Our Story - Short Sale, Countrywide Madness

[Joe55]

First of all thanks for this forum and all the dedicated posters and moderators. It really brings to light how big this mortgage problem is. I appreciate being able to read other stories and receive input

Our long story; My wife and I have been maried for 21 years and have four teenagers. She is a stay at home mom. We have never had financial problems but have faced some significant challenges over the last couple of years. We have a first mortgage with CW of around $260K and a HELOC with CW (BofA) for 140K. In Mid 2006 I was laid off; income went to zero. After several months we burned through our life savings and seeing the severity of the problem contacted all of our creditors inlcuding CW. At the time we were not behind on any payments, but it was coming. Bottom line, no one offered any help. In August of 07 I found employment but at a substantually lower income (120K to 70K), but it is with a great company. My wife found employment but her salary does not come close to making up the difference. Prior to finding re-employment we started to fall behind on our $3,100 mortgage. After a period of time it became evident we wouldn't be able to keep our home. We put it for sale. Only two offers of 270K. Submitted both to Countrywide for short sale; they took too long (over 90 days) to evaluate and both buyers walked.

We met with an attorney and the only option presented was to file Chapter 13. We did so. We knew there were only two options at the time for our home 1) foreclosure or 2) shortsale. After talking to CW they said they would foreclose in 90 days. Because of this we decided to find some place else to live so we found a great place of which the rent is $1,700. This was emotional but at the end of the day we know a home is where you make it, not four walls with sheet rock on them.

We wanted to do the "right" thing, as right as we could anyway. So, we continued to keep the home up, paid the HOA dues, kept it in show condition and kept it listed. 8 Months went by and no bites, no more offers. At the same time CW was contacted numerous time. The Chapter 13 filing stopped the foreclosure but because the payment was too high we knew it was coming. We didn't want to abandon the house.

During this 8 months a lot has changed. Two months I received a promotion, my salary has increased to nearly what I was making in 2006 and my wife is working, (although we would like her to work only part time with four kids at home). We are now starting to rebuild our financial situation. NOW we can afford the payment. I have called CW and asked what can be done. What I would like is that they take the arrears and tack it on to the principle and let us start making our regular payments. However, they want to increase our payments to $4,250 per month to make up the arrears in 18 months. Basically they looked at our finances and took everything they say we have "extra" every month. So, if anything happes; medical bills, emergency, etc. we're toast again. Doesn't make sense to me and I don't think I would "sign up" for this.

Now, having said that, we've already dealt with the emotion of this loss so we need work this from a logic side. Our credit which was 780 plus I am sure is in the toilet. We're not planning on buying anything on credit anyway, so we understand and are alright with this. What the foreclosure does the Chapter 13 filing already did. So, the credit score is moot point. We love(d) our home but we are over 150K upside down. Does it make sense to jump back in now that we have already relocated settled somewhere else? (I know only "we" can answer that...)

Dealing with CW has been madening; there are plenty of stories on this forum to bring this to light. I call, I sumbit paperwork, etc. I cannot seem to get them to understand that putting 18K of arrears on the backside of the loan and letting us start making payments is better for them than taking a $150K loss by foreclosing on our home.

Our investor is Freddie Mac and CW is saying they will not do a Loan Modification which is what is required to put the arrears on to the principle balance.

If what they are telling me is true (input anyone?) than it looks like my options are $4,250 payment leaving us no extra at the end of the month for 18 months, or foreclosure. As I said we have four teenagers, so insurance will be going up, college, books etc.. will increase over this time.

Input or ideas? All are greatly appreciated.

This is a somewhat unique situation but perhaps someone can help us navigate these waters.

Thanks,

Joe

[CW California]

Joe,
My heart goes out to you. CW mostly defies any kind of reason or logic. Who have you spoken to at CW? Perhaps you could appeal to the Executive office and get assigned a decent negotiator. I thought having a Freddie Mac loan was a good thing. At least better than having a securitized mortgage loan.

There are a lot of people on this site with a lot of good information. I'm sure someone will be along soon with some input.

[Joe55]

Thanks CW. I have talked to several people and I am not entirely sure I have been assigned a "Negotiator". One time I called they told me no problem - send us a letter of hardship, tax return and two paystubs. This was Theresa. She said as long as they can prove the problem that caused us to go behind on our payments were corrected they could just put the arrears on the principle and move forward. This sounded great. We do not need them to reduce interest rates, modify terms etc.

Once I got all that paperwork together I went to fax it and got a voice line. So I called and talked to an girl named Amber and and she took my financial info and entered it into the computer and it came back with "recommendation" of paying the arrears over 18 months raising our payment by $1250 per month based on income. They excluded a lot of the legitimate expenses we had. This is just not practical; we need to pay medical, education and other expenses we have. She said that there was no one else to talk to, the decisions are put into the computer program. She said she would submit the recommendation for approval, even I after I said that would NOT work. What a mess...

Joe.

[Irish Gal]

Joe55,

Welcome! I too have CW (1st note) and I am trying the short sale route but because of the market, the most likely outcome will be foreclosure. I am ok w/ that as I am $100K upside down and both my loans are non-recourse (CA). CW (now BofA) is one of the most predatory of lenders and its sole goal is to make customers part with their hard-earned $$$. Nothing you say matters to them in their decisionmaking process about loan mods (IMO). And, as your read more and more here, you will learn more and more about how this rotten process works (for most). IMO, most of the loan mods are predatory and not helpful to distressed homeowners. Many folks who get mods default again w/in mos because the terms of the mods are so lousy. Also, it's the investors on the loans who authorize any modifications and also determine what the terms will be. As CW now is aware of your good financial fortune again (back on your feet again and with a decent income, by the way good for you in this terrible job market ), their goal is to get as much of that good fortune from you as they can . If you make more, they demand to take more. If you make less, they take what they can get. I rejected 2 rotten CW mod offers last year as both continued to be predatory. And, unless CW agreed to principal reduction w/ lowered interest rate for life of loan, I am better off walking and starting over. It's all a game with the lenders and with the goal to get the most they can from you re mods. It's definitely not what makes sense or in helping you stay on your home. Some lenders prefer to foreclose on folks as they get reimbursed by folks like AIG for their loss. Read "Racoon" story on this site. The lenders / investors usually agree to whatever avenue makes them the most $$$$. If it's foreclousre, that's their route. Your instincts re CW are excellent and I would trust your gut and tendency to poo poo anything CW tells you. And beware. There are a lot of smart, savvy folks on this site. I would read, read, read here and educate yourself more on your options. Prof Shays (member on this site) is an excellent resource as he's a foreclosure expert and can provide specific feedback re your situation. You may also want to consult a real estate attorney experienced in debt collection in your area re best option and any legal ramifications / liabilities down the road for you if you decide to foreclose. If you decide to fight for a decent loan mod, you have to work with the loan mod dept folks which is listed on this site somewhere (not CW collections who are mostly morons ). There's also an org named NACA (free, housing nonprofit) that gets good deals for folks and many folks bypass dealing w/ CW altogether and just go through NACA. That's listed here somewhere too. As for short sales, according to FICO, the credit ding is the same whether short sale, deed in lieu or foreclosure. But, agents hype the short sale route as they want the commission. And, of course, the lenders love to promote the short sale route and then make any offers impossible to actually close. So, many homeowners are walking vs. short selling to avoid the hassle. Anyways, I think you are on the right track with your instinct to not automatically cooperate w/ whatever some CW rep is trying to get you to agree to. Basically, CW wants to exploit your good fortune now that they know about it (IMO) . So, gather more info here, try to touch base with the Prof, and know that many real estate attys do not charge for a 15 min tel consult re your current homeowner situation. Good luck !

[Walking Away]

Hey Joe; you have an interesting situation. I'd suggest you rent based on the fact that it sounds like you'll be living paycheck to paycheck for the next 18 months and you sense it will create major stress at times and an unhappy homes at times. The monetary difference for you in owning and renting is huge each month. You've done your best; so why work hard and live pay check to paycheck and have financial stress if you don't have to? Is it worth it? You could save enough the next 3 years by renting, that you might be able to buy a simliar house for $50,000 less than what you owe on this one anyway. Maybe more depending on home values where you live. Just look at the numbers. You can rent for $1,700/month instead of paying $4250/month. So you'd save $2550/month for the first 18 months. And then you'd save $1,400/month each month after. That's a huge difference. That's close to $50,000 you'd save in just the 1st 18 months alone. And over $80,000 the 1st 3 years. Plus, what about home repairs and all the time and money spent fixing up the house or paying people? That's also more money for you and your family. In the end; do what's best for you and your family. Good luck Joe

[kateistired]

The reps at CW can change the recommendation. They just need to manipulate the data a little I called back in Oct. First they said modification was what the computer recommended. I told them I didn't want to do that. Then they said, ok repayment plan. I called them back the next day, and said, please cancel the repayment plan and put me up for a modification ( I know, a little indecisive). Don't let them tell you that you have no other options. Keep calling until you get a rep to put you up for a modification. It sounds ridiculous, but it has actually worked for a number of people. I think every rep has their own way of putting data in the computer and making the numbers work.

[CW California]

Originally Posted by Walking Away

Hey Joe; you have an interesting situation. I'd suggest you rent based on the fact that it sounds like you'll be living paycheck to paycheck for the next 18 months and you sense it will create major stress at times and an unhappy homes at times. The monetary difference for you in owning and renting is huge each month. You've done your best; so why work hard and live pay check to paycheck and have financial stress if you don't have to? Is it worth it? You could save enough the next 3 years by renting, that you might be able to buy a simliar house for $50,000 less than what you owe on this one anyway. Maybe more depending on home values where you live. Just look at the numbers. You can rent for $1,700/month instead of paying $4250/month. So you'd save $2550/month for the first 18 months. And then you'd save $1,400/month each month after. That's a huge difference. That's close to $50,000 you'd save in just the 1st 18 months alone. And over $80,000 the 1st 3 years. Plus, what about home repairs and all the time and money spent fixing up the house or paying people? That's also more money for you and your family. In the end; do what's best for you and your family. Good luck Joe

Joe
While it's true you save on the payments on the mortgage v rent don't forget to consider the downside of paying way more in taxes.

I hope you can get a better modification. Sounds like they are just driving a tough bargain. Call their bluff!

[Joe55]

Thanks for all the input, I will keep you posted.

[gjbrum111]

how do you escalate to the executive offices to get assigned
a good negotiator?