Loan Modification CitiFinancial

[ama06483]

To All,

I'm completely new to this. I have begun learning about loan modifications only because I have been solicited by companies offering the service to negoiate with your bank to obtain a loan modification. All of which upon some investigating on my part have proven to be frauds or have complaints filed, etc.

Can someone who is not educated or savvy obtain a loan modification? Are there reputable companies that can obtain results on a fee basis?

My situation is my mortgage is current but my property taxes which were never included in the mortgage payments are past due and killing our family budget trying to pay them down and get caught up expecially in light of the 18% interest they charge and I don't know of any way to negotiate with them. My house likely has no equity, our credit is bad, but if there was some way to get the back taxes amortized into the back end of the mortgage the situation would be affordable. Does anyone here have any advice for me?

[jakelabry]

Well, eventually your mortgage company will pay the taxes because they don't want the house seized for back taxes. Unfortunately they will add this amount to your payment and then proceed to escrow your account for taxes. Paying back past due taxes and the added escrow account will increase your monthly payment.

What state are you in and how many years worth of taxes do you owe?

[ama06483]

Thank you for your reply and your help. I owe $26,000 which is about 31/2 years worth of back taxes. I'd just as soon they escrow the taxes not to get into this trouble again. Right now my mortgage is at 7% $2,271 per month but I've been paying $1,000 a month additional to the tax people to keep them off my back. Do you think I could get the interest rate lowered a bit or would the bank simply pay taxes and just add it in. What would be the first step you would advise I take?

[jakelabry]

The first step would be to call the bank and see if you qualify for a loan modification -that would make the most sense. Two simple questions to determine possible qualification - 1)is your current payment greater than 31% of your gross income, and 2)have you experienced some sort of economic hardship recently? The goal of these modification programs is to get your total 1st mortgage payment, including principle, interest, taxes, and insurance, to 31% of your gross income. We already know you are not escrowing your taxes, how about your homeowners insurance? If you get a modification then they will insist on escrowing both taxes and insurance - plus they would pay the delinquent taxes and add them to your loan.

[ama06483]

Thank you again. My homeowners insurance is not included in the mortgage payment either. If I am doing the math right, my gorss monthly income is $8,376 per month so 31% would be $2596. That would include taxes, insurance and the mortagae principle and interest. If I were to add up my current circumstance the mortgage is $2,271 the taxes are $591 per month and insurance is $84 that adds up to $2,946 so the opportunity might be $600 per month?

One question when you mentioned one of the qualifiers being mortgage payment being 31% does that in my case mean adding up the mortgage, insurance and monthly property taxes? If that is the case I am over 31%. However just on the mortgage alone I am under how would they view that?

[jakelabry]

Thank you again. My homeowners insurance is not included in the mortgage payment either. If I am doing the math right, my gorss monthly income is $8,376 per month so 31% would be $2596. That would include taxes, insurance and the mortagae principle and interest. If I were to add up my current circumstance the mortgage is $2,271 the taxes are $591 per month and insurance is $84 that adds up to $2,946 so the opportunity might be $600 per month?

One question when you mentioned one of the qualifiers being mortgage payment being 31% does that in my case mean adding up the mortgage, insurance and monthly property taxes? If that is the case I am over 31%. However just on the mortgage alone I am under how would they view that?

Yeah, the 31% is supposed to include taxes and insurance. In your case, subtract $84 and $591 from your 31% of $2596 and that leaves you with a P & I payment of $1924 - they can get this by reducing interest, extending term, or doing both. I think you said your current interest rate is 7%? Are you paying principle and interest now or interest only? What is the balance on your mortgage? Don't forget, you got a lot of back taxes to add to your loan amount.

They will want to see a hardship as well! And not paying your taxes for 3.5 years doesn't exactly qualify as a hardship.

[ama06483]

I am paying P&I. I was paying interest only for a time. My balance is $331,400. At one time a few years back the loan had adjusted up to 9% my payment was over $2700 per month. this is when I got into trouble. The bank gave me what they called a forebearance which lowered the payment to $2,271 but for a long while the principle was unchanged from month to month, only recently have I seen the balance change when I make a payment. Do you think given the circumstances I could by a mitigation keep the payment under $2,600 taxes and insurance included and get the back taxes paid? One thing that got me into the back tax situation is when I took this mortgage with them my income was much less. Also are there reputable attorneys, etc that can negotiate these things for a homeowner? The ones I keep running into all come back with complaints with BBB, etc.

[jakelabry]

I personally think using attorneys is a waste of money.

It wouldn't take much to get your payment down - a drop of 1% to 6% is all you need. The big elephant in the room is those unpaid taxes. I am really shocked the lender hasn't stepped in yet and paid them. Are you in California? You say you are in a repayment plan with the back taxes? This is with the city/county I presume?

The first thing you gotta do is contact the lender. Is your loan FHA, Fannie, Freddie, or VA? These things make a difference!

[ama06483]

First of all I appreciate the guideance. My loan isn't FHA, Fannie, Freddie or VA etc. I have talked to my local loan servicer in the past regarding the back taxes which they were well aware of and they said I couldn't do it but they were more talking in terms of a refianace which I proabaly can't do from a combination of a bad credit rating and I'm not sure there's any equity in the house and that they would not amoritize the back taxes. I'm in Connecticut, I have an informal payment plan with the town. They say they officially don't accept payment plans but if I keep paying $1,000 a month towards the back taxes they don't take any action but they keep collecting the interest.

How do I go about contact the lender? I've heard horror stories about people not knowing the correct people to call at Citi and getting a complete runaround and bad information. What's your advice knowing my situation, who would I contact to get a decision maker and what should I do?