Indymac: need help with unusual situation - Loan Modification Forum

aiken · 04-13-2009, 01:40 PM

Hi, everyone. I'm glad I found this place.

I'm stuck in a difficult situation, and I'm afraid I've fallen through the cracks of the various loan mod / refi options. I'm hoping someone here can help.

I own a house in Hawaii, where I lived from 2005-2007. At the beginning of 2007, I moved to Seattle to get my MBA at UW. I am now partway through that and will graduate in June 2010. My place in Hawaii is rented out, of course covering only about half of the mortgage/HOA expense. That's the only house I own and I don't consider myself a speculator -- I want to move back when school is done!

Of course, the property is underwater, and worth only about 85% of the mortgage balance.

On top of that, I'm self employed. I'm more or less making ends meet, but I'm looking at hitting bankruptcy in July if nothing changes. My loan in Hawaii is an ARM that is currently at 7.25%. If I could refi at current rates it would likely make the difference of being able to stay afloat.

As far as I can tell, I'm largely out of luck because I don't live in the house. I'm tempted to bail on UW and move back to Hawaii so I can live in the place and refi it, but it's a >$70K school commitment here I'd be bailing on part way through.

Of course, being a full time student and trying to work to stay afloat, I'm really having a hard time finding time to deal with this, but I have to. I'm happy to pay lawyers or whatever, but I'm not even sure where to start. Do I want a Hawaii lawyer, or a Washington one?

Can someone more knowledgeable help? I'm open to any ideas!

maxx233 · 04-13-2009, 03:28 PM

I would say you want a hawaii lawyer probably, and let them know your intention is to get a loan modification, I can't imagine they'd have much to offer other than knowing who to talk to though. From the sounds of things, and my own experience, the bank won't even talk loan modifications til you miss payments. But if you miss payments, you should be ready (mentally/emotionally) to go all the way to foreclosure - banks can do some pretty silly things that may force you into it if you miss payments - such as stacking on so much extra fees and charges that you *can't* bring it current. Or it may just be a wakeup call to them and they'll suddenly start talking Mods, just depends. Which bank are you dealing with?

CaWalker · 04-13-2009, 04:28 PM

DO NOT GIVE UP SCHOOL. Education is always a better investment than your house.

I agree to maxx233, talk to a hawaii lawyer, or better yet, talk to your bank and tell them you foresee difficulty in making payments in the near future and want to know what mod programs they have.

15% underwater is not too much, comparing to some personal friends I know who've lost 50%. A good rate mod might do the trick for you.

Good luck, welcome to the forum and keep posting updates.

aiken · 04-13-2009, 04:55 PM

Thanks for the replies.

The bank is Indymac. I've talked to them and they basically say "fill out the paperwork, but if you're not living in the house we're not going to do anything because you're a speculator."

I'll look for a Hawaii lawyer. If I could just refi to 5% or so, I could probably hang in there. And yeah, I've lost considerably more than 15%, because at one point I had a fair amount of equity. Ouch.

maxx233 · 04-14-2009, 01:42 PM

I definitely agree that 15% isn't much (forgot to mention that earlier), and again reiterate that if you stop making the payments you should be fully prepared to walk, not just call their bluff and get the mods - even though that's the real goal.

They may just say 15% off the top of the loan is a more acceptable loss than reducing your interest rate over the course of the loan. For instance, if your mortgage is 300k and the house is now worth 255k that's a 45k loss if they foreclose and sell it now. But if your payments are 3500/mn and they reduce them to 2000/mn that's a 1500/mn loss * 12=18k/yr loss, which over just 3 years ends up costing the bank 54k with the only end to their lost potential income being the 30 year term of the loan - unless you can bargain for an exploding IO ARM and believe you can take care of it in 3-5 years from now. Sadly, It might just make more business sense for them to take the loss now while the government is wiping their ass with money :/

04-13-2009, 01:40 PM	#1 (permalink)
aiken Junior Member Join Date: Apr 2009 Posts: 2 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Indymac: need help with unusual situation Hi, everyone. I'm glad I found this place. I'm stuck in a difficult situation, and I'm afraid I've fallen through the cracks of the various loan mod / refi options. I'm hoping someone here can help. I own a house in Hawaii, where I lived from 2005-2007. At the beginning of 2007, I moved to Seattle to get my MBA at UW. I am now partway through that and will graduate in June 2010. My place in Hawaii is rented out, of course covering only about half of the mortgage/HOA expense. That's the only house I own and I don't consider myself a speculator -- I want to move back when school is done! Of course, the property is underwater, and worth only about 85% of the mortgage balance. On top of that, I'm self employed. I'm more or less making ends meet, but I'm looking at hitting bankruptcy in July if nothing changes. My loan in Hawaii is an ARM that is currently at 7.25%. If I could refi at current rates it would likely make the difference of being able to stay afloat. As far as I can tell, I'm largely out of luck because I don't live in the house. I'm tempted to bail on UW and move back to Hawaii so I can live in the place and refi it, but it's a >$70K school commitment here I'd be bailing on part way through. Of course, being a full time student and trying to work to stay afloat, I'm really having a hard time finding time to deal with this, but I have to. I'm happy to pay lawyers or whatever, but I'm not even sure where to start. Do I want a Hawaii lawyer, or a Washington one? Can someone more knowledgeable help? I'm open to any ideas!

04-13-2009, 03:28 PM	#2 (permalink)
maxx233 Senior Member Join Date: Mar 2009 Location: California Posts: 58 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: Indymac: need help with unusual situation I would say you want a hawaii lawyer probably, and let them know your intention is to get a loan modification, I can't imagine they'd have much to offer other than knowing who to talk to though. From the sounds of things, and my own experience, the bank won't even talk loan modifications til you miss payments. But if you miss payments, you should be ready (mentally/emotionally) to go all the way to foreclosure - banks can do some pretty silly things that may force you into it if you miss payments - such as stacking on so much extra fees and charges that you can't bring it current. Or it may just be a wakeup call to them and they'll suddenly start talking Mods, just depends. Which bank are you dealing with?

04-13-2009, 04:28 PM	#3 (permalink)
CaWalker Senior Member Join Date: Sep 2008 Location: Greater Sacramento Region Posts: 104 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: Indymac: need help with unusual situation DO NOT GIVE UP SCHOOL. Education is always a better investment than your house. I agree to maxx233, talk to a hawaii lawyer, or better yet, talk to your bank and tell them you foresee difficulty in making payments in the near future and want to know what mod programs they have. 15% underwater is not too much, comparing to some personal friends I know who've lost 50%. A good rate mod might do the trick for you. Good luck, welcome to the forum and keep posting updates. __________________ $365K loan 80/20. Both with WF Current house value: 240K. Now reduced to 215K Last payment: Nov 2008 NOD: Mar 16 Current Status: WF working on a Loan Mod under the Obama Plan.

04-13-2009, 04:55 PM	#4 (permalink)
aiken Junior Member Join Date: Apr 2009 Posts: 2 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: Indymac: need help with unusual situation Thanks for the replies. The bank is Indymac. I've talked to them and they basically say "fill out the paperwork, but if you're not living in the house we're not going to do anything because you're a speculator." I'll look for a Hawaii lawyer. If I could just refi to 5% or so, I could probably hang in there. And yeah, I've lost considerably more than 15%, because at one point I had a fair amount of equity. Ouch.

04-14-2009, 01:42 PM	#5 (permalink)
maxx233 Senior Member Join Date: Mar 2009 Location: California Posts: 58 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: Indymac: need help with unusual situation I definitely agree that 15% isn't much (forgot to mention that earlier), and again reiterate that if you stop making the payments you should be fully prepared to walk, not just call their bluff and get the mods - even though that's the real goal. They may just say 15% off the top of the loan is a more acceptable loss than reducing your interest rate over the course of the loan. For instance, if your mortgage is 300k and the house is now worth 255k that's a 45k loss if they foreclose and sell it now. But if your payments are 3500/mn and they reduce them to 2000/mn that's a 1500/mn loss * 12=18k/yr loss, which over just 3 years ends up costing the bank 54k with the only end to their lost potential income being the 30 year term of the loan - unless you can bargain for an exploding IO ARM and believe you can take care of it in 3-5 years from now. Sadly, It might just make more business sense for them to take the loss now while the government is wiping their ass with money :/

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