Going to attempt a Countrywide Loan Mod, advice needed please

[NoahSi]

I have been reading the forum posts constantly for about a week now. As a lot of people did from 2004 – 2007 I get in way over my head on two properties because income was good at the time and funding came easy.

Primary Residence
1^st - ING 1,020,000 5.50% 5/1 Arm IO = 4675/mo
2^nd - Chase 250,000 7.00% 30 yr fixed = 1754/mo
We paid $1,275,000 in Dec 2006 and current value is probably $900,000

**I am afraid we must walk from this home or short sale as we can no longer come close to affording it with property taxes + mortgage payments. What we want to do is move back to our condo which is now being rented out – which countrywide holds the 1^st on. Here is that scenario:

Investment Property (want to move into as soon as we sell/foreclose on our primary residence)
1^st Countrywide – 510,000 Neg Am 6.00% - Minimum pmt 1510/mo + 1800/mo impound acct (see below) – Principal climbing quickly!
2^nd Popular Mortgage – 110,000 HELOC around 6.00% pmt 650/mo
We have impounded taxes on the Countrywide loan of $1800/mo!! (current impounds plus approx $9,000 in back taxes spread out over 12 months)
Current Value = $360,000 per appraiser
We are 30 days late on both loans as of Nov 1^st.

My income has taken a pretty big hit being in the past month so I know we cannot afford both homes – but I want to try and hang onto the condo if I can get some sort of loan modification either reducing principal or putting us into a low 5/1 IO and spreading the impounded taxes over a longer period.

What do you think my chances are and what is the first step? Will we have any chance at principal reduction given the fact we want to move back in and make it our primary?

What is my first step? Thanks so much for any advice given!

[elpjohnson]

Noahsi......

Welcome to the forum and thanks so much for joining......soon a moderator will be by to answer your questions and give you some sound advice. In the meantime, hang in there, we are here for you!

[NoahSi]

Thanks Elp! I don't know how I got myself (and family) in this situation...all I know is I need to do the best to get us out and fix it so we can try and move on and not be stressed every day worrying about it. It has eaten at me for the past 2 yrs and now that I'm trying to find answers and solutions it seems every person or company I call gives me different answers and I don't know what to do anymore. Sorry for rambling...

[elpjohnson]

Noah....

You're not rambling..... I just wanted you to know that we're going to help you through this.....have you written your hardship letter yet? There's a thread with some really good examples in it. Also, get you income/expense worksheet together with a small surplus of $100-$250 per month ready too....Cat will be by soon to give you more advice.

[Cat Damiano]

Hi NoahSi,

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


Just give me a minute here...........I am doing some research before commenting with the Professor...........because the occupancy scenarios need to be thought out first...............to allow you the best possible outcome here..

I am assuming that these properties are in California correct?

Are the loans on the principle residence the original purchase money loans?

[NoahSi]

Hi Cat, yes both CA. Both homes 2nd loans are cash out 2nds unfortunately

[Professor Shays]

I'm going to tackle both of these but before I do, I'll need some more information. What I sense is that you originally occupied the condo as your residence (hence your use of the words "move back to our condo"). So let's start with questions relating to the condo and then next we will deal with the house.

1. What state is the condo located in?
2. Was the condo purchased for occupancy as your primary residence?
3. Were the two loans identified below created at the time your purchased the condo?
1^st Countrywide – 510,000 Neg Am 6.00% - Minimum pmt 1510/mo + 1800/mo impound acct (see below) – Principal climbing quickly!
2^nd Popular Mortgage – 110,000 HELOC around 6.00% pmt 650/mo

Next let's look at the home.

1. What state is the home located in?
2. Was the home purchased for occupancy as your primary residence?
3. Were the two loans identified below created at the time your purchased the condo?
1^st - ING 1,020,000 5.50% 5/1 Arm IO = 4675/mo
2^nd - Chase 250,000 7.00% 30 yr fixed = 1754/mo


I don't normally follow this forum so if I don't respond in twenty-four (24) hours after you answer the questions, give me a nudge on the "walk away" forum.

Daniel

[NoahSi]

Thank you Professor here are the answers to your questions:

Condo
1. Located in CA
2. Yes condo was originally purchased in 2004 as primary residence (lived there until 2006 - now renting it out)
3. Both loans were refinanced and not the original loan taken out on property. 2nd was a cash out HELOC

SFR
1. Located in CA
2. Yes purchased in 2006 as primary residence
3. We put 20% down and got a 1st of 1,020,000 with ING. Then about a month later took out the 20% as cash for landscaping, upgrades, etc (I know, stupid!)

Let me know if you have any other questions. My main concern is of course if we foreclose on the primary that the 2nd (Chase) will come after us and place a judgement for the $250,000. And I was seeing if its even worth it to try and do a loan modification and hope for principal reduction or some crazy 2-3% fixed rate for the condo - we have come to terms that we can no longer afford big primary SFR and must move back to condo to make things work and relieve the stress. Thanks for your time!

Noah Si

[NoahSi]

ElpJohnson,

Yes I saw the example hardship letters they are great - and I am currently working on mine. I am also working on an expense to income spreadsheet - I just dont know what to tell Countrywide about our other loans on our primary residence that we know we cannot afford. Do I tell them we will have to foreclose or short sale? Do I include those payments knowing that I can no longer make them and will probably not have those loans in 6 months or so? Thanks!

[Professor Shays]

Given the situation on the single family residence being underwater relative to the first loan alone, my sense is you are facing a serious issue with Chase. Frankly they can't be expected to do much relative to the property other than let it go, as you appear headed to do, back to ING through the foreclosure of the first loan. The other problem you face with Chase is that $250K is just too large to fall through the *****s. My recommendation, but you already know that, is to seek the "short sale" path and hope for the best. If you find a buyer, perhaps Chase would be willing for a small portion of the sales proceeds, to go along with the sale and accept the money as a full satisfaction of the debt. It is certainly worth a try.

Your exposure on the condo exists because of the refinance. That exposure, given that the first loan will likely follow a non-judicial foreclosure path (just like the holder of the first will do on the SFR).

My recommendation is that you talk to a bankruptcy lawyer and get some ideas relating to that path. We are talking about sizable debt and there may be some benefit in choosing that path.

Daniel