Hope someone will help point me in the right direction.
We are current on our existing first mortgage which is interest only for another 7 years, then converts to an interest + principal loan (with wells fargo).
I'd lost my job and went underemployed for 2 years as I retrained myself and my wife was raising our newborn. This may sound odd, but that started in 2002 and went through 2004. During those two years, we ate through all of our savings and in the end of 2004 I took a job that paid me less than the original job I'd been laid off from. We took an interest only mortgage thinking things would improve, but with the economy the way it was, the salary increases never came. We've cashed in our son's 529 program (taking the penalty) and have been cashing in IRA money over the years to help fund the gap. Prior to pulling money out of the IRAs, and back when we thought things would improve, we did a lot of home improvements and took out a 10 yr Fred home equity line. My understanding is that it works like a line of credit, but I'm not sure of the official type of loan.
Well things have gotten worse. We no longer have much IRA money left to cash in. Increases never came and now I'm told that at the end of next month my employment will be terminated. We filed for chapter 13. Our first mortgage with wells fargo was denied a modification. Our hearing was today and Affinity Federal Credit Union who we have our FRED with objected to our bankruptcy including the FRED stating we have equity (which we don't believe we do). We have an appraisal stating the house is worth less than what we owe and it needs work (concrete steps are falling apart and plumbing leaks etc).
We've been instructed to request a modfication. But what motivation does affinity have? They don't own the first mortgage.
We currently have unsecured credit of $70k prior to including this 50k. We have a monthly surplus of $80 prior to me losing my job but we are committed to our Chap 13 plan which shows us making $250/mo pmts. Hey, we'll figure out a way, burn through IRA money, beg from friends/relatives. Anything we can to save our house.
Should we go ahead requesting a load mod on the equity loan?