NACA or Short Sale? I'm current - for now.

[miked2023]

Bought a house in 2004 for 590K. Interest only loan. As of now, it seems there's no equity in the house due to the crash and my stupidity of not putting more down (although if I had, I'd probably be out that too).

In December, the loan is set to go adjustable. I make a decent salary but if I can't qualify for some kind of re-fi in the next six months, I may be forced to default. I don't know what to do.

I send a hardship letter to Countrywide (My wife lost her job not long after our daughter was born - she worked in subprime) but they didn't seem to care unless we were in default (I've never been late on a payment).

I don't think I qualify for Obama's deal because I make too much money. But believe me, in LA, with a wife out of work and a 2 year old, I'm in stretched to the max.

Does anyone have any advice for me? I'm freaking out that I may be forced to default on my loan early next year. Obviously, I want to take care of this without defaulting. Please let me know if I need to provide any more info. Thank you so much.

[Moe Bedard]

Hi miked2023,


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

If your mortgage payment is more than 31% of your gross income........that is one of the qualifications for the new program.........regardless of the income................

Qualification Terms:

• The home must be an owner occupied, single family 1-4 unit property (including condominium, cooperative, and manufactured home affixed to a foundation and treated as real property under state law).

• The home must be a primary residence (verified with tax return, credit report, and other documentation such as a utility bill).

• The home may not be investor-owned.

• The home may not be vacant or condemned.

• Borrowers in bankruptcy are not automatically eliminated from consideration for a modification.

• Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.

• First lien loans must have an unpaid principal balance (prior to capitalization of arrearages) equal to or less than:

1 Unit: $729,750
2 Units: $934,200
3 Units: $1,129,250
4 Units: $1,403,400


The borrower’s Monthly Gross Income:

is the amount before any payroll deductions includes wages and salaries, overtime pay, commissions, fees, tips, bonuses, housing allowances, other compensation for personal services, Social Security payment, including Social Security received by adults on behalf of minors or by minors intended for their own support, annuities, insurance polices, retirement funds, pensions, disability or death benefits, unemployment benefits, rental income and other income.


Front-End DTI:

is the ratio of PITIA to Monthly Gross Income. PITIA is defined as principal, interest, taxes, insurance (including homeowners insurance and hazard and flood insurance) and homeowners association and/or condominium fees. Mortgage insurance premiums are excluded from the PITIA calculation.

The Back-End DTI:

is the ratio of the borrower’s total monthly debt payments (such as Front-End PITIA, any mortgage insurance premiums, payments on all installment debts, monthly payments on all junior liens, alimony, car lease payments, aggregate negative net rental income from all investment properties owned, and monthly mortgage payments for second homes) to the borrower’s Monthly Gross Income. The servicer must validate monthly installment, revolving debt and secondary mortgage debt by pulling a credit report for each borrower or a joint report for a married couple. The servicer must also consider information obtained from the borrower orally or in writing concerning incremental monthly obligations.

Borrowers who otherwise qualify for a modification under this program, but who would have a post-modification Back-End DTI greater than or equal to 55%, will be provided with a letter stating that they are required to work with a HUD-approved counselor and the modification will not take effect until they provide a signed statement indicating that they will obtain counseling.

[miked2023]

Unfortunately my gross income is too high to qualify. If the rate goes way up, there's a chance but it doesn't look good. Any other options? Thanks for your reply.

[Moe Bedard]

In that case if your mortgage payment is at or below the 31% of the gross income......I am not sure they would have another option directly from CW..........but if this is the only property that you own...........you can try going through NACA..........and see what they may be able to do.........
here is the link for the info...........
https://www.naca.com/refinance/refinanceTenStep.jsp

[miked2023]

Great I will give them a go. Thanks for the advice. One thing though, they seem to be setup for low income households - will I get laughed out of the room with a six figure salary? Thanks.

[Moe Bedard]

As long as it is the mortgage payment that is causing the hardship and not other debt............then no...........

GENERAL ELIGIBILITY:

NACA’s Home Save Program is open to everyone regardless of their income or the mortgage amount based on the below requirements.

Be a Member in Good Standing:

NACA provides the Home Save workshop to everyone without becoming a NACA Member. To begin the NACA Program including the initial counseling you need to be a NACA Member in good standing. This requires that the Membership Agreement be signed by all household members. Given the current mortgage crisis NACA has suspended any Membership Fee for Home Save participants. In addition, NACA will pay for accessing your credit reports.

You cannot own another property:

NACA cannot assist people who own other properties. If you own another property but are losing or selling it, we can assist you with your primary property after the disposition of the other(s). Servicers in the NACA Program also require owner-occupancy as a condition for accepting a NACA solution.


Live in your property:

NACA believes that owner-occupants stabilize neighborhoods. Therefore, NACA requires that you are an owner-occupant. Being an owner-occupant involves you in all aspects of the community because you own a piece of the community, not just real estate. Also, owners of multi-family homes may choose stable tenants that will strengthen the community and maintain the property, even if they could have higher paying tenants. By contrast, absentee landlords usually want to maximize the rent and have little involvement with the community.


Participate in at least five actions and activities a year in support of
NACA’s mission:

Every Member is encouraged to contribute their unique skills to NACA and its mission. Many people say the NACA program sounds too good to be true. It is reality through the active participation of NACA’s huge Membership. There are numerous activities to take part in: advocacy campaigns that may include protests, demonstrations, actions and/or engaging in litigation against persons or companies that discriminate against or victimize others; volunteering in the NACA office; and assisting Members with their solutions. Your involvement in whatever way you feel comfortable is essential for NACA to continue to provide free homeownership services and the mortgage solutions in America. When you join NACA, you agree to the Participation Pledge which requires you to participate in at least five activities a year. This applies immediately as long as you have the mortgage restructured through NACA. Thus you may not be able to access the NACA program if you do not participate. We need you to take the initiative and contact your NACA office to volunteer and participate.

You may receive a live or tape-recorded phone call or e-mail to participate at an event or action, or to update you on information about the NACA Program or issues affecting neighborhoods, NACA Members, and economic justice. Please pay attention to these and do your best to attend. If you are unable to participate, it is important to find others who can. Participation and direct action have made NACA successful and will continue to strengthen our neighborhoods and organization.

[miked2023]

Hi, and thanks again - this is a great forum. It's decision time for me and my family and I could greatly use your advice:

I'm still current in my loan but probably for only a few more months max. It goes adjustable in December and we can't afford it now (my wife lost her job) never mind in December.

As it stands, we're upside down (probably at least -50K on the value) and the house needs about 25K worth of work.

We're with Countrywide/BOA and they've been little help with the loan mod process.

We've contacted NACA but here's where it gets tricky:

I'm not sure I want to save this house. With the 50K under we're at and the 25K worth of work it needs, I'm not sure I will want to stay here long enough for it to come back the 75K + to make it all worth it (my taxes are ridiculous). It's only a two bedroom and if we want to have another child, we'd have to move within a few years of that happening. Basically, I can see us staying here for another 5 years max. 3 would be more ideal.

So is it even worth trying to save in that case? If NACA can whack our principal then, maybe yeah. But, I assume Countrywide isn't going to do something like that when we're still current.

So should I just go for a short sale? Try and get ride of it while hopefully staying current? I have a feeling this may be the best option for us assuming Countrywide would accept a short sale offer within reason. Does anyone know if CW accepts short sale offers when the owner is current?

I'd rather do short sale then to almost go into foreclosure only to have it saved last minute. I'm trying to preserve my credit as much as I can as I'm already thinking about the next house and not as much this one.

If I go ahead with NACA, does that prevent me from working on a short sale too? I know CW is difficult once you start the NACA paperwork. If I begin with NACA does that cutoff my short sale prospects? Will CW freeze my account?

The other side of this is, if I can't get a short sale to go throuh and will miss payments anyways, NACA could swoop in and save the day. If my credit is ruined, I'd rather find a way to stay in my current house if I can.

I know this is a lot, so I appreciate any advice. I'm sure a lot of you can relate to how I'm feeling and are looking forward to better times.

Peace on you.

MD

[FLgata]

Good Morning Miked,

Below is a link which will take you to the "Short Sale" section of the forum.

Short Sale Outpost - Loan Modification Forum - Loan Safe

This may help you get an idea of what is in store for you if you decide to go that route. From what I've heard, short sales can be a nightmare. In my area, buyer's realtors have given up on them almost completely. They would rather deal with bank owned properties than waste their time and energy on short sales. From what I've been told, the process is very long and there are no guarantees that the potential buyers will get the home. I've heard of lenders sitting on offers (for several months) with little or no communication while they waited for a better offer to come along. I'm not trying to talk you out of anything, just letting you know what I've seen and heard from the buyers and their agent's perpective.

In the above post, you had mentioned staying in the home for another three to five years. If that is the case, you may want to contact the NACA in hopes that they can help you before your adjustable rate kicks in. Some members here have gotten assistance from them while being current with their payments.

I appreciate that you have been looking at this from every angle (long term), but usually we crawl before we learn to walk. You wrote above that you don't think you would be able to handle a higher mortgage payment, so if I were you, I would try to prevent that from happening first. JMO.