Should I turn down 3rd offer?

[shazloco]

I desprately need advice... Recently got our first mortgage with citimortgage modified with a HAMP mod. Our second is with Flagstar and I have not made a payment since March 2009.
The house is worth $350,000
1st mortgage is $226,000,00
2nd is $419,000 (this includes the missed payments, original amount was $380,000).
Flagstar made us the offer of 4% interest, 50ARM, 7 year balloon. This was their 3rd offer( I turned down the other 2 offers) and final offer. They told me to take it or they foreclose. We agreed to take it with the intention of once signing the mod we would than try again for a better mod.

The new payment is doable for us but the 7 year balloon is ridiculous because we are so underwater there will be no equity to refinance in 7 years and the whole foreclosure process will begin again. My thought is by taking their offer now we are buying some time and I will try and modified into a fixed for the term loan at a later date! Does this make sense? or should we not sign the papers and see if they are bluffing.

The 2 previous offers I turned down my gut told me they were bluffing, this time I am not so sure as they will get about $70,000.00 after expenses if they foreclose. We verbally agreed to the mod 2 months ago and still no paperwork, according to my negotiator things are moving but at a snails pace! I am trading one stupid loan - interest only, adjustable ARm for a stupid 7 year balloon term! I don't think this should be allowed!

Also your thoughts on this... Flagstars legal dept tell me that Flagstar owns our loan but loss mitigation dept tells me it is a securitized loan owned by investors and the only reason they can offer me a mod is because they are buying back the loan from the investors - has any one heard of that before?

I would love some feed back on what others would do if in this situation - Is there something I should be doing/contacting while waiting for the paperwork that could help our cause.
I look forward to your replies.

[Evan Bedard]

The new payment is doable for us but the 7 year balloon is ridiculous because we are so underwater there will be no equity to refinance in 7 years and the whole foreclosure process will begin again. My thought is by taking their offer now we are buying some time and I will try and modified into a fixed for the term loan at a later date! Does this make sense? or should we not sign the papers and see if they are bluffing.

Hi shazloco,

Yes this makes perfect sense and actually is a very good idea. If it is affordable now you may want to take it to prevent foreclosure since you haven't paid since then. You can always again try for something better, but at this point they may go ahead and begin foreclosure. But if they have not drawn up the paperwork see if your negotiator can help you better the terms. Verbal means nothing, its when you receive it in writing that counts.

[shazloco]

Thanks Evan for the reply. I hate second guessing my choices so it is very helpfull getting your opinion. I have tried with our negotiator for better terms, she said this offer came from managment. I was told they are already "going outside the box" with this offer, they actually went from 5years to 7 years after "managment review", and was told take it or leave it!
What are your thoughts on them saying they are buying the loan back from the investors? And who would you beleive the legal dept who say Flagstar owns the loan or loss mitigation who say it is securitized, owned by investors.?

[shazloco]

Hi shazloco,

Yes this makes perfect sense and actually is a very good idea. If it is affordable now you may want to take it to prevent foreclosure since you haven't paid since then. You can always again try for something better, but at this point they may go ahead and begin foreclosure. But if they have not drawn up the paperwork see if your negotiator can help you better the terms. Verbal means nothing, its when you receive it in writing that counts.

Thank you Evan for the reply, I actually responded to your reply last night but I don't see that it posted! - I'm not very computer literate! I appreciated your opinion/advice as I hate second guessing myself.
I have tried with the negotiator for better terms on their offer. The previous offer was a 5 year balloon and after i requested a managment review they bumped it up to 7 years and told me to take it or leave it. They said they were already "going outside the box" by offering me these terms and this is the final offer - this is all coming from the negotiater! I'm afraid to keep pushing incase they take back the offer altogether- What do you think?

What are your thoughts on Flagstar buying back the loan from the Investors? Who would you beleive, legal dept who say Flagstar owns the loan or loss Mit. who say it is a securitized loan, owned by investors? Can these loans be bought back?