My Modification Terms with EMC - Need your opinion TODAY! - Mortgage Forum

ciscokidinsf · 09-13-2009, 12:50 PM

Well, it happened. I got the modification, although NOT the MHAP one I wanted. The bad news is, I was out of town for work last week. Just arrived today and the Modification acceptance is due tomorrow. So, take a look at it. I'm not sure if its good or not, and it does not mention the 2nd mortgage at all.

Original Terms: $480K on an 80/20, Monthly payment after both of them was: $3,400/month (1st was a fixed 30yr for 5.75%, 2nd was also a 30 yr fixed at a very high 11%)

NEW MODIFIED TERMS:

Adjusted Unpaid Principal Balance: $415,101 reamortized over 480 months. (40 years?)
$21,550 is deferred so $393,000 bears interest
Maturity date is Sept 1st 2035
New Payment (1st only or not sure here what about 2nd one) $2,115

Payments are as follows:

Interest only payments for the 1-5 years at 5.00%
Interest only payments for the 6-10 years at 5.14%
Years 11-26 is interest and principal payments at 5.14%

Balloon Payment (Yikes!) of $229,000 due either upon selling the property of finishing the loan payments

So.... not really sure if this is a good deal or not, first because it doesn't say what happens to the 2nd mortgage. (Although the papers do say that under the terms, if I accept this modification and make payments, EMC cannot foreclose)

For those of you who may have received something, let me know if this is similar. I need to call my real-estate agent to evaluate this, and this thing is due tomorrow. I really worry about signing, because plan B is to sell the property, and I worry if I sign the modification, then I won't be able to see without adding the balloon payment to what I owe (In this case $635K) The house is probably south of $420K right now. Probably an even $400K.

A penny for your thoughts, please!

MAXIE19 · 09-13-2009, 01:03 PM

Cisco:

What is the breakdown of your first and second mortgage with regards to principal balance, monthly payment and escrow?

I suspect the breakdown will not affect my opinion of this offer, but still will like to know before rendering my opinion.

MAXIE19 · 09-13-2009, 01:08 PM

Also, what is your monthly income......are these payments any close to 31% of your gross income?

MAXIE19 · 09-13-2009, 01:10 PM

Where you behind in payments.....if so, by how many months.....what is the total amount of your arrearage?

ciscokidinsf · 09-13-2009, 01:18 PM

1st one: $2,817
2nd one: $652.07

I didn't have Escrow on my original ones. I paid my own taxes and HOA (HOA is $355 month/ Taxes are $480/month)

The modi is supposed to include taxes and a portion of HOA. Good deal, except that the balloon payment is huge.

What I am not clear is that if there is a pre-payment penalty. (e.g. if I refinance in 3-4 years from now) The way I read it, I think the balloon payment would become due.

I was 'not' behind per say, when I was unemployed for 6 months, I made my 'forbearance' payments all on time. Right now I am only behind on the 2nd one, which I stopped payment when I started the modi process on the first one. This modified payment is actually more like 37% of my take home pay, not including the 2nd one. But this is it, I cannot pay anymore, so I plan to let the 2nd one go bad if they are still expecting payment on it.

MAXIE19 · 09-13-2009, 01:53 PM

Does the $480 amount include taxes and insurance or just taxes? Also, the fixed rate of 5.75% was that interest only or was that principal and interest? I think you will need to analyze these various factors to determine whether this is a viable offer.

If your previous loan term included both principal and interest, I do not see how EMC can offer an interest only modified payment as a sustainable solution. If your previous loan term was just interest only, then their offer may be a little bit more palatable.

Do not feel rushed into accepting an offer that you have not had enough to deliberate on. Call the executive team in the morning, let them know you have been out of town and just returned, and would need more time to consider the offer. Get that offer to a real estate attorney ASAP.

MAXIE19 · 09-13-2009, 01:59 PM

Also, understand that with the forbearance payments, even when you make your modified payments on time, you are still technically behind because you are not making your full monthly loan payments. The deferred amount is not forgiven but rolled into your principal which may have contributed to the large balloon payment. Notwithstanding, ask questions and seek clarifications before signing your name to any legally binding document.

litehouse01 · 09-13-2009, 03:18 PM

if you don't mind my asking how long did it take you to receive this offer from chase? In other words how many trial payments did you have to make before receiving this offer? So they didn't call you first to go over the terms..Just Fed Ex it to you?

ciscokidinsf · 09-13-2009, 03:58 PM

Both my loans were setup to pay principal and interest. Although obviously on the 2nd loan it was like 95% interest and 5% principal

Yes, I was in forbearance for six months, but my payments were only short on total approx $950 per month from their original amounts. Even if you add all the amounts I am behind of, it is roughly no more than $10K. There is no way in hell that translates to a balloon payment of close to $300K. The more I think about it, it seems like an 'interest-only' refi than a true modification.

$480 was taxes ONLY, the HOA covers my property insurance.

If I had been approved under MHAP, the payment could have been a TOTAL of $1907 for everything. Now I assume I make this $2,225 AND let the 2nd mortgage go unpaid and let a charge-off happen.

As for how long it took... more like 4 months and a half, I started under the trial payments in May. I made 4 trial payments, but I was a total and complete pest, calling EMC everyday for 4 months.

Dunno, I will call tomorrow but really doubt I can get a hold of someone to discuss the specifics.

ciscokidinsf · 09-13-2009, 06:31 PM

OK, so I worked the numbers of the 'proposed modification' from EMC vs. my current mortgage as it was originally (30yr fixed) and guess what? Basically its all smoke and mirrors and no real savings. The balloon payment + the re-amortization of the loan for 40 years (instead of the 26 I have left) makes the savings near-zero at the end of the loan. (and/or whether I sell or refinance)

Below, I'm not even counting my last 4 months of 'trial payments', just what I've paid so far. Sure, under the mod, I pay less per month on the first 10 years, but that is because there is now a balloon payment + a 'deferred' payment at the end to reckon with. These numbers are the mortgage payments only, NOT INCLUDING taxes and HOA. Here is the skinny:

Current Mortgage Terms
$1,014,210.00 Total of Payments after 30 years

Proposed Modification Terms
$121,157.66 Already Paid July 05- Jan 09
$ 9,500.00 Forbearance Paid Feb 09 - Jun 09
$ 98,388.00 Years 1-5 interest Only
$101,142.60 Years 6-10 interest Only
$412,122.24 Years 11-26 interest & principal
$228,949.00 Balloon Payment (due at end, sale or refi)
$ 21,550.00 "Deferred" Payment (due at end, sale, or refi)

$992,809.50 Total Under prop modification after 26 years

$21,400.50 Savings over 30 yrs
$713.35 Savings per Year
$59.45 Savings per month

Jeebus Cripes, they must think I am retarded or desperate, or both. Plus, they don't even say if the 2nd mortgage is charged off. I would take the deal only IF the 2nd one is charged off in writing, and that would at least justify 50% of the balloon payment. As it is, the numbers point out to a savings of less than $60 a month.

OK, so tomorrow I'll call and ask if they will charge off the 2nd one in writing, or start looking in between short sales and deed in lieu. I still want to be told why I did not qualify for the MHAP.

Looking desperate here folks. House is about 30% packed, we'll be squatting here by this Christmas to get that extra Dickensian mood this holiday season.

litehouse01 · 10-27-2009, 10:07 PM

Were you originally doing the Hamp/MHA trial payments and they said you didn't quailify and then gave you this mod under an inhouse program without even letting you know they had switched you? Did you originally start out in the Making homes affordable plan?

ciscokidinsf · 10-27-2009, 11:17 PM

Quote:

Originally Posted by litehouse01

Were you originally doing the Hamp/MHA trial payments and they said you didn't quailify and then gave you this mod under an inhouse program without even letting you know they had switched you? Did you originally start out in the Making homes affordable plan?

Yes, exactly. I filled out the MHAP forms and was given a payment under the 31% of gross guidelines for the 90 day trial payments. At the end, they claimed I didn't qualify for the MHAP and offered me the interest only + balloon payment bullshit modification a month ago. I declined, but agonized about it.

I've even spend 3 days at the NACA event in San Francisco a week ago, hoping that talking person-to-person to a Chase representative under the NACA folks would help. It didn't. They offered the exact same modi and wanted me to start all over with a trial period. I 'accepted' but just to stop the collection calls and late fees for the next 45 days. House is in the market and has been for 3 weeks. Every week I reduce the price by $10K

At least I got over my anxiety about rejecting the modification. I don't want to leave my house, but EMC's modification offer is utter lunacy and a bad financial decision any way you look at it. They don't lose or adjust anything at all in the long run.