Las Vegas Homeowner should return the property keys to the lender.

[pwrought]

Hi,

I have a Fannie Mae loan with the 5 years ARM option that will increase my rate from 6.25% to something I do not know yet. I also have a second mortgage with citi financial for $25,000. I called countrywide 6 months before this new payments starts and was told that if I wasn't 5 months late I would not be able to get the loan modified. I listened to the bank rep. and started to miss my payments. They put me on forbearance for 3 months and offered my a loan modification making my payments lower, but not helping me with the principal. I could get a settlement with my second mortgage for my $25,000 loan and they offered me to pay $3,000 to settle.I brought the house back in 2004 for $250,000 and now is worth $84,000. Contrywide put me on a new plan with a 40 years fixed. ( What a joke).
My house is 75% down in price and there is not a modification from Countrywide that will help me. They only offers interesting down for 5 years, but I will have to pay all the late fee plus late payments in the back of the loan making my problem even worse leaving me with no other choice than short sale my property and wait 7 months to 1 year to buy a home that will be affordable. I found condos in Summerlin for $40,000 ( 2 bed and 2 baths) which makes me even more desperate to get away from my home.
Any suggestion or ideas?

[gray517]

No Lenders are giving principal reductions regardless of your situation and unfortuneately most people who own a home now have lost value and many are underwater on thier loans. But because they love thier home, have personal attachments to the home (raised their kids there) or have put money and sweat equity into thier home they have decided to fight and try to keep the home. When you get a modifiction regardless of the lender, type of modification or how you go about getting it, the standard way of doing a modification is to add the interest portion of your past due payments as well as any escrow shortage and fees for things like inspections to the back end of the loan, this is how all modifications are done regardless if they reduce your rate or extend the term. A lot of people on this forum have used Naca (non-profit whose services are free) to obtain modifcations with lower rates and lower affordable payments, I personally got 2 modifications using them and my payment is now lower than what I would pay for rent in this area. What most people don't realize is that if you get your loan modified with a lower affordable payment it is actually cheaper then renting and at least you are paying on something you own instead of paying rent where the money goes into a corporation pocket or to make someone else's mortgage payment depending on what you are renting. And buying a house after a foreclosure isn't as easy as people might think and if you walk away and wait 5-7 years to buy a house who is to say prices won't be up again by then plus you would have paid to live somewhere for those 5-7 years and that money will be gone and you will have nothing to show for it. I can not advise you what to do but if you want to keep you home with an affordable payment you may want to try working with Naca their restructures are for the life of the loan, so the lower rate and payment would be for the entire life of the loan and not a temporary fix. Good Luck in whatever path you take.

[pwrought]

Thank you for the information, but I want to let you know that many lenders are working with principal reduction. Litton loan serving bank is offering a 20% to 30% reduction on most of the modifications. What I noticed was that CW, Wells Fargo and Citi Mortgage are the only banks that is making impossible for homeowner to get help and no principal reduction. I thought that those banks received a large amount of government money couple of months ago. Where is the money that supposed to be used to help us Americans tax payers? If you have CW as you mortgage serving the only option is short sale, deed in lieu or foreclose. Their loan modification is a joke.

[laurap]

pwrought,
i'm in the same situation and i can understand your frustration. i want to keep my home only if they reduce the principal, otherwise after 2 or 3 years if you want to move out of the house there is no way you can sell it at that time. actually with the only interest rate reduction, you are stuck in that home for who knows how long maybe 8-10 years!!
with a short sale, from what i understand you can buy a home in another 2 years if you put money down. what do you think? CW is very hard to deal....

[gray517]

I have not seen or heard in the news, this forum or any other site on the internet where anyone has actually gotten a principal reduction, there have been stories of 2nd mortgages settled for cash amount. Most modification firms and attorneys keep advertising they can do this but have not seen a single result where that has happened and having experience in the real estate area (title examiner) with contacts in every aspect of the business, have not heard of a single reduction. Many people on this forum are using Naca to obtain lower fixed rate for the life of the loan modifications, thier services are free.

[rozuki]

Since I have no plans to go anywhere for at least 10 years and the fact that I would be paying much more to rent in my area (for a much smaller space), the low fixed interest rate NACA managed to get for me from CW/BofA, made sense in my case.

I am sure that is true for a lot of people going through this whole process. Not to mention having to uproot families, etc.

The fact that NACA's services are free is truly the only bright side to this whole economic fiasco going on in this country...

[CW California]

Originally Posted by gray517

I have not seen or heard in the news, this forum or any other site on the internet where anyone has actually gotten a principal reduction, there have been stories of 2nd mortgages settled for cash amount. Most modification firms and attorneys keep advertising they can do this but have not seen a single result where that has happened and having experience in the real estate area (title examiner) with contacts in every aspect of the business, have not heard of a single reduction. Many people on this forum are using Naca to obtain lower fixed rate for the life of the loan modifications, thier services are free.

Isn't the whole idea of settling the 2nds interesting. I mean after all, if all those 20's of the 80/20's went away peoples homes might be worth what they owe. I wonder if it's possible to do it and still keep your house or if you need to settle them on a short sale only?

[pwrought]

I heard from a friend who was 7 months late in her mortgage with litton bank and had a principal reduction from $345,000 to $180,000. Several people who deal with Litton bank, GM bank , US bank and other small banks are getting principal reduction in their loans. Countrywide is not doing it at all.
Now the second mortgage companies are helping distress homeowners to settle their loan for $0.20 on the dollar. The started to realize that it is not worth for them to foreclose the home. I also learned from an attorney that the second cannot foreclose your home, but they can sue you or send you to collection. Call your second lender and work on a settlement if it is your goal, but if you are thinking about short sale just don't give anything to your second. Usually when they agree to the terms of the short sale, the second will probably forgive your debt.

[gray517]

Litton is a loan servicer (link below) the type of assistance a borrower gets from them depends mostly on the investor and what the investor will offer. And you were misinformed, yes a 2nd mortgage can legally foreclose on thier mortgage interest. Most 2nd mtg lenders choose not to since they will need to take over the 1st mtg or pay it off since it has a priority lien, but some 2nd lenders do foreclose, it depends on several factor including loan balances, value of property etc. and in a short sale if the 2nd does not agree to settle or forgive the debt it will remain a lien on the property regardless of who owns it. A mortgage is attached to the property that was used for collateral.


from thier website and they are not participating in the making home affordable plan:

We are unable to assist you with refinancing as we are a mortgage servicer and do not originate loans. You may wish to contact a lending institution in your area for refinancing options
https://www.littonloan.com/fin_info1.asp

I assume in your post above you meant GMAC not GM Bank since GM Bank doesn't offer mortgages and GMAC is participating in the making home affordable and is not offering principal reductions

Homeowner Help

GM bank doesn't do mortgages
Services

US Bank is participting in the making home affordable plan
Making Home Affordable - Loan Modification and Refinance


Most of the people that come to this forum are looking for help in trying to save thier home or just looking for solace in knowing they are not alone in this mess and each must make a personal decision to either stay or walk away, if a short sale works for your situation then I wish you the best of luck! However, there has not been a single documented case posted here or in many of the other internet sites nor in the news of a principal reduction especially like the ones you have posted. I have been thru 2 successful Naca Modifications myself and if you want to keep your home this is the way to go. Good Luck in whatever path your choose

[pwrought]

The person who got this was a coworker at the casino where I work. They had the intention to foreclose the home so they could go rent something for a couple of years and then get a cheaper property. Before the home goes to foreclose the bank called them and offer a 30% reduction in their primary mortgage and write off their second. The bank that did this was litton bank. I also know other people who had the same luck, but with different banks.
YES YOU CAN GET A PRINCIPAL REDUCTION. CW JUST DO NOT WANT TO DO IT.

[graytmom]

We are also in Vegas and have been dealing with Litton for 11 months. When we finally received the modification offer it included $25000 in late fees, interest etc, and it was at a 3% for only 5 years then the interest rate goes up again. (That is what started this whole mess in the first place!) Add that to the loss in value of the home and some major repair that has come up the choice was made to walk away. We would have been more open to take this deal if a loan to value would have been offered but to increase the loan amount and the interest being adjustable we don't want to take a chance to have to redo this mess in a few years. As I do love my home and have great memories in it I also can't see starting out this new loan with such a large portion of it being upside down just to save a memory. My credit is now so bad anyway if I walk away and file foreclosure and bankruptcy I can start fresh. Whatever choice you make or is made for you I wish you the best.