Jumbo, Interest only need Mod

[furr2ball]

Hello All,

My story begins 10 years ago, I purchased an 18 acre parcel of ground, split it into 3, 6 acre parcels improved the site, 1 mile of road, built a bridge over the canal for access, put in a well, brought in power, etc. I sold the back 2 parcels and retained the front ( best view parcel for myself). This left a small balance on the land loan with enough cash to pay for the short term capital gains. Six years later the land loan is paid off and the retained parcel is valued at $120,000.00, so we start construction on our dream-future retirement home. We live in Idaho, and the site has a spectacular un-obstructed view of the mountains, and the Snake river. The setting is very quiet and full of wildlife.
I am a Commercial Realtor and property manager, my wife is a CSR for a local "Doc in the Box" health clinic. We have a good income for our area. We build the dream house, we get a loan from First Horizon, an interest only fixed rate Jumbo loan for 600K, the project appraises for $850,000.00, shortly thereafter we get a Heloc from First Horizon for $112,000 to build a Shop, a pond, and finish the landscaping. Life is good!
A year and 1/2 later my wife loses her job, her clinic decides to cut costs, personel are the first to go. Things get tight, but we have weathered these things before, and then the IRS decides that it's time to audit my returns, Long story short I pay them every thing that was in savings, ( $68,000 ) and agree to an 18 month repayment plan for $400.00 per month.
Then the economy goes to poop, I earn about 10% of what I normally earn in commissions for the year and see no light at the end of the tunnel in the short term. Fortunately my wife is employed again with a shorter commute to work, ( gasoline is now $4.00 per gallon), but we do have medical coverage again.
I am struggling to stay current on the loan payments, when I recieve a letter from First Horizon informing me that ther is a huge escrow shortage and that my pament will increase $700.00 per mo. Ouch!! Fortunately my Heloc has been dropping thanks to the lowering prime rate. But still not enough to be even remotely comfortable.
My propertty management income is very stable and my wife's income is stablized though less than she had been making, counting on real estate commissions in this market is like counting on winning a lottery ticket.
If you have managed to get this far in my rambling narritive I will summerize and ask the group for some advise.
My 900 K home is now worth about 450K and would take 38 months to sell in this market. The balance on the first and Heloc total 750K. Our debt ratio is around 90% of gross income. We desperatly want to keep our home! We are 30 days past due on the first current on the Heloc. First Horizon has sent us the request for financials and a "cry baby letter", 995 Hope has just left us an envelope on our door asking us to give them a call.
Do I need to be 60+ day past due to get someone to discuss a loan Mod?
Can or will working through Hope be of anny real help?
What advise can you give me , so that we can move forward, in an effort to retain our home?
Warmest Regards
Furr2ball

[Moe Bedard]

HI furr2ball,


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

The modification given will be up to the investor on your loan so you would need to contact them and see what the options are. Not all investors require that you be in default in order to get help.

Is First Horizon the servicer on the loan?
If they are have you contacted them to see if they can help?

[furr2ball]

Thank you for the reply.
First Horizon is the servicer, and yes I have spoken with them, in generalities, they have sent me a request for updated financials and requested a "Hardship" letter. I havn't returned yet, wanting to know what they are looking for, i.e. if my DR is too high will they not be inclined to do a loan modification?

I am 30 days past due now, and I may be able to make my next payment on the 30th of the month but I was wondering if allowing the loan to go 60 days past due will give me more or less strength negotiating a loan modification.

Is 995-Hope a helpful way to proceed, they have contacted me by leaving an envelope on my front door. I did not contact them.
Thanks again, any info is greatly appreciated.

[Moe Bedard]

here is the format for a hardship letter............
These are what most lenders consider to be generally acceptable hardships....
1. Loss of job or reduction in income
2. Death of the homeowner, spouse or family member
3. Illness of homeowner or family member
4. Divorce or separation
5. Forced job relocation by employer
6. Adjustable rate reset-payment shock

The best way to set up a hardship letter..........

* First, describe the hardship and the circumstances that caused it
* Explain what steps have been taken to correct the situation
* Provide the lender with your plan to get back on track and stay there
* Assure the lender that you are a responsible homeowner who just needs a second chance and that you are very motivated to save your home


each investor has a different criteria as to what they are looking for to modify a loan, some require a small surplus while others work off of a small defiicit........you would need to ask the lender what they look at as far as expenses and if they look at gross or net income. most members are doing this on their own...........with HOPE the comments have been mixed.........some have received help while others not so much.......but it seems to depend on the counselor that they are working with..........since they are free, you may want to give them a try if you are not able to get anywhere with the lender on your own.

[furr2ball]

We are experiencing extreme difficulty in making our current home loan payments.
I am a Commercial Realtor, and beginning in 2007 and to date, I am earning roughly 10% of what I had normally made in the previous 10years, I still have a stable property management income but it is not enough to make ends meet most of the time. In August of 2007 my wife lost her job as a customer service representative for a local clinic, and was unemployed until April of 2008, she was able to find employment at a much reduced level of income, but at least they have Medical benefits and it is a shorter drive time, saving on fuel. The net effect however is still a $400.00 per month reduction.
Early in 2008 I was subject to an IRS audit resulting in an unexpected bill for $78,000.00, I was able to repay $50,000.00 from savings, 401 K, and sale of assets, the remainder was set up on a monthly repayment plan which amounts to $400.00 per month through June of 2009, and then escalates to $500.00 per month. (I do have a current note payment to Kubota Credit in the amount of $419.00 per month which goes away in June of 2009.)
Early in 2008 First Horizon Escrow department informed us that there was an escrow shortage on our account and the home loan payment went from $3,800.00 per month to roughly $4,500.00 per month, this coupled with my First Horizon “Heloc” of $420.00 per month gives me home loan payments of $4,920.00,( the “Heloc” we took out was spent on improving the property, we added a shop structure and finished the hardscape in the landscaping), my monthly property management income is $5,354.00 per month. We are surviving on my wife’s reduced income and my sporadic real estate income. We have no problem living with a high debt ratio, we are very conservative, and we know the economy will turn around eventually; we want to stay in our home! We realize that the value of our home has dropped like a rock, the appraisal when we built it was $800K,and we have spent an additional $100K on it. Now the local market representatives tell us that we would be lucky to get $500K for it, and that the average time on the market in that price range is in excess of 36 months. I will be able to petition the County Assessor in February for a valuation review in an attempt to lower the property tax, and I have the documentation to prove the point, however if I am successful, the effect of the valuation reduction won’t be felt until December of 2009.
We desperately need a modification of our loan, to be able to survive.
Again, we want to keep our home!
Your consideration in this matter is greatly appreciated.
Regards,

[Moe Bedard]

You explained the hardship in great detail...............but you left off the last three steps...............

Explain what steps have been taken to correct the situation

Provide the lender with your plan to get back on track and stay there

Assure the lender that you are a responsible homeowner who just needs a second chance and that you are very motivated to save your home

[furr2ball]

***,
Thank you for the input, I will modify it and resend for further review.
Thanks