How long should this take?

[cageycruz]

Hope you guys can offer some advice.

I bought my house in 2003 for $810k, about average for a 4BR 2BA in this county. I financed 80% First + 10% Second + 10% down. First TD was 3 year Countrywide ARM at 4.75%. After 3 years it jacked to 7.5%. I refinanced, it appraised at $1000k, so I rolled 1st and 2nd into $800k 30 year fixed at 6.25%. Also got a HELOC from ETrade for $120k to use just in case of financial emergency.

Then prices here (Santa Cruz, CA) dropped 27%, my salary got cut 53%, and ETrade canceled the HELOC (balance is $0). All of a sudden salary + rent I get from extra bedrooms and an accessory dwelling on the property - mortgage - taxes is a net negative. I'm draining my savings and will lose it all in a few months.

I'm still current on all payments, over 800 credit score, but confirmed the house is worth less than the balance. Attempts to sell have gotten no offers so far.

So in Jan I hired Grander Financial to assist with a loan restructuring. Checked them out, money back guarantee, BBB approves. Sent them partial payment, documents and a hardship letter. They send it on to B of A who says it's going to their "Obama Team" and expect an answer in 60-90 days. Three months go by, then Grander says it's going to a different program at B of A and expect an answer in 60-90 days. Three more months have now gone by and the B of A website now shows only "Documents received" in late May and no word from Grander.

If we just can get the interest rate down to today's market, about 4.75-5%, I can make it work. But B of A says it's a jumbo loan so the best they can do is 7.5% fixed. And nobody will refi 109% LTV so it'd have to be a short refi if I could get it. But I can't qualify anymore because of the drop in salary.

I'm particularly concerned that the refi may have turned this into a recourse loan. I spent the proceeds on a new deck, added another BR + 1/2 BA, and kitchen repairs. How can I tell?

So what next? Give Grander more time? Do these things usually take this long? Or demand money back from Grander, start over with an attorney or NACA or somebody?

Thanks for reading.

[Nathan Fransen Esq.]

cageycruz,
You raise several good questions. I will do my best to provide an answer without giving too much specific legal advice. These forums are difficult because i have to be careful not to create an attorney-client relationship inadvertantly.

That being said, lets start with "recourse loans". Let me first give you some homework to do. Take a look at California Civil Code Section 580d. This code section deals with lenders rights for deficiency following a trustee sale. Also check out: Security Pacific National Bank v. Wozab, (1990) 51 Cal. 3d 991. This case deals with lenders options in the event a borrower is in default.

What you will likely find is that the first lien holder does not have the ability to pursue a deficiency judgment after a trustee sale. Again, do your own homework to confirm. Something else you may consider is having an attorney draft an "opinion letter". My office does a fair amount of these. Basically you can present the attorney with your situation and questions and have them respond in a written format with supported research. I have found this is very helpful for piece of mind and planning.

As to your questions regarding Grander Financial, i can't offer much on that. It is in deed possible that your lender is taking several months and Grander is doing everything they can at this point. Of course it is also possible that they are not doing enough. I would suggest you continue to stay in contact with them as well as your lender at this point.

Best Regards,