First Franklin (Home Loan Services) Won't Modify Our Loan

[mitkoff]

Hi,

We bought our home (80/20) for $535K 100% financing in Feb. 2006. In Feb. 2008 just before the ARM reset, we received a modification which lowered the rate slightly for 2 more years. Our notes are held with U.S. Bank and serviced through First Franklin.

We have since had a string of overwhelming financial burdens that has caused us to be 1 month behind on our 1st mort. and 2 months behind on our 2nd mort.

I have spoken to a negotiator at Home Loan Services who told us that the guidelines prevents her from doing nothing more than getting us caught up, which will raise our payments when we are needing to lower them.

Question:

1. Is there something more that we can do with the negotiator?

The negotiator told us to stay current on the 1st, but clearly implied to stop paying the second. She stated that yes, the 2nd can foreclose, but it will not take it to court. She said that most 2nd are simply written off.

Question:

1. Does that mean that we have a non-recourse 2nd and,
   if we did stop paying the second, what are the realistic reprocusions?

We love our home. We want to honor our debt obligations, but we just need a break. The best thing in our situation would be to refiniance both in to a 40 or 50 year fixed. However, elimintaing the 2nd mort. would help too.

WHAT SHOULD WE DO? WHAT ARE OUR NEXT STEPS?

Any help or suggestions would be greatly appreciated.