am i screwed?

[emeselle]

I have a loan with Countrywide for my townhouse in San Diego. As with a lot of people these days, I am upside down. I know that refinancing is out of the question, but here's my dilemma.... I had an opportunity to move in to a place and live rent free, so I decide to rent my townhouse. The rent only covers a little more than half the mortgage payment. I'm on an option ARM and am able to pay the amortized amount with the help of the rent money. I would like to hold onto the property as long as possible, but without renters I will not be able to.... unless I'm willing to keep adding on to my principle (negative amortization). I have not talked to Countrywide yet. After reading through some of these horror stories, I'm feeling a bit intimidated. Would they even consider modifying my loan?

Any advice would be greatly appreciated....

I'm okay for now... just terrified of losing my renters.

[Cat Damiano]

Hi emeselle,

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

You would need to call them to get the process started and to see what options the investor on your loan has...........that is the only way you will be able to know................

You would need to start by putting together a hardship letter and and income/expense sheet (there are examples in the Homeowner Tool Box to the left of the forum) and then call................

Countrywide Home Retention
1-800-669-6650


Please keep us posted on your progress.........

[emeselle]

I just wanted to update you all on my progress. I finally gave Countrywide a call. We discussed my options and they offered a loan mod for a fixed rate interest only for 10 years. I just need to fax over my latest pay stub and the rental agreement. I was also told that after they pull my credit and analyze my debt to income ratio, my payments may go down further and my loan extended to 40 years.

I was so worried that they wouldn't even work with me since I have stayed current all this time. Let's just hope that once I get the documents faxed over there won't be any hiccups in the process.

[Cat Damiano]

emeselle,

Thank you for the update.............so happy they are working with you!

Good Luck on the mod..........it sounds good so far.......

[Moe]

I wanted to pipe in here for a second. My work has kept me busy off the forum lately and sometimes I miss these threads, but it is important that everyone understands whats going on around them.

Recently, the California AG had reacehed a billion dollar settlement with Countrywide/BofA that includes these nasty pay option ARM's. Read the order here.

I wrote a lengthy blog post on Loan Modification & Home Loan News - LoanWorkout.org about the details etc.
Countrywide & Bank of America Attorney General Lawsuit and Settlemnet Details | Loan Modification & Home Loan News

Even if you quality for the settlement program, you will, generally, be notified starting on December 1. Independent of your qualifications, however, you still are obligated to make payments on your existing loan agreement until the modification fully goes into effect; as a result, you should always go forward assuming that you will have to make complete payments on the existing loan until you receive a firm modification offer (even after receiving an offer you should consult with a professional advisor to go over the details.)
Keep in mind that if your home is currently in foreclosure, the settlement does not reverse the procedure unless you meet the specific terms of the agreement - while you can consult the lender, they are not necessarily legally obligated to stop all foreclosure proceedings that have already begun, and are only suspending proceedings for those who meet the narrow terms as outlined in the agreement (this affects some 390,000 home owners, leaving many more outside of the scope.) As a result, you’ll have to contact a private attorney to help you navigate the individual details of your situation.


Keep in mind that loan modifications, under the settlement, are restricted to homeowners who are more than 60 days delinquent on their current subprime or pay option, ARM mortgages that are managed by Countrywide. If you have a loan with another lender, then your particular situation does not strictly apply to the settlement, and you will have to pursue the normal channels of working with your loan modification offices to reach a mutually acceptable agreement. Additionally, if you have another form of loan with



Countrywide or if you originated your mortgage before 2004 or since the beginning of this year, then the settlement terms also will not apply in your case.


The equity of your home also plays into the equation: if you owe less than 3/4 of the current market value of your home, then the loan modification agreement also will not apply to your case. While this leaves out a large pool of borrowers, there are still other routes that you can take to reaching a new agreement, namely working with Countrywide on an individual basis to reach an agreement.


The exact terms of your modification will be determined by Countrywide as a product of the criterion they established to reflect both the income of the borrower, as well as the appraised value of the home relative to the principle amount. While most borrowers will be eligible for a reduced interest rate option or transformation of their loan to an interest-based mortgage over a shorter time period (generally, the conversions will be to five or ten year terms.)



The lowering of principle amounts is determined at the discretion of Countrywide, and is a function of the current market value of the home and your home equity position - only those who owe above 95% of the current home value might qualify (although home values can be subjective, Countrywide determines these based on 3rd party appraisals.)


Further, the exact interest rate reductions are determined by Countrywide, which can issue either temporary or permanent modification offers on interest - while some instances may provide temporary reductions at 3.5% or below, each case will be evaluated individually according to the agreement.


Keep in mind that the modification offer must be mutually agreed upon by both parties, and no fees can be levied under the terms of the settlement. If you are currently up to date on your loan, but anticipate financial pressures in the near future, then the terms of the agreement extend until June 2012 for those who qualify. (see California Attorney General News)