art) I pawned off my Canon DSLR equipment for about $3k with the remaining funds going towards preparing for my property tax bills. As far as the value of my house goes, the good news is, the county assessor “temporarily” valued the home at $415k, so my property taxes would be much less then anticipated. The bad news is my equity had evaporated and I was now underwater (got to love contradicting analogies). Coupled with the supplemental tax bill, property taxes for 2008-2009 would still be close to $8k. I paid my first installment exactly on time in December. The Zillow.com “Zestimate” values my home at just $385k, which could be representative of the low-end. I explored the refinancing option two weeks ago. That was a complete bust. One lender I like needed LTV < 90%. Just to refinancing the 1st I would need to assess at $418k and the note holder on the 2nd would need to sign a subordination agreement. Both of which are not likely to happen. After a few long rants containing the words, “Bail-out”, “AIG”, “TARP”, “ZIRP”, “Madoff”, “hedge fund”, “lower interest payment”, “mutually beneficial”, “fair” and “frustrated”, I discovered what could be the buzz word of 2009, “Loan Modification”. Although it’s conceivable I could be just fine paying my current loans, I’m not very confident. My income is not what was expected and I’m just barely making the payments. As a result, I’m not able to save any money, let alone buy anything for my house, which looks like a warehouse. I have added a room mate which is helping, but it’s likely he’ll move because his company was bought-out and they’re relocating him. I’m out of stashes of expensive photography gear to bail me out when something breaks. If I’m laid-off, that’s it I’m toast and so are these loans! I think I have a secure job, but we’ve already cut 25% last year, and it’s not certain I won’t be next. What I would like to do is lower the interest payment on my loans by lowering the interest rate to somewhere between 4.5 and 5% to give myself some breathing room. That would lower my payment by $500. The only brown spot on my credit report is my “outstanding loan balance, i.e. these mortgages”, my FICO when I bought the house was 755, and it’s probably not below 730 right now. I would think it would be mutually beneficial to both lender and borrower, i.e. give me some breathing room to help absorb my lost income and the default risk goes down! Sorry to write a short-story, but I wanted to make my situation as clear as I could. What are my options for making the case for loan modification? I’ve read some of the stories of other people on hear, and I seems getting a loan modification isn’t exactly 15 minutes of filling out paper work. Before I even ask Wells Fargo about this I want to know how to approach them. Any advice here and I would be very thankful. Even if it's, "you're complete clueless dude"!