Loan modification came through, but ...

[goldpig]

Hi everybody:

First of all, I want to thank loansafe.org, everybody that had posted/responded on this loan modification post had help me in making my mind up and dealing with my mortgage companies for a loan modification.
December last year, I visited this post, and submitted hardship letter to my first mortgage company, GMAC, and my second mortgage comany, HSBC. Months later, here is where we are now:
GMAC, had approved a loan modification, interest rate is dropped from 7.5% to 4.25% for 5 years.
HSBC, refuses to give a loan modification unless I make a qualifying payment.
My problem now is:
The only way I see that I will be able to own my house one day, is to obtain a principle reduction with a 30 year fixed P&I. I mean, I am grateful that GMAC is willing to do a loan mod at least, but with the terms, it helps me to stay in my house for 5 years, but then, I will be in the same situation as I was when I started this loan modification process, interest rate is adjusting to a high rate, my house worths about 1/2 of what I paid, so I cannot re-fi and will no longer be able to afford the raise of the interest rate.
So my question is:
1. Should I push harder to see if there is any slim chance that GMAC is willing to give me a principle reduction with 30 year fixed?
2. The principle reduction everybody is talking about, is it that the current mortgage holder is willing to take a cut, but you still need to somehow obtain the pay-off/short-finance from another lender? Like H4H program? Or is it that GMAC will just write my loan to a lower owed amount, but they still holds the loan?
3. Since my second mortgage HSBC refused to give me a loan modification, what happens if I just don't pay them any more? I heard that in order for the second mortgage company to foreclose on a property, they will have to pan out all the cost/fee involved with foreclosure, and they have to pay off the first mortgage. But in my situation, my house doesn't worth nearly as much as I owe even just on the first loan, what can the second mortgage legally/willing to do? Can they dip into my pay checks, bank accounts, cars?

Advanced thank you for anybody's help. For those of you that are still struggling with getting a loan modification, I will have a seperate thread soon, and tell you all about what I had to do to get GMAC to help out, and believe me, it's a long, long story... very frustrating, but with the help I had gotten from loansafe.org, I did it! (although, now, I am trying to get more, I am not trying to be greedy hear, like I said, I am grateful, but I just don't want to do this again in another 5 years.)

Thanks everyone,
Julia

[Moe Bedard]

Hi Julia,


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

Keep updating and posting here in your original thread..........it makes it easier for everyone to follow your story in one place........

For the answers to your questions regarding the second you would need to consult with a real estate/foreclosure attorney in your state as it would depend on your state's deficiency laws.

What you have seen on a couple of times here with GMAC is a short refi...........and for that you would have to ask GMAC if the investor on your loan is willing to accept a short payoff............HSBC would also have to be willing to accept a short payoff as well.

[saeta78]

Hi Julia,

I am also working with GMAC with my modification. I would love to hear your story and see how you got from a 7% down to 4% with them? I am at 6.5% right now and I know the value of my house is somewhere between $200k to $250k with my loan balance at $325k. (South Florida here)

if you search under my posting name you can find my thread with experience so far.

I have an internal BPO scheduled today and I am anxious to get this done and submitted to them......I am now 2 months into the process and finally got to the BPO stage.

[goldpig]

Hi ***:

Thank you for your reply. Information you had posted in other threads had helped me countless times.
I am meeting someone from HUD next monday, hopefully she will be able to tell me what the california deficiency law envolves when it comes to my second mortgage.
I had read about short refinance as well. I guess my husband and I would need to have pretty good credit and a good chunk of down payment in order to obtain a new mortgage loan from someone else (anybody but GMAC/HSBC), right? Just like buying a new house? I mean, given GMAC is willing to take a short pay-off.
I didn't think it made any sense either for GMAC to just cut our loan balance in half, when it comes to principle reduction...
So, suppose GMAC is willing to take a short pay-off, what should I do next? Call around banks to see who wants to give me a mortgage loan? What about this government H4H program? Can I contact them directly to see if they are willing to give me a loan? Or does the program go through some bank servicers, and I would have to contact those servicers? I had heard the name SunWest with H4H together, is that the servicer the government uses to write out H4H loans?
I know I have a lot of questions, I am just a very confused little mouse trying to get to the cheese through the maze...

Thanks,
Julia

[goldpig]

Hi saeta78:

Good to hear GMAC is getting BPO done on your house, I believe that was the last thing they told me they were waiting for before they told me that the loan modification was aprroved. Given the right situation, I think GMAC is pretty loose on given out loan modifications. After all, this one is the second one I got from them.

Julia

[goldpig]

So, I will take ***'s suggestion, and post my journey in this thread, and hopefully it will be helpful to everyone (especially has loan with GMAC). I will date all the events, and give everybody a rough estimate where they are at, though each case is different.
I had learned so much from loansafe.org, it's time for me to give back a little. Please ask if you have any questions, and I will answer as long as I know the answer.
Keep in mind, I am just a software engineer, I nearly failed my economics 101 in college...

Julia

[goldpig]

My husband and I brought our first (current) house in august, 2005. We had saved and waited for a couple of years while renting, but with the housing price kept raising, we figured we will never be able to save fast enough to keep up with the down payment amount, I made the worst decision of my life (so far, hopefully it remains that way), bought a house in northern california for $575,000. We put $50,000 down, and the rest was split 80/20. We were "assured" by the realtor and his loan friend that we would be able to refinance to a low interest, 30 year fixed loan in a year or so. Both loans were sold over and over again between banks, and they landed with GMAC and HSBC.
With GMAC, loan amount was $460,000, and it was a 2-year arm with 5.25%, monthly payment was roughly $2600 (including impound w/tax, insurance). With HSBC, loan amount was $80,000, and it was a 5-year arm with some rediculous interest rate of 10% or so, montly payment was $600-$700 (I don't remember this figure very well now, because my husband paid into it above and beyond, it had gone down to $480 the last time we paid it, somehow).
In august 2007, we were informed by GMAC, that the interest rate raised from 5.25% to 8.25%, montly payment was $4400. We tried to refinance, but were not able to, due to the housing price had gone down considerabilly. So, we contacted GMAC and requested for a loan modification. Meanwhile, we continued paying $4400 for 2 (maybe 3) months (so we were current, and were not even late on the payment), and loan modification was approved by GMAC, 6.5% for 1 year, starting december 2007, till december 2008. When all this went on, we continued paying our second mortgage.
Above is the background, I will start dating what I had to do to get this modification. Oh, and by the way, in august 2008 (knowing that the interest rate was going to adjust from 6.5% to 7.5% in december), we contacted GMAC, and asked for another loan modification to help out when it comes to december, and they told us no, because we already obtained a loan modification, and there is only one modification per the term of the loan.

[goldpig]

On 12/12/2008, we contacted a local HUD approved company, attended a free work shop (they even provided pretty good dinner ), and got some useful information, and met other home owners struggling just like us. This somewhat gave us the strength of facing the situation and dealing with it, not just walking away from the house we call home (and we had our beautiful little baby girl in 2007). According to a expense work sheet, we had only about $300 surplus after paying all the mortgages, obligations, expenses, per month. And we are both employed, pulling in about $7000+ a month. The Lady from HUD pretty much said GMAC/HSBC are not going to be willing to give a loan modification unless you are late on the payment.
So, we stopped paying, both first and second mortgages. Please be aware, this severely damages your credit (though I haven't checked mine, why bother, right?!). But our situation was clear, either keep paying, and get nowhere, or stop paying and accept the consequences.
On 01/14/2009, I called GMAC and spoke to someone from the lost mitigation department, and faxed a copy of hand-written hardship letter and our latest 2 pay stubs.
01/29/2009, called GMAC, spoke to loan servicing deparment, was informed that they got the fax, call back later to get update.
02/10/2009, called GMAC, spoke to loan servicing department, the person I spoke to make it an official loan modification request. I had to call to make this happen, I guess. Informed to call back in 2 weeks.
03/13/2009, called GMAC, spoke to loan servicing department, was informed that they just got the BPO back on the house (I wasn't even aware when this happened). And the modification was approved.
03/21/2009, got an automated call from GMAC, saying that the doc had been mailed out.
03/26/2009, got the loan modification document, interest rate was dropped from 7.5% to 4.24% for 5 years, interest only, till 2014, that made our montly payment $2200 (including impound w/tax, insurance, from a $3600 at 7.5%). However, we will need to start paying principle and interest by 2015, and god knows how much that's gonna be...
So here is our story with obtaining a loan modification (second loan modification) from GMAC, how long it took, and what they were willing to offer. I really hope that this is helpful...

[goldpig]

I didn't get nowhere with the second mortgage with HSBC, yet. So I am not going to waste anybody's time on this, so read it if they think it's useful to you. It roughly went like this:
In 12/2008, We stopped paying HSBC (second mortgage with montly payment of $480 on a somewhat $80,000 loan).
On 01/12/2009, I called and faxed hardship letter.
01/29/2009, HSBC called to collect money, told them I had none, that's why I requested for a loan modification.
02/04/2009, HSBC called, took down the information over the phone on our monthly income, expenses and such. The guy I spoke with was really nice, said that HSBC holds their own loan (I guess it meant they are the investor?), so HSBC is not going to give a principle reduction, however, he said most likely, since they are not getting any money from me, they might go for a short pay-off to settle the loan amount.
02/11/2009, HSBC called and said that as long as I pay one qualifying payment ($480, a month worth of mortgage payment), their modification department would be able to look into my situation. But unless they get that money, they will not do anything. I still didn't pay.
02/24/2009, HSBC called, asked us to fill out the on-line form to request modification at www.hsbcmortgageservices.com. I did so.
03/03/2009, Capital Management called me on behalf of HSBC, and said HSBC had given my default account to them, I guess they are a debt collection agency, and told me to same thing, make a payment, and they will give me a loan modification. I didn't pay.
03/11/2009, Capital Management called. I didn't pay.
03/13/2009, Capital Management called, said they are willing to take $240, half of the "required" $480. I didn't pay.
03/16/2009, Capital Management called. I didn't pay.
04/01/2009, Capital Management called. I didn't pay.
So, that's about all that happened with the second.

[goldpig]

Call me a cheap *ss if you will, after much research at the beginning, I decided to go down this road and dealing with the mortgage comanies myself, rather than spending a few grand on attorneys/lawyers. They might be able to get better results than I was, I admit that, and I admit that I had to spend a lot of time and energy, and had a lot of stress. What I am trying to say is that, there is free help out there, HUD, wonderful websites like loansafe.org, and that you can do it yourself (my second mortgage doesn't speak much on this point).

[goldpig]

For anyone out there that can shine some light on what I should do at this point, I am grateful. My questions are:

1. Suppose GMAC is willing to take a short pay-off, what should I do next? Call around banks to see who wants to give me a mortgage loan? What about this government H4H program? Can I contact them directly to see if they are willing to give me a loan? Or does the program go through some bank servicers, and I would have to contact those servicers? I had heard the name SunWest with H4H together, is that the servicer the government uses to write out H4H loans? If I accept this loan modification (it's due back by 04/10/2009), will I be killing the possibility of GMAC might be willing to take a short pay-off?

2. In california, what happens if I stay in the house (say I accept the loan modification and continue paying my first mortgage with GMAC), but I stop paying on the second mortgage?

[Moe Bedard]

You will need to clarify with GMAC..............but I believe on the short refis that they are doing..........it is done in house.......meaning that GMAC is taking care of the new loan......but see if that is accurate.
Question number two would need to be answered by an attorney.


Also if this is the only property that you own and you are just looking for an affordable modification.............you can also look into NACA..........they are a HUD approved counseling agency and the services for their Home Save modification are free....here is the link.
https://www.naca.com/refinance/refinanceTenStep.jsp

[saeta78]

Hi Julia,

thanks for posting your experience.

After calling repeatedly to GMAC Loss Mitigation, I found out that they have indeed assigned a loan negotiator to my loan mod and they (loss mitigation) have been sending emails to her each time I called requesting the BPO and just recently telling her that it was complete. They have not or I should say refused to tell me her contact information.

It sounds like from your situation they just mailed you documents with the new terms. Did you at any time speak to the loan negotiator for your account prior to getting your loan mod approved?

thanks1