Downey Savings Modification

[jhn_plsn]

Pardon me if this is off topic.
I understand why the 401k rules are the way they are, but are we not in a crisis situation in this nation when it comes to just living in general? I just do not understand why one can't draw the money, pay the penalty and taxes and make a situation better. The IRS could allow catch up deposits over and above the limits to those who did this. I have heard some crazy stuff like people leaving thier tenured jobs to gain access to thier 401k to save the house. In todays job market you have to be almost suicidal to do this.
Has anybody heard any talk on this topic?

[schwefls]

I agree, in order for me to save my home I had to give my employer my Notice of Foreclosure (quite ambarrassing) in order to withdraw and pay penalties on my desperately needed monies, my employer doesn't even contribute. These were all my monies........

You can take the money for certain reasons, foreclosure, eviction, medical, tuiton and first time homebuyer. But, you must show proof. My proof was ambarassing to say the very least

[jhn_plsn]

schwefls,
It should be as equally embarasing to the emloyer, as income has not come close to keeping up with actual inflation. I work for the largest food distribitor in the world and they actually mailed out information on how to get a tax rebate for low income workers.
Your company should have had someone who services your 401k so you could keep your situation private. I had to submit the same paperwork but I was lucky enough to not have to show any of my co-workers. This situation has made me think about how to invest for retirement yet keep my resources more liquid and it does not include the 401k. I will put into it as the company matches but only up to that limit.

[schwefls]

jhn plsn:

I work in a small Drs. office there is no privacy, the Dr. is the administrator and he actually had to sign off as such. Hell we all know what toilet paper the next one uses at home. I have since opened up an IRA with my credit union, the penalties did not bother me the privacy did. SO being that the Dr. was not matching and the market sucked why not save it with the credit union. God forbid I should ever need it again I can liquify it online and if I never need it all the better. Everything will be private either way.

[jhn_plsn]

I am currently lost in my situation. I am in the proccess of filing bankruptcy but may have to pay the mortgage through my 401k to pay for it. I can barely make the new payments on my home loans and afford to live, period.
I have a pic-a pay with Downey Savings that has hit its limit, and a 2nd frozen heloc with Countrywide. I would like to contact both for loan modification but am unsure how to start. Should I go through with the bankruptcy first?
I intend to keep the house and am working to get the payments in on time but it is so tight there is no breathing room. One even minor problem and everything will change.

Thanks for your thoughts,
John

[jhn_plsn]

Do you think Downey Savings would consider forgiving the negative amortization and locking in the current interest rate?
Do you think that Countrywide would also consider locking in the interest and change the loan from a heloc to a basic loan?

[schwefls]

jhn plsn:

Hang on *** will be by to advise you on where to begin with the modifications. However, I do not believe you can apply for a mod while in BK. Have you filed yet?

[Moe Bedard]

John,

If you file the BK you will not be able to apply for the modification......

Chapter 7........until it is discharged fully and all mortgage payments were made on time without default.

Chapter 13......until the relief of stay is lifted on the property, and only with permission of the courts and lender.


In almost all of the cases the lender will add the negative amortization amount into the principle balance.........they don't forgive it.

If a modification will be given on an Option Arm is up to the investor.......some are not modifying them.........

You will have to contact Downey to get the process started to see if they are modifying Option Arms........

[jhn_plsn]

Should I try the loan modification first? Also, will there be qualifying conditions as I have not payed any of my creditors for 11 months? Credit score is somewhere around the price for lunch. I am sure all this will be considered, just looking for additional advice and confermation.

I have been having bad thought as I am sure many others have had. My first ballance is about 311,000 and my second HELOC is 93,000, yet the house is probably only worth 325,000. With my credit the way it is now and hopes for any kind of relief I feel like if I allow the foreclosure, file the BK, then I could use my 401K to put a fair size down payment on a home with a realistic value. This would include a payment for 1/3 less than what I have now and include mortgage insurance. I may even be able to feed the kids again.
Is my thinking a bit scary? Are there others doing this?

P.S. Regardless as to why I am in this situation I am looking for any advice.
Thanks to all.

[Moe Bedard]

Not many considering you have to wait 5 years after a bk now to get looked at for a loan and that doesn't include a foreclosure, and you would have to qualify using the payment amount on both of the homes.......not an easy task for most and there are questions on the application for the new loan pertaining to the status of any current real estate that you own......which is why.............most are going the rental route while saving money and repairing the credit............

Have you checked yet with Downey since you last posted to see if they will even modify an Option Arm? That should be the first step so at least you will know if the investor on your loan will even work with you on a modification.....

[jhn_plsn]

Our first contact with a collections agent with Downey stated that they are working out many loans currently and sent us a generic financial statement form to fill in.
I am concerned with what to enter in the credit card payment section as I have had no contact with these people in some time. should I take a guess or leave it blank and include a letter?
Thank You for any info.

[jhn_plsn]

Originally Posted by *** Damiano

Not many considering you have to wait 5 years after a bk now to get looked at for a loan and that doesn't include a foreclosure, and you would have to qualify using the payment amount on both of the homes.......not an easy task for most and there are questions on the application for the new loan pertaining to the status of any current real estate that you own......which is why.............most are going the rental route while saving money and repairing the credit............

Have you checked yet with Downey since you last posted to see if they will even modify an Option Arm? That should be the first step so at least you will know if the investor on your loan will even work with you on a modification.....

I think you missunderstood my post. The question was that if I were to loose this home then file bankruptcy would I be considered for a loan on a different home with a 20% down payment (from 401k) and a back ratio of about 36%?
I am attempting to set my self up for the furure the best I can. My fear is that if I file bankruptcy then loose the home I may be liable for losses concerning the house on the first and/or second. Yet if I filed for BK before loosing the house I would have that liabillity for who knows how long. If I were to loose the home then file for BK I could include the house liabilities in the BK. Does this make more sense at what I am getting at?
Thanks.

[Moe Bedard]

Got it.............that is definately one for the BK attorney..........

[jhn_plsn]

I sent a letter requesting discussing a loan modification and it only took about 2 weeks to get a response. I was surprised.
A brief history;
This is the fourth time in a years time that I have had to do a hardship withdrawal from my 401k in order to pay the mortgage. I have not paid a nickle on $25,000 of credit debt in a year and have been looking to file BK. I do have a substantial 2nd that is effectively an unsecured lien at this time. Downey, the 1st lien holder, responded with an interest only for 5 years at 5.875% that will adjust to a variable. They will add the last 2 unpaid payments to the loan and forgive all late fees. This is a substantial monthly savings(now), but I still fear the adjustable part after the 5 years. So we asked if this was the best they had to offer and the response was yes. The payment will go from $2525.00 to $1760.00, a $765.00 savings(now). This will simply help us to keep up on the current 1st and 2nd and still be able to feed the kids.
I know the debt is a time bomb but am still uneasy as to how to approach it, settlement company or BK? If I were to file under chapter 13 then the 2nd would likely be stripped but we would also be able to settle the old debt. I would like to avoid the BK but am keeping it on the back-burner. I also make a $480.00 monthly 401k loan payment and was hoping that when the Democrats get into office will actually allow this to become a taxable hardship withdrawal and I would be done with it. What do you think the odds of that are?
I feel like we are making progress but does the offered modification seem reasonable?
Thanks for any info and opinions.

[Moe Bedard]

The modification actually gives you a savings of 45,900k over the course of the 5 years..........more of a savings if the rate was adjustable and going to adjust over the 5 years raising what the payment was to begin with...........so it is a great deal.........and we don't know where things are going to be 5 years out.............this will allow you to get on top of finances to put you in a better position for a possible refi 5 yrs from now and at this moment 5.875% is lower than the current market rate that you would be able to receive if you were able to refi now...............

For any BK questions you would need to ask the attorney those.........

Congratulations on the mod!!!!

[jhn_plsn]

Thanks for the feedback ***.

I also have a frozen HELOC from Countrywide and sent them a similar letter. It has a variable interest rate currently at 8.5%. Do you think there is a chance I could get them to lock in a fixed for the life of the loan?

[Moe Bedard]

You will have to see..........but I don't see why they won't fix it.....

Keep us posted on how it goes.

[jhn_plsn]

In reading some of the other threads in this forum I am thinking I may be better off in the new program that starts Dec 1st, but am concerned if I even qualify. My loan is not FHA and in the paperwork states it is also non-recoarse. I am not sure what it means. Does anyone know if I qualify for the program do I get a letter automatically even if I am in the middle of a loan modification?
The reason I ask is that it may remove the 2nd altogether if I qualify yet if I go with the current loan modification I would still have the 2nd to deal with.

[Moe Bedard]

If you are referring to the program with Countrywide that is beginning on Dec. 1st................it doesn't mention second liens in the information.........you would need to check if they are working on them as a part of the program too.
1-800-669-6607

[jhn_plsn]

Hi ***, I was actually thinking if my situation would qualify for the Dec 1st program it may take the 1st and 2nd down to the 36% (?) debt to income limit, and would actually net a better situation than to go with the current modification on the 1st and risk CW not working with me on the 2nd.
If I do qualify would I receive a letter stating that I do qualify?
Does non-recoarse mean I have no legal rights within the loan?

Thanks again for rehashing this stuff over and over.

[Moe Bedard]

That is the program beginning on Dec. 1st..................

That sounds like the H4H FHA program that began on October 1st and the second lien would need to agree to release and extinguish and the investor on the first lien, if they are having to accept a short payoff, would need to be participting as well.

[jhn_plsn]

We recieved the paperwork for our loan mod on our 1st on the 5th of December as indicated by Downey Savings. I am so jazzed. Thank you all who share thier experiences here.
They were very helpfull and recpectfull of our situation, and they were not demeaning in any way. The only oddity was that the colections departement does not talk to the home retention department. I was surprised they called but when we gave them the info we had they did not call back and aksed to make sure to follow up if the paperwork does not show up as indicated.
I must give Downeys collections department a thank you for speaking to us in a repectfull manor with the intention to resolve the situation. This has been a painfull year and they made it a little less difficult to answer the phone.
Thanks again and now I will attack the 2nd to see if I can get Countrywide/BofA to lock in the current rate for the life of the loan.

[schwefls]

Great news jhn plsn, kudos to you, party hardy, you deserve it.

[jhn_plsn]

I know I just recieved this great modification with Downey Savings but with the new rules related to bankruptcy should I send them a new letter stating my intentions to file for BK.
I am actually pleased with the mod but the rule states I need to allow them the opportunity to modify under the new rules.
Any thoughts?

[dletulier]

Hi There,
Sorry being new here I didnt know how to start a new thread with losing what I was conversing about with you. That is so funny that you mentioned Pearl at Downey, she is wonderful, in collection. But the Loan workout dept is the worst. Jasmine is ok, but they really dont know the full works of the loan mod approval process, they give alot of programmed answers. I will try Cindy and Irma as you mentioned. Thanks!!

Diane