CW and Obama Plan

[Carona]

Hello Loan Safers,

We had our first phone conversation with CW today and their tactic is to make you feel really rich. Or perhaps we are. Briefly, we have a 1st with CW for $544,000 and a 2nd with HSBC for $138,000. Our home is currently worth approx. $435,000. The third owner of the property is walking away (and we have agreed) leaving us to pay the whole mortgage unless we rent our her space which needs loads of soundproofing. We could afford to pay the whole mortgage, but with no money to spare for the inevitable home repairs, car repairs, doggie bills, etc. The CW rep suggested we pay minimum on our credit cards and pull from our retirement. And since I'm a teacher, I should get a summer job. Yes, we can afford our payments NOW, but when interest rates shoot up (and they will) we will be unable to feed the monster any longer. Plus, we would like to have the whole house so we can grow our family and not be landlords. But, I'm willing to concede that perhaps we're being a bit unrealistic during these tough economic times.

So, here's my question: is it a right or privilege to be able to pay off credit cards, have a retirement fund, and have a little money left over to take your family out to dinner? Or do you truly only have a "hardship" when your credit is overextended, your retirement fund is empty, you're unemployed, and your family is on food stamps?

We have an appointment with NACA on Tuesday, but I don't want to waste their time if our situation is not as dire as others. Please advise.

Thanks,
Biggest Mistake I Ever Made Was Buying a House in California

[FLgata]

NACA is probably a good choice. If they can help you, they will make a proposal for a restructured loan (fixed at lower rate) and base their proposal upon your current income.

Good luck and keep us posted!

[lugson]

Originally Posted by Carona

Hello Loan Safers,

We have an appointment with NACA on Tuesday, but I don't want to waste their time if our situation is not as dire as others. Please advise.

Carona,
Everyone has a right to to a decent loan. Definitely keep your appointment with NACA. Good luck!

[dthom]

Definitely keep the NACA appointment. They will not make you feel like you are wasting their time. Like lugson said everyone deserves a decent loan. Just because you can pay your other bills at this time doesn't mean you don't have a hardship. We paid all of our bills too, but cut back on little things, like food (lol) to get by, until one of us got laid off. Then those credit cards didn't seem so important anymore, but we don't feel good about ourselves anymore. Easy for CW to say pull from retirement account, they don't have to pay the penalties for early withdrawal. CW told us to rent out a room in our house. I told them I didn't have a spare room to rent. Then they just thanked me for paying on time and told me to keep up the good payment history, end of story. Called NACA

[Carona]

I read in the SF Chronicle that Bank of America will participate in the new Obama plan. Does that mean that CW will too since it's owned by B of A? Or are they? I'm confused as to who's who?

And, if they are indeed participating, do we contact them or will they reach out to us? (Yeah, right)

Thanks!

[Moe Bedard]

CW has already agreed............

Countrywide Financial - Real Estate Mortgage Lender - Home Loans - Equity Loan Mortgages

[Carona]

Hello Loan Safers,

We just can't figure it out what to do. Do we continue to pay or not while fighting to get "in line" for a loan modification? I keep hearing and reading conflicting information. Some say that it's the only way to get the lender's attention, others say that all your penalties, etc. will be embedded in your modification making it more costly than before, not to mention the trashed credit score. Plus, the new Obama program mentions something about not being delinquent.

Help!!! What's the best tactic to take advantage of the new programs and get help.....to pay or not to pay while attempting a loan mod?

Thanks,
Carona

[Moe Bedard]

With the new program................you can either all ready be in default or not................you would just need to show the hardship...........

Do borrowers need to be delinquent in order to qualify for a Home Affordable Modification?

No. Responsible borrowers who are struggling to remain current on their mortgage payments are eligible if they are at risk of imminent default, for example, because they have had or will soon have a significant increase in their mortgage payment that they cannot afford. A servicer participating in the program must screen every current borrower who contacts the servicer and meets the minimum eligibility criteria to determine if they are at risk of imminent default.


Will the Home Affordable Modification help borrowers who can easily afford their current payment but whose property value is now less than the amount they owe?

No. Home Affordable Modifications are designed to prevent foreclosures by making mortgage payments affordable for working homeowners struggling to retain homeownership. The plan is not intended to replace equity lost by home price depreciation. However, by preventing avoidable foreclosures, the plan is expected to stabilize and eventually strengthen property values which will benefit all homeowners.



Please ask questions and keep updates here in the original thread.........it makes it alot easier to follow your story for other members going through the same..............and also to be able to answer questions without having to go back and forth between threads...........

[Carona]

Thanks for your reply, ***. Here's another question about this part of the new plan:

"Second Lien Elimination Payments:

To reduce the borrower’s overall indebtedness and improve loan
performance, additional incentives will be provided to extinguish junior
liens on homes with first-lien loans that are modified under the program. "

Who negotiates this possibility? Does the first lien holder or the borrower? Paying our second to HSBC is literally like burning money since the house is valued $100,000 less than the first mortgage with CW.

Thanks!

[Moe Bedard]

You would need to go through HSBC as the servicer to see if the investor is participating..........

Second Liens:

While eligible loan modifications will not require any participation by second lien holders, the program will include additional incentives to extinguish second liens on loans modified under the program, in order to reduce the overall indebtedness of the borrower and improve loan performance. Servicers will be eligible to receive compensation when they contact second lien holders and extinguish valid junior liens (according to a schedule to be specified by the Treasury Department, depending in part on combined loan to value). Servicers will be reimbursed for the release according to the specified schedule, and will also receive an extra $250 for obtaining a release of a valid second lien.

Under the Home Affordable Modification program, junior lien holders will be required to subordinate to the modified loan. However, through the Home Affordable Modification an incentive payment of up to $1,000 is available to pay off junior lien holders. Servicers are eligible to receive an additional $500 incentive payment for efforts made to extinguish second liens on loans modified under this program.

[nymess]

Has there been any word on which banks will or will not participate in this 2nd lien holder program.( what is a jr lien holder?)

[The Professor]

Carona:

Given your situation, I would recommend that you come over to the "walk away" forum and post your situation, specifically answering the questions below. Speaking from the perspective of "teacher to teacher," you know as I do that you shouldn't make a decision without knowing all of the alternatives. Without having an understanding of your rights under California law, the decisions you make relative to continuing forward or accepting modifications may not be in your best interests.

Questions:

1. What is the fair market value of your home?
2. With regard to the loans on your property, what is the current balance of each, and were the loans created at the time you bought the home and their entire proceeds used to buy the home.
3. At the time you bought the home did you intend to occupy it as your primary residence.

Daniel

[Carona]

Hi Professor Shay,

I've probably read all of your posts in all of the other forums and have learned a tremendous amount. Thank you.
In regards to your questions:
1) Market Value maybe $450-$500
2) CW 1st at $544 and HSBC 2nd at $138. Here is where it gets confusing. Although both were made as purchase money, the HSBC one used to be a Wells Fargo Home Equity Line, but then our mortgage broker suggested we refie it into the HSBC HELOC. I fear this is what will haunt us, even though we've never used the money for anything but purchase money. The fact that we changed from Wells to HSBC makes me feel it is recourse. Is this so??
3)Yes, it is our primary residence that we've lived in for four years. Our economic hardship is based on the fact that the third owner (Tenant-In-Common) has decided to walk away (we've agreed) leaving us with this huge mortgage of $680. No buyout since there is no equity and no down payment was made. She knows that her credit will be ruined if we can't get a loan mod and we were willing to take on the fight to possibly have the whole house. The downstairs is an in-law that is not soundproofed enough from our 2 1/2 year old toddler or even the daily life of a tenant who lives there. Plus we would like to grow our family.

Thanks for any advice,
Carona