This forum has some great information, and I appreciate the information I've found here so far. I have read some really great advice, but I also have questions related to my own situation. I pray this recession/depression will be over soon.
Here's a bit of my story: Home purchased mid 2006, $280k. Current value $140k - good ol Arizona! 1st mortgage is $224K, 2nd is $56k both are interest only loans, both will adjust to prin+interest in 2011, a ways off, but still going to happen. If I can't afford the interest only now, how willl I afford the "real" payment later?! This is what the cust serv for the 1st (Provident Funding) told me on the phone, so why would I even try or fill out and send in this packet if they have their minds made up? Should I try anyway?
Missed 4 payments already, beginning Dec 08. Family business got super slow over the fall/winter, construction company - bad business to be in these days in AZ, but it was great two years ago along with the value of this house! 1st mortgage sent me a modification application as well as a foreclosure auction date scheduled for early June. I did the hardship letter, filled out their application, I have bank statements ready, tax return, BUT I have not faxed it in yet: do I really want to do this? Or should I just walk away from a house that's not worth half, but what will happen if I do? My credit is already in the pits, so no worries there.
The immediate future is looking good on the business now as we picked up some solid contracts, but the cash flow is slow currently. I'm late on everything from credit cards to car payments. Considering bankruptcy too. I can afford to pay the 1st payment soon $1200/mo., but not the $6600 I need to stop foreclosure. Should I send in this modification packet, I just don't believe they will help. I think they just want to know what $ I have/make and right now and I won't look good by the bank statements I have. I don't even think I would qualify for this house and I know I didn't before! They already told me that if I can't afford the interest only payment, how do I expect to afford anything "real" if they modify it? Should I send it in anyway to see what happens? Or just start packing?
Recourse/non-recourse?: I never had 20% down. But I don't have an 80/20 loan, I don't think. The 2nd is actually a HELOC at WF. But it was the 20% down or appeared to be. The 2nd papers were signed a few days later to pay back the 20% I never had, that was loaned me to fund my 1st loan for a few days, following? Creative financing with the help/suggestion of the loan officer, who now says "you shouldn't have bought a house you couldn't afford!". She's the one who told me the house was worth $340K at the time and I could always refinance before the loan adjusts. Anyway, back to the next question; is the second loan, or heloc, going to be recouse even if it was actually the down payment, but it doesn't appear to be? Will I be sued for the heloc (because they will not get paid from an auction sale or even a normal sale due to the value now) Will I be sued for it if I do walk away or if I go ahead and apply for a modification and get denied and foreclosed on anyway? This is my primary residence, only home I own. I live in Arizona. Thanks for your help.
And honestly, if you were in my position, what would you do?