Question about CW Loan Mod offer letter...

[gavintiegirl]

Let me start by saying, I am in good standing with CW. I do have an interest only pay option ARM that I have had for about 3 years now and I am not late on any payments. However, I have been making the minimum payments for most of the 3 years. What this means is that my loan went up $18K dollars in 3 years.

When we entered into this loan we were not planning on being in the house long, so we figured why bother paying down the principal, especially with the way the prices are going up. We might as well pay off high interest debt and take vacations. Well, as we all know, the prices went down and as a result we can't make a profit on our house at this time. Between our first mortgage and our second mortgage we are at about 90%. We had called Countrywide about a month ago regarding refinancing our 1st and 2nd into a 30 year fixed rate, but we were told that we need to get our principal down about $20K to be at 80%. That's not happening anytime soon.

So, my husband and I were surprised to receive a letter from Countrywide this week stating that we are pre-qualifed for a loan modification program using a 5/1 ARM. The loan modification will lower our interest rate from 7.5% to 5.37% and the lower interest rate will stay at 5.37% for 5 years. The loan will still be an interest only, but with the lower interest rate, our payments will be about the same as we are paying now and our mortgage will stop going up each month.

I am wondering if this is the right thing to do?
It sounds too good to be true. Just like the original ARM that got us into this in the first place.

I am wondering if entering into a loan modification agreement with CW will negatively effect mine and my husband's credit rating?
We are not in a dire situation and can make our existing interest only payments, we have just been bad and have chosen not to. It seems like a no brainer to take a lower interest rate and just continue to pay the interest only for 5 years with the possibilty of extra money thrown in from month to month. Who knows where we will be in 5 years or what the housing market will be like.

Is this 5/1 ARM loan Modification another scam? Is it the right way to go?

Sorry so long - thanks in advance for your answers.

[lighthouse]

GGirl, hi I'm sure 110% this is the right thing to do , 7.5% to 5.37% is a very good deal, at least you are paying the interest of the loan monthly instead of just paying the minimum payment which put your unpaid interest to the principal loan.pretty sure this is not a scam....

[Cat Damiano]

Hi gavintiegirl,

Welcome to the forum and thank you for joining...........

Some of the investors on the CW loans are being proactive and reaching out to their customers..........especially the option arms.....so we have seen this before........there isn't any reason for you not to take the offer because it will put you in a better financial position with whatever you choose to do down the road....
as far as credit goes........it will not affect your good credit standing to take the offer..........just keep on them to make sure that they update their systems to reflect the new terms on your account.

If you have a bit of doubt, what you need to do is to call the customer service number for a CSR off of your statment and make sure that the offer is authentic.......for your own peace of mind.....

It is a really great offer for you........

[gavintiegirl]

The most important questions I have are:

Will entering into a loan mod w/ CW negatively effect our credit reports (like when you enter into an agreement with a debt management company)?

And....

Will we be putting ourselves in a negative situation with CW? I read somewhere on here that if you enter into a loan mod you are no longer allowed to make your payments online.

I just don't want to put myself into a negative situation when we are okay where we are minus the higher interest rate. Sometimes eating the fire is better than being burned by it. Ya know. LOL!

[gavintiegirl]

Originally Posted by Cat Damiano

Hi gavintiegirl,

Welcome to the forum and thank you for joining...........

Some of the investors on the CW loans are being proactive and reaching out to their customers..........especially the option arms.....so we have seen this before........there isn't any reason for you not to take the offer because it will put you in a better financial position with whatever you choose to do down the road....
as far as credit goes........it will not affect your good credit standing to take the offer..........just keep on them to make sure that they update their systems to reflect the new terms on your account.

If you have a bit of doubt, what you need to do is to call the customer service number for a CSR off of your statment and make sure that the offer is authentic.......for your own peace of mind.....

It is a really great offer for you........

Thank you for your quick response.

I did speak with CW today and the customer service person explained everything to me. The fee to do the loan mod is $499 out of pocket, which I was told is normally $1,200 dollars.

I told her I would speak to my husband and get back to her. I wanted to do some research this time around before entering into anything.

I was planning to pay the larger interest only payment this month, so instead I will pay the minimum and use the rest to pay the $499 fee and be on my way to a lower interest rate for 5 years and stop that awful negative amoritization.

Thanks for your help here.

[donna317]

...just curious...did this letter start off with....Dear (your first and last name)
and did it give you a personal reference number?

I just posted this week with a letter I received last year...with 5/1 advantage pay option....it also had an expiration date...signed by a Jennifer Hickey, loan modification manager....out of the Texas office....

If so, then maybe there is hope for me!