I need help

[stweedy]

We purchases our home through a mortgage broker who I feel grossly misled us. Our arm is going to adjust and we can't afford it. I have been pouring over our loan documents and I have a couple of questions since all the documents seem to bee in greek. What is the three day letter to rescind and will it be called exaclty that. We also never saw our loan documents until signing, our broker convienently called while we were on our way to signing and said she couldn't make it (imagine that). We were never told of our prepayment penalty, we were told that our house payment would never go above 2000.00 because within a year and a half she would have us refinanced because we would be at 80% and have our credit better because we would be making our mortgage payments. We thought we were dealing with professionals because we went through century21 and a broker whom we never even actually met. At our signing we sat down with a notary who blew through everything and we were seeing some of this, such as the prepayment ryder for the first time. We also found out that there is a ballon payment we weren't aware of about six months later. Our first loan of 252,000.00 was a 2 yr fixed then turns to an arm. Our piggyback loan was for 62,000.00 but at a whopping 11.5% we never knew. At the end of our 30 year arm we have a ballon payment of 231,000.000 meaning we pay on this house for 30 years and only have managed to pay down roughly 80,000.00 dollars and our loan payments are a total of 2275.00 a month. We feel really taken advantage of and are looking for advice. Our arm will adjust shortly and we are stuck. Thanks for any help. My husband and I have five kids and thought we were finally doing okay, I am heartsick over this whole business.

Thank you for joining the forum and welcome...

The Right to Rescission is called the Notice of Right to Cancel. I have never seen a loan that has those terms....is it a 40 year amortization with a 30 year balloon? Even a 40 year amortization with a 30 year balloon would not have that large a balloon payment, where are you reading this data? That does not make sense in the mortgage world...

Please let me know where you are reading this data from, which document and in what context. Please check the note and see if it is a 40 year amortization or 50 year amortization with a 30 year call (balloon).

Please let me know.

[stweedy]

In my form that says balloon payment it states that instead of paying payments for 50 years after the first thirty years we will be required to make a balloon payment of $231,816.69. Our first mortgage was only 252,000.00.
I dont understand how we can pay for thirty years and then they demand all at once a payment of 231,816.69. How does the normal person whose family income is 80,000.00 per yer pay that. They put us in an impossible loan in my opinion and we were not told up front about any sort of balloon payment. The top of the form says Balloon payment disclosure and it discusses why a forty or fifty year loan would be worse than the ballon payment being made in full in August of 2036. It also states that they are in no way obligated to help us refinance that huge amount.

Pretty simple....it is amortized over 50 years...so the payment that you are paying would pay it off over 50 years, but...in this case they have a 30 year call on it (balloon payment). It is an instrument and program that is used to qualify people that do not qualify for a 30 year payment....it makes the payment far less than a 30 year payment...like this...

100,000.00 loan for 30 years at 7.50% principle & interest payment = 699.21

100,000.00 loan for 50 years at 7.50% principle & interest payment = 640.23

Now that means that you are paying 58.87 less in principle a month than if you were paying a 30 year note. You want to amortize this over 30 years...real simple figure out what it would take to pay off the loan in 30 years and pay that amount. Since it is an ARM that is hard once it starts adjusting since you have to recast the loan every time the rate changes for the rate and term. Confusing, but a good mortgage person can show you how to do it. Your present loan amount is probably still around 252,000.00 so you have to figure the payment based on the present rate and how ever many years are left on the loan to pay it off by 30 years time. So if you have had the loan for 1 year, you need to use 29 years to compute the payment stream at the rate it is today...and when it adjusts, same formula....28 years and the new rate against the principle balance at that time. That is called recasting.

There is nothing illegal about the product, perfectly legal, perfectly allowable, just probably not something that was properly explained to you. So there is the way to make the loan pay off in 30 years.

Now if you decide to do this, you have to send the regular payment in on one check and the extra in on another check and make sure that you put on the check and on a note in the envelope that the extra amount is for "Principle Reduction", otherwise the morons will not know what to do with it. So there is the cure for the problem....the payment will go up since you will pay the extra, but it will payoff in 30 years. I think that there is an amortization program in Microsoft Money...just plug the information in and the program will give you the payment, principle of the loan now, rate and the remaining years to pay it off in 30 years...when it adjusts, do it again...every time.

The second rate is not good, but not the worst that I have seen in my day, you might want to approach the servicer on the second about a modification then do the same on the first after you get the second done. When you go to do the first, ask for a 30 year term at a reasonable fixed rate...that product really is obnoxious.

Also they are not required to refinance the 50 year or 40 year balloons, well in some states they are if you have been current on all of your payments over the life of the loan, i.e. satisfactory payment history...but that is really, really rare and they did not sell those products in the states that made them refinance the balloon, so they fixed that problem.

[stweedy]

Thank you, we are current on our mortgage an hve been talking to our lender.
We also did not recieve the right to recission. i have been through our whole contract and it is not there. That is why i wanted to know of other names it might be called. You guys have great info and i am hoping to get all of this fixed as we really want to stay in our home.

Keep talking to them and try to get this 50 year thing tamed to a 30 year thing, all of them are long...but, it would be nice to think someday you can own it outright..... stay on the lender and see what you can do, but also get rid of the interest rate on the second if you can, that will help make a difference when you amortize it over 30 years...the combination of the higher payment and that second, well.....

So if you can get the first to a 30 year and drop the interest on the 2nd, it might be real tolerable.

[MlcMBjnn]

Poppy, doesn't the right to rescind only apply to refinancing? If the loan is an original purchase loan you don't get this, right?

The 3 year window is germane to refinance, purchase money is only a one year time frame for damages, that does not include rescission either, just damages and actual issues caused by the violations.

Example, they overcharged in the APR and you were off by that .25%, they refund a portion of the charges to make you whole and cure the problem..that is what happens on Purchase Money. I have seen this time and time again...all in all there are also some ongoing servicing issues that can be used as well to impress the dolts that they need to do the right thing.

Purchase Money is different than refinance, however...however....there are things that an attorney can and will do to remedy some of these issues that the lender may or may not be very sensitive to. Predatory lending issues are very much a hot button and they do have teeth, not the kind that RESPA, TIL and Reg Z have, but there are things that can be done with that appraisal and other issues in the file that could and do bring some fear in the little hearts of the Lender/Servicer.....

I am not an attorney, have to say that, you need an attorney to assist you when you go for these issues and let them be your gladiator in the arena of lender malfeasance.

[stweedy]

Should my next step be to write a hardship letter and include our monthly financials? I would like them to start considering us for a modification or interest reset. If we can't get it under control we will be facing foreclosure. Our mortgage broker told us not to worry about any terms because she would have us refinanced in about a year and a half. Our prepayment penalty term is longer than that so I'm not sure how we would have accomplished this. Now she seems to be missing in action and sure isn't offering help. Should I be seeking help through hud counseleing, or keep trying my lender first? These loans that reset to more than a persons monthly income should be illegal, or at the very least they should have to explain , in laymans terms, what an interst reset means in real dollars. We had no idea that our reset rate would be more than we make a month. Why would they put people into unaffordable loans. Thanks everyone for your input!

At this point contact the Lender/Servicer and get the modification package sent out...start the hardship letter and the financial data so that when it shows up you are ahead of the curve. I do not know who your Lender/Servicer is, so if you could tell me I have a fairly good idea on who is doing what...not in all cases, but in some.

Please let me know on the first as that one is the one that you are going to have the toughest time addressing as the change is a ways out, the second as well so that you can start that process too.

[stweedy]

Hi again,
Our lender is America's Servicing Co. I believe they are owned by Wells Fargo. At first they were really difficult to talk to, and they have fees for everything although this is the norm, maybe? Lately, since all of the legislation has begun to change they have become a little easier. I just feel really ignorant, this is our first house and we were so consumed with excitement that I think we were very easy to manipulate into the position we are in. I love our house and would try very hard to keep it. We are current and hope to stay that way with their cooperation. I so appreciate your help, I feel like I am stumbling through the dark.

Well some of my favorite folks, NOT, Wells gives lip service to the programs, and ASC ignores them...

So...get the package started and be ready for a ride of a life time...these are not easy people to deal with and since your adjustment is a ways out, there may not be a possibility of modification until closer to the adjustment. Meanwhile I would make a full out run at it, NOW.

Do not take their word for anything, get everything in writing, follow up any verbal conversations with a fax and be able to confirm that it has been received at their end.

Keep me posted, let me know your progress and I will try to help as you go through this. Also check out HOPE 888.995.HOPE.

[stweedy]

Thank you Poppy,
I will keep you informed of my steps, I have already called a hud-counselor and they sent me some paperwork that I need to fill out giving them the right to request our information and help us, it is through the Community Housing Improvement Program located in Chico Ca. It is an authorization for interagency exchange of information. They lady I spoke with said they are associated with Hopenow. I will fax everthing in duplicate, and should I send copies certified mail for backup. I have found these people to be difficult in the past and while I hope for the best, I am quite nervous. Also when is the right time to understand that we may need outside help and hire an attorney to help with communication. Will I know when my efforts are failing? It would be worth the expense if I run out of options. Great job on provideing info, your site has been a blessing. Should I now be posting under loan modification or another area? Thanks again!

Let me know that you saw this and I will move the thread for you under the modification forum....there will be a redirect for a while if you loose track of it. Yes send everything by certified mail as well, the problems that you have with them everyone does and I always recommend certified return receipt mail...fax with your property address, name, loan number and last four of primary borrower SS#....three times.

They are really good at loosing things...go figure...

[stweedy]

Thanks Poppy,
I will be starting with sending and resending on Monday. One thing they did tell me was that If I apply for a loan modification that once they have recieved my letter they will not be reporting to the credit bureau and that my account will not get reported negative while we are in the approval or negotiating process so that if my rates have went up and I can't make full payment it won't go against my credit record, True? or to good to be true?
Thanks again!

With ASC, I do not believe a thing that they tell me....sorry, been there done that....so, take that with a grain of salt. If they live up to their word, good, but will they is the question. Kind of doubt it myself. Make the payment and call it good, you need to stay a head of the curve with these folks, they are really, really nasty. This is an derivative of Wells and their sub-prime servicing unit, nothing is ever what it seems with them.....so do make your payments, request the modification and call them daily or twice daily...this group if they make a commitment to something, fax what they said to you with your loan number, property address, borrower name and last four of the SS# to them to have it memorialized in your file. They are famous for one thing today and something else tomorrow.

Make sure that you document the names and badge numbers if possible of every person you talk to date, time....etc...

Call daily, do not let up with these folks and definitely get everything they tell you that is important to the process documented with a fax back at them outlining the conversation.

Make you payments with them to, they do not hesitate to falter to foreclosure.