How to get out of a Neg. Amortization ARM

[ByetoNegAmort]

Hello all,

This forum has been wonderful. My loan is with AHMSI and I actually applied for a loan mod. late last year which was denied based on the fact that what they finally offered was higher than my current rate of 4.8%, which would altermately increase my payment. Now, after my recent reading, I don't think the mod. offered was either a HAMP or even an Obama plan modification. I need to get out of a bad situation, which goes like this: Have a $365k loan from 2006 that has ballonned up to close to 400k because of negative amortization. it's an options ARM and we've only been able to pay the interest only payments, which have never been late. Problem is since 2006, I was out of work and recently got rehired at a salary close to 20k less than what I made before. My interest rate, though low still results in a payment at full PI of about $2600k which is unaffordable. My goal is to get on a HAMP modification loan that will take into account my income by making sure my payment is less than 31% of income. Also, I would really like to have my principle reduced but I doubt that would happen because I actually put down over 20% a purchase and I still have lots of equity (no thanks to the market, I should add).

I was unable to refinanance while out of work, but now that I am working, I need to do something fast. My questions are:

1. Which of the programs (obama plan, HAMP etc) is best for my situation?
2. How should I go about addressing AHMSI in requesting the right modification and how to get them to take me seriiously (stop making payments etc?)
3. How to get them to understand that my current payment is not affordable and paying the interest only is going to get me on the foreclosure list sooner or later
4. How to avoiding AHMSI from tagging on any "interest" to my principal as at the end of any proposed modification. The goal is to get out of a negative amortization and start to build some equity if/when the housing situation improves.
5. Any other information that you think would be helpful in my case.

Thanks.

ByetoNegAmort.

[lisasxr]

From your post I gather that even the payments you've been making are not Interest only if your principle balance has grown. The payments are the optional Neg Am payment amount.

I don't know that there are any easy answers as it's very difficult to
1)

[lisasxr]

Sorry, hit the wrong button.

By my amortization schedule, $400K at 4.8% for 30 years is a full principle and interest payment of $2098.66 (about $1600.00 Interest Only)

What are the terms of your ARM? When is it set to adjust?

If you have equity, I'd start by calling them about refinancing. If you don't qualify for a refinance, ask what your options are.

It is going to be very difficult to find a FIXED RATE FULLY AMORTIZING loan that will lower your payment.

[lennox]

If you have equity and AHMSI is offering to give you a fixed rate and extend the term to 30 years....I'd say run with it. If you have equity and a good credit rating, why don't you try and refinance?

I have an option 1 loan. Mine is set to recast in 2011, as I'm sure yours is. I would gladly take a fixed and even a slightly higher payment right now then the dreaded recast in the next year.

I'm just curious, when you signed the option 1 loan; what were your plans for the future? Were you planning on selling before the recast; or planning to refinance; expecting a big promotion before the recast?

When we signed ours, I had a very sick feeling that day. We planned on selling 2 years after we signed, thinking we had lots of equity and more to be built....we gambled and lost the bet on the market. If we had any kind of equity, I would sell in a minute and buy something more affordable and smaller.

[flagirl4444]

If there is equity, you most likely won't qualify for HAMP. Since you've never been late and you have equity you should qualify to refinance into a 30 year fixed. Rates are currently around 5% so your payment will go up, although you could probably refi into an interest only fixed rate. That would give you 10 years before your payment increases to start paying principal. The only other option is to sell while you still have equity, and purchase something that you can afford.