Loan Mod: Does EMINENT DOMAIN matter? Or a temp income change?

[drraz]

I have 2 questions:

1. Does it matter that my home is in a potential eminent domain area? We are in the zone, but the fwy project hasn't been approved by the feds, and
even if it is, the state won't need my home approx 5-7 yrs. I would like to remain until then (mostly bc the state won't pay more than fair mkt value, and I don't want them to force me into a short sale before the market recovers). I had the home up for sale when I was still right-side-up, but it didn't sell bc the eminent domain issue scared people away. And the state won't buy it until the project is approved & funded (could be 1 yr+ before I can voluntarily sell it to them, forced sale much later like I said).

2. Does it matter that my biggest income change is due to a loss of the child support? So that is possibly temporary, but it could take a year or more for DH to get another job, and I doubt it will be anywhere near the salary he previously had. Plus he's going into debt and about to put his own home in short sale, so it's not like he could pay out of savings. And once he DOES get a steady income, I'll have to file the paperwork in court, and last time we did just a modification of the CS amount, it took a year to get a court date! So I think I need at least 2 yrs of a modification.


Right now my mort total is $2K, and I have worked out that I can't pay more than $1050 or so, to stay afloat. Is that too big of a difference? I figured if both loans are taken to 2% for at least 2 yrs, that would bring my payment down $750/mon to $1250. I don't know if they would take the int rate lower than 2% or not.

1st loan: ASC, balance $238K, 5yr IO, fixed until 8/2011 at 6.375%, payment $1550/mon
2nd loan: HELOC thru Webster Bank, bal $132,500, APR has ranged from 4-9%, payment currently $450/mon (2nd was $1200/mon last year, back when the int rate was 9%+, so I am grateful for the temp lowering, for sure)
Home: bought for $400K in 6/06, now worth $350K per comps, $320K on Zillow.

My own salary has gone down 15-20% (all OT canceled when work sent to Phillipines, after 13 yrs of mandatory OT) and my ex lost his job, which means his $1400/mon CS payments have been canceled until he finds another one, which may take a LONG time considering he was a project mgr for a homebuilder in AZ. Plus I was injured in a Jo-Ann's Fabrics store last year, and they won't pay anything (yes I even hired an atty) so that completely depleted my $10K savings account.

Until the ex lost his job tho, I was not only on time, but I was paying $600 extra every mon to my 2nd, trying to get it below 85%!! Now I can't believe I didn't add that to my emergency fund. :-( I am current on all loans, but not for long (CS payments stopped Jan 2009).

I was actually ABOVE water on the loan until Dec 08, but Webster (holder of the 2nd) refused to let me refi! I actually got most of the way thru a refi a year ago, paid for appraisal and was set to close, then Webster refused to sign the subordination paperwork bc they said they had just changed their policy to only allow a max of 85% LTV, and I was at 89%!?! Which was sooooo stupid of them, bc the new loan was going to dramatically reduce their risk -- it would have taken the HELOC bal down to like $20K. Now they stand to lose way more than that if I go into short sale or foreclosure!! Talk about the banks creating their own nightmare.
I submitted the req for modification thru Wells Fargo's website (ASC's parent co) but I nothing so far, keep being told that I'll eventually hear from someone. Do you think I have a chance at a loan mod?

[Moe Bedard]

Hi drraz,

Welcome to the forum and thank you for joining.............

A modification is a restructure of the loan that you already have......so the eminent domain might not have an effect because it isn't a new loan..........but you would need to clarify that with Wells..........

Wells Fargo is implementing the Home Affordable modification program and using the guidelines that are outlined in the links here.......which outlines the income parameters.........

https://www.wellsfargo.com/mortgage/.../stabilityplan

http://www.treas.gov/press/releases/...guidelines.pdf


Keep us posted on your progress..........

[drraz]

I was wondering if the 2 companies might argue that the house isn't worth saving, bc if the state should call it up in 4 yrs, maybe they'll say, "well if the homeowner HAS to sell the home in the next few years, the market might not be recovered by then, in fact the house might be worth less, so why not just cut our losses now?..."

I guess my plan is not to mention it, as it will only muddy the waters, I think... because I have no way of predicting exactly when the state will want it. I doubt it will hold much in the way of bargaining power (esp for the holder of the 1st lien, who stands to lose nothing).

[drraz]

of income vs expenses that will ensure that they take me seriously but not deny me for inability to pay?

Someone else asked this:
What is the magic number of showing I am sort each month and in dire need of the mod (which I am) vs. going too far and looking like I wont be able to pay with the mod? Should I call back and figure out what they did to the numbers and get them revised?

ASC wants expense info, like daycare, utilities, etc. I don't want them to deny me as unable to pay, so I don't know if I should only put half the daycare expenses down (assuming ex pays other half, but he doesn't always), or half the utilities (assuming I get a roommate, which seems likely). KWIM? I'm walking a fine line, I think. I'm really not trying to lie, I just don't want to make it seem worse than it is so that they say, 'forget it, we'll foreclose'.

[Moe Bedard]

drraz,


There isn't a "magic ratio"..............you need to be honest with the expenses and your income, which they will verify, so that when they figure a modification for you it will work within your accurate financial means..............

check you eligibility for the MHA program along with the FAQs here........
Making Home Affordable - Payment Reduction Estimator


If the expenses that you have are more that 55% DTI........they will recommend HUD counseling prior to modifying............

You can look over the modification guidelines here in this link........
http://www.treas.gov/press/releases/...guidelines.pdf

[drraz]

I'm truly not trying to deceive, it's just that there are a lot of ways to look at things (do I count the full childcare or half, since I never know if I'm going to get help, KWIM?). I'm showing a huge deficit, which is why I need the modification, but the expenses I list actually only come to 35%. Do you think this looks appropriate?

GROSS $2500
1st mort -1600
2nd mort -450
½ daycare -300
elec -100
water -70
phone -50
petrol -80
parking -60
groceries -150
car ins. -70

NET $-430

[drraz]

BTW if they were to reduce my primary loan's int rate from 6% to 2%, my monthly outflow would go down $1K. So maybe they're going to say I don't really need it (tho by my calculations, I need it to go down at least that much to make it). Ugh.

[Hopefull2009]

Originally Posted by drraz

I'm truly not trying to deceive, it's just that there are a lot of ways to look at things (do I count the full childcare or half, since I never know if I'm going to get help, KWIM?). I'm showing a huge deficit, which is why I need the modification, but the expenses I list actually only come to 35%. Do you think this looks appropriate?

GROSS $2500
1st mort -1600
2nd mort -450
½ daycare -300
elec -100
water -70
phone -50
petrol -80
parking -60
groceries -150
car ins. -70

NET $-430

I don't think you want it to look "appropriate," but rather realistic. You are looking for a payment that is going to be comfortable and sustainable over the longterm. If you were to reduce your monthly expenses on paper (to the effect it could potentially cause you to fall short each month) will you actually be able to pay the new mortgage amount with the realistic expenses and still breathe? You obviously have a valid reduction in income with the child support issue alone. I would stay as close as possible to your known must recurrent expenses and cut where it logically makes sense, i.e. budgeting for instance, phone, food, etc. Let's face it, with kids you're going to have the odd unexpected expense on top of the usual childcare, etc. You're going to want to make sure you're prepared for that in reality, not just on paper. It's such a fine line and definitely not easy on the nerves this whole mod process, isn't it?

[drraz]

I have been trying for a loan mod with the 1st (ASC/WF) and 2nd (Webster) since February! Both told me on April 1 that they had all my paperwork and would have a decision for me at the end of May. Well I find out this week that

1) ASC hasn't gotten to it yet, and has no idea when they will, and
2) Webster claims they sent me yet another packet, requesting more info, on May 8th. Obviously I never received it so now we are at square one again (they mail it, I send it in, wait 60 days more)

On top of that, I found out that the house across the street (exact same floorplan as mine, but nicer bc it has a pool & spa) is for sale for LESS than the value of my 1st loan! That means my 2nd is totally unsecured, so I faxed that listing to the 2nd (Webster) weeks ago. I am much farther upside down than I thought.

I am so frustrated with how long this is taking, and how much of my time. I needed to have this resolved before July 1 bc that is when I have to put in for the state to purchase the house (part of the eminent domain) and there are only a few slots available this year. So I don't want to sell it if there is hope of modification, but my hope that it would be resolved in 6 mos doesn't seem to be happening. I may have to proceed with the sale w/o the mod, bc they are both playing games and dragging their feet SO bad!

[drraz]

Also I have a bad feeling that when ASC finally does get back to me, it will be to deny the mod, bc my expense sheet shows me upside down each month (unless I get the mod).

I am awake at this hour bc I'm having heart palpitations, and I know it's from the stress of all this, and wondering if I'm going to be out on the street soon. Did I mention that I'm 6 mos pregnant with a super high-risk pregnancy too? My perinatologist sent me to a cariologist yesterday, bc of the heart irregularities that she observed. I don't know how much longer I can take the uncertaintly and the hoops the lenders keep throwing at me...