GMAC First and Second Mortgage - What Next

[UnderwaterinIL]

First of all ... thank you for this forum. This is a great resource, but I am just overwhelmed by information right now.

Here is our story:

We purchased our home in 2007 for $636,000. It is in a new construction development, and still is the highest sold home in that development (tough to get comps for appraisal). The house is our dream home and we have no plans to sell or move, so we upgraded it fully. We also put in about $45,000 of additional upgrades after the home was built.

We took out a mortgage with GMAC for $508,500 and a second HELOC for $128,500 (total of 100%). First mortgage is a fixed 7.5% for 30 years, and the HELOC is currently at 3.5% which is good. We took out 100% expecting home appreciation and a tax shelter for our income (about $300,000 household at the time) with no kids. We moved money into investments and house upgrades instead of putting down on the house.

Ok ... fast forward 2 years. We now have an amazing little boy to share our home with (who we adopted) and some serious medical expenses (our daughter passed away after being born prematurely) that have drained a chunk of our savings. A stock option and brokerage fund that is worth a fraction of what it was, and a 401K that has loans against it and also it half the value it was. My bonus (about 20%) has been cut this year, no raise, and my wife has taken a 10% pay cut and no raise. Our house has been appraised by GMAC at $404,000 and there is a similiar model house down the street that is listed at a short sale for $399,000 with no takers. We also have increased expenses for daycare, etc. We also have about $90,000 of personal loans and credit card debt that is under 9.9% right now (some of it is 3.9% or under)

We have been making all payments and have never been late. Our credit score is above 730, and it is a constant battle to keep the credit card companies from trying to increase our interest rate all the time.

I tried to contact GMAC for a Loan Modification to reduce my interest rate to something that matches the market and was unsuccessful. I just recieved a letter simply stating that "Investors Denied" with no other detaisl. Even getting the application for the Modification was like pulling teeth. There first "solution" was for me to stop paying my credit cards since those companies are "desparate for cash" and will take any thing to settle. So instead of passing through any of the billions of dollars they received from the goverment, they are telling me to wreck my credit and pass on the problem to someone else.

I know I am not alone .... but this is getting to be ridiculous.
I am basically artifically held at the interest rate I have, since I cannot refinance based on the mortgage companies rules. I would be happy to do a no-doc refinance or anything else, but they look at me as a steady income stream at 7.5% on top of the bailouts they get from the goverment while I deplete my life savings to do the "right thing".

So ... I am not sure that the right thing is the right thing in this day and age.

I know every situation is different, so I tried to be explicit as possible about our specific case. I have friends that currently are defaulting, and it seems that creditors are bending over backwards for them to make arrangements, while in our case they seem to be doing all they can to suck us dry. Their net worth improves while mine decreases.

Do I trash me credit and stop paying everyone and wait for them to settle with me ? How long will it take to recover my credit score ? Do I really need high credit scores ? Do I keep throwing money at a house that is down 1/4 million dollars in equity ?

Do I hire an attorney ? If so, what can they do that I can't ? What are the expected costs ?

Are there other ways to get GMAC to acknowledge what they are obligated to do based on the Making Homes Affordable Program ? I could not be more upset with them at this point.

Open for suggestions, guidance, whatever. I am tired of the stress to keep everything together as the situation gets bleaker.

[UnderwaterinIL]

Also ... I forgot to add that neither Fannie Mae nor Freddie Mac own my loan. It is unknown who the mystery investor is.

[Moe Bedard]

Hi UnderwaterinIL,


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

While GMAC as a servicer has agreed to be a part of the new program..........the investor on your loan may not have...........if the modification denial happened before March 4th...........you may want to check back with GMAC and see if the investor is participating at this time.........

http://www.gmacmortgage.com/Resource...wner_help.html


Is the Home Affordable Modification mandatory or can investors or servicers choose not to participate?

Investor and servicer participation in the program is voluntary. However, the government is offering substantial incentives to servicers, investors and borrowers, and it is expected that most major servicers will participate. Participating servicers will sign a contract with Treasury’s financial agent, through which they will agree to review every potentially eligible borrower who calls or writes asking to be considered for the program. All loans that meet eligibility requirements and test “positive” for modifications in the NPV model must be modified, unless there is fraud or the modification is prohibited by the pooling and servicing agreement that govern the servicing of the loan. As contracts are signed, a list of participating servicers will be available on the internet at FinancialStability.gov. Participation will be mandatory for any institution that accepts future funding from Treasury’s Financial Stability Program.



If this is the only property that you own..............you can try going through NACA instead........they are a HUD approved counseling agency and the services for their Home Save modification are free...........
here is the link for the info...........
https://www.naca.com/refinance/refinanceTenStep.jsp