Loan Mod on Rental Property?

[htbam]

Hello,
Hoping someone can give some advice. I am going through a divorce and am already struggling enough to keep my house.

My question is related to my rental property. I am hoping to get a loan mod for this mortgage, as I can no longer absorb the negative cash flow.

Mortgage is through Washington Mutual. I have little if any equity in the property and would at best break if I tried to sell it. I want to keep the property. I have about $300/month negative cash flow (includes average $100/mo in repair and maintenance expenses, property manager, utilities). But really, I should be setting aside money for reserve for major repairs such as new roof, exterior paint, carpet, etc. House is 17 years old. I figure I should set aside about $1000/mo for major repair reserve, so if you include this amount then I am $1300/mo negative. House payment is $1255 and I have a renter that pays $1295/mo.

My questions:
1) Does anyone know the chances of getting a loan mod for a rental?

2) Should I present the monthly negative cash flow as $300 per month or $1300 per month? $1300 seems high considering the mortgage is only $1255, yet I should have some reserve for major repairs. Not sure what they look for, and if I show "too" much need will they just say to sell the property although I want to keep it.

3) The loan mod package requires I submit my personal expenses and income, although I'm only seeking help for my rental. I hope to continue living in my current house, using child support and cash reserves. Child support will cover just over half of my estimated monthly living expenses; remainder will come from savings and cashing out investments. Will the cash and investments I have, that I will need to live on, hurt my chances for a loan mod on my rental.

4) When outlining my personal assets - is it better to show a lot of cash reserves to "prove" I can live on the child support, or am I better off painting a "truer" picture - $17 to 20k of the cash is from my kids' bank accounts and money I have set aside for attorney fees for my divorce.

Thanks in advance for any help you can give me!

[Jazmin66]

Dear htbam

I also have a rental property with WAMU now CHASE. I filed a loan modification with them back in June 09. I called them last friday and spoke to a WAMU CHASE "specialist" and he told me that I don't qualify because it is a rental property and at this time they do not have any plans to offer me.

I also went through a divorce and was forced to rent the property for that very reason. I couldn't afford to live in it and so I rented it out at about a $2k loss every month. The forms I filled out with CHASE to modify the loan included a section on rental property and it clearly stated that rental properties are eligible for a loan mod but the specialist told me that back in May 09 they didn't have enough information on what types of packages they were going to offer so the form included those types of properties too.

Needless to say, I was very upset that after waiting all these months I get told that I don't even qualify to apply. I told the specialist that basically if I kick my tenant out and move back in and not pay my mortgage, then I would qualify for a loan mod? I mean seriously people! Its like if you do everything right like I did to avoid foreclosing and rent out the house at a loss, then you don't qualify for the modification.

My mortgage amount every month is equal to how much I make (pre tax) each month and WAMU knew that when they refinanced my house under my name after my divorce but now they refuse to help. I should have done what everybody else did. Take out my $250,000 equity line and let the house go to foreclosure. I didn't do that and decided that I got myself in this situation and I will get myself out. But now because of a small glitch I'm not qualified for this program.

The Obama plan is meant to help individuals keep their primary homes and thats why rental properties don't count. I suggest you live in the home, file for a loan mod and after you get it rent it out again. If they want to be technical, so can we.

[htbam]

How frustrating. I'm sorry to hear you went through that. And sorry for both of us. Why can't they get their story straight. I talked to several people and the last person said they'd consider modifying on a rental property, so that gave me hope.

Thanks for updating me so I don't get my hopes up too much. I spent way too much time preparing the loan mod package - giving them copy after copy of various financial documents - and mailed off almost 50 pages to them.

Are you going to keep trying with them? I was told to not take no for an answer and to keep at them.

Good luck - hope you get a better ending to your story.

[Jazmin66]

Well I haven't received a denial letter yet. The guy on the phone told me that maybe in a few months more plans would come out and may include rental property. He placed me on hold and checked and rechecked to make sure he was telling me the correct answer that I don't qualify. I'm not sure what to do next. I am currently looking into possible refi but I doubt I would qualify. They will still hold on to all my applications, but I would need to update it in the future if such a plan did come out.

Please update here if you get anywhere with them and good luck.

[htbam]

Will do.

Hoping in the meantime someone else will post and have some information for us???!!!

[my550i]

Look here:
GMAC - beginning loan mod process

[htbam]

Thanks for that thread - gives me some hope!

Keep the suggestions coming!

Thank you!