4 Rental condos-serviced by Chase subprime

[classicgk]

Well here goes, we have 4 condos in Minneapolis we rent out. The loans were originated by Ameriquest and are serviced by Chase as of January 1, 2009.

Each loan balance $144,000
Rate: 6 3/8%
Term: 30 years

Each month our loss - after vacancies, repairs, condo dues - on each unit is over $300.00 Our renters are low income and we are dedicated to maintaining a beautiful block and continuing to provide them with good and safe housing.

I am just starting to write a hardship letter and assemble documentation. Because we own other rental properties all on one block - we live in a formerly tough block we have worked hard to improve for over 25 years - its really hard to give the financial information over the phone. Our finances are complicated. Is it possible to mail or fax this info along with the hardship letter?

We also have a lot of short term debt - credit card- 300k that we have asked a credit union to help refinance. It is mainly debt that we were not able to roll into a LT mortgage when values started falling.

We approached the credit union first because we wanted to simplify our finances before approaching Chase. We are waiting to hear from the credit union who promised a prompt response.

I am working with a bookkeeper to submit an accurate Profit and Loss statement and a personal budget.

My best and let me give my appreciation for a well run and informative - and hope giving - site.

[Dan Bailey]

classic,
It is definately possible to send a copy of your profit/loss with the hardship letter. Or, also make them sit for hours while you read it to them over the phone

[HopingtoFind]

Hi classicgk,

We have recently received an offer for modification on a rental property that Chase services... and yes we had to give all information over the phone... we are also self employed with other rental properties. Once they assigned an analyst she told us to go ahead and fax profit and loss to her among other things... I would call Chase first, they should direct you on what to do next...
*** usually posts the number for loss mitigation department... if you search other threads you should find that number...

[Moe Bedard]

Hi classicgk,


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

You would need to call first and they will give the number to fax everything in...........

Chase Homeowner's Assistance
1-800-446-8939


Please keep us posted on your progress.....................

[classicgk]

Just an update: I am working on a P & L for the last six months with a CPA and her bookkeeper. CPA suggested a more professional presentation so am using Quickbooks.

[chasepmt2hot-firefighter]

classicgk, this is my first year of owning rentals. What a mess my records are from beating ourselves to death trying to produce a nice product for a nicer return. So... I ran all of our financials also including personal under one umbrella and it's a terrible mess. I don't have QB but would like to try a cheaper version of it. Can you give me any examples of yours are looking like? I would like to see if hopingtofind would be interested in providing me an example sheet of all the docs. I only have Open office and it's generic.
Thanks

[HopingtoFind]

Classicgk, chasepmt2hot.... I know exactly how you feel, when I started looking at possibility of modification in October, I really had no clue as to how to present our financial information...there wasn't much information for modifying investment properties..

I simply decided to start the process and see where it leads me... Chase basically let me know that they will take my finances over the phone... and they will look at personal/business finances combined. My husband really did a the work with the financial info, he put everything in Excel spreadsheet... he is really good with Excel....When we had everything in the spreadsheet, all the numbers were in front him and it was easy to give it to the rep over the phone... We ended up about $200 positive net income vs expenses.

Later when the case was assigned to an analyst she let me know to fax Profit and Loss statement....it ended up to be a really simple format on one sheet of paper that basically included as follows:

Income consisting of Net Sales and Cost of Goods Sold
Gross Profit (Net Sales - Cost of Goods Sold)

Rents

Expenses (Utilities, Insurance, Mortgage Pmts, Taxes, Maintenance)

Total Expenses (Add everything under Expenses column)

Net Profit Before Taxes

Provision for income Tax

Net Profit after income Tax (Net profit before Taxes - Provision for income tax)

And then a column for all of our personal expenses.

That was pretty much all we have submitted as far as our financial info.. no fancy formatting or anything.

She also asked us to fax Hardship Letter, rental agreements, declaration of insurance and tax bill, but I understand this list varies for different investors.

I hope this helps you guys...

[classicgk]

Hopingtofind,
Your posting helps immensely! Thank you for posting the format you used for organizing your rental expenses!

Trying to save on professional accounting help for me was a mistake. Because our operations are fairly complicated I am meeting with a bookkeeper now to at least get our financials in order from January 1st, 2009. I shifted to Quickbooks simply because I have at least three investors that will be looking at different stuff.

Thanks again,
HopingtoFind

[classicgk]

Promised update from credit union - I know you're waiting with bated breath

I had asked them to help refi long term credit card debt 300k worth!! and to refi some of their mortgages to longer term at a lower rate.

They spent a lot of time analyzing my situation. Their response was that an interest rate or term adjustment would have little effect on my negative cash flow situation. They are willing to help but only if other issues are dealt with to indicate a possible total resolution.

The points they said I need to do are:
1. Reduce credit card debts greatly through negotiation. My comment: there goes the score
2. On the Four super negative cash flow upside down condos: get rid of em through negotiated sale or surrender. My comment: 40 year 3% would work Question: has anyone seen this great a rate offered?
3. Occupancy: the credit union wanted to know how rentals were going. Fortunately it seems that more of our renters are paying ontime than ever. Our collections are about 20k a month. Our renters dont want to get behind either.
4. Reorganization: the credit union said a chapter 13 bankruptcy may be required to get all creditors to comply with a VIABLE repayment plan.

My first response was disappointment. My second appreciation for what I thought was their excellent analysis.

I am doing my accounting now with an eye to having to file Chapter 13 - actually it is prolly Chapter 11. I would prefer loan amounts knocked down to actual market value - in some cases this is 40% writedown of principal.
Why try keeping going unless all the financials are in place for a successful operation?

I dont want a cheap workout because why do I want to end up as simply servicer for someone elses property?. In my instance PI has to come in at about 55% of rent. And I needed to leave at least 20% of rents for maintenance. Even in hard times pipes have to be fixed and a landlord is still COMPETING with other properties for rent.

I called and talked at length to a nonprofit debt counseling service. It was hilarious. On 210k of credit card debt what they came up with was a monthly payment of $5000 over five years. i think the interest rate they offered was 13%.

My present credit card rate is about 10% and the monthly payment $3500.
However they were helpful in asking me personal budget questions over the phone; something I have to do with Chase when I apply for loan modification if I go that way.

Well this is a lot of info in one message: hope it helps someone else working things out!

I made a list of all the people who are helping me. That keeps me from feeling isolated and discouraged.

Joe in Mpls

[classicgk]

Update Feb 4th
Well this month I am working on P & L to submit.

Also will not pay the mortgages on the 4 rental condos for the first time. Scary....

Also lawyer sent letter to two credit card companies offering 15 cents on the dollar to settle. I am not paying them this month either - though I hear Republican Senators want to reward "creditworthy" homeowners with 4+% mortgages....

This week I meet again with the bookkeeper. We got the accounts set up with Quickbooks last month and three weeks of entries done.

It's hard to be patient. I hope to get about two more months of entries completed this week.

Hang in there....it's a long ride

[Moe Bedard]

Thank you for updating.............


Good Luck!

[classicgk]

Servicing was transferred from Citi Residential to Chase on Jan 1, 2009. I saw a RESPA posting somewhere and so I decided to write to both servicers and ask them who owned these four loans.

I got a letter from Citi Residential promising an answer in 60 days. Today I actually found out that the loan investor is Washington Mutual LLC for what thats worth!!!.

[classicgk]

Credit card debt: debt reduction lawyer sent letters to ALL credit card companies offering 15 cents on the dollar. Lawyer said it takes about 5 months before they get serious in offering to settle for much less.

I had stopped payment on 4 condos; now I will prolly stop payment on another condo. Negative cash flow does not work when one can no longer rely on borrowing to cover!

I don't recommend borrowing from friends or family to cover negative cash flow. You are only digging yourself in deeper.

[classicgk]

The credit union wanted to see all the other creditors' cards before they bid. I sent them an email telling them I could no longer afford to pay two credit union mortgages on two condos. Two days later the credit union business loan head emailed me saying they would like to meet in the near future.

About credit card debt: in Minneapolis my debt reduction lawyer charges about $250 a credit card and then he gets the calls and handles the negotiations. My oldest bro said to give him a gift.

So I trudged into the lawyer's office with my Costco loot: a bundle of hydrangeas, a big box of strawberries and a brand new National Geographic. He said, "I'm only doing my job."

I got a lovely thank you note from his wife.

[Moe Bedard]

I am sure he appreciated the gesture..........

But I bet he won't forget you........

[classicgk]

Graciousness and thanks pave the way....

Update is we stopped paying on two condos to local credit union. Head of business lending asked to meet with us in near future.

So next week they are coming to our block to see their mortgages at work firsthand

[classicgk]

I forgot to mention that this local credit union has six mortgages on this block. Were it not for their investment the block would have foreclosures and boardups.

Located in the inner city of Minneapolis we have no residential houses in a three block area engaging in overt public crimes.

[classicgk]

Result of credit union visit was they seemed to be looking for leftover equity they could sink their hooks into.

They staked out a 2% reduction on homesteads for 18-24 months as their standard offer.

Be careful what info you supply; the banker is not necessarily on YOUR side. It is not a partnership!!!!

Unfortunately brinksmanship is involved; and one does have to be willing to walk away.

It takes huge gobs of time and I am lucky to have an unemployed numbers cruncher who has his cpa. thank god!!! he is generating the spreadsheets and helping pull numbers from the tax returns that I need.

So just plodding on

[classicgk]

I sent a request for QWR to my mortgage servicer Chase for two different investors, WAMU and Chase. About a month after sending the letter I got all the original loan documents in the mail.

I also got a cover letter for WAMU and for Chase with fax numbers to send my hardship letter, last tax return, paystubs etc. AND a worksheet with all the personal expense categories Chase asked for over the phone to prequalify you.

Today I just faxed in 46 pages of docs That fax covers 4 condos and now I have to churn out the docs for the other two condos that Chase services.

Tip: Number all the pages of your fax Pg 1 of 46, Pg 2 of 46, ...

[HopingtoFind]

I wonder how this will work for you...

We have been trying to modify an investment property that Chase services since February... with no luck. Today I spoke to a manager and he explained that they take into consideration rent that we get from other properties.. we own several others one of them is also with Chase... but ignore the expenses associated with them (mortgage, taxes, ins, etc..). This makes your income too big and they deny... how bizzare to consider income but not the underlying expenses..

[classicgk]

Interesting...thats the pay me but don't pay the other guy school.

My bean counter said to submit just the leases for the properties for which we were asking for loan mods. Let them ask for the others.

Our basic assumption is that each rental property has to stand on its own. If it doesn't cash flow I don't have the income any more to subsidize it.

I'll update on how it turns out.

[HopingtoFind]

That was probably a good suggestion by your bean counter.... My only issue with that would be if they end up running a credit report and see other mortgages, but then since they ignore them, maybe it wouldn't matter....

Another issue is that they ask for bank statements for the last 3 months and look at the deposits... they consider those as your income... while ignoring ALL other expenses.. including personal.

[classicgk]

These condos have a present value of 50k and mortgages of 140k so theres not much incentive in keeping em... its up to Chase not me It would take a 40 year at 3% to just make em cash flow!

But what the heck they don't have anything to do now do they?

I figure all I can do is to show good ol' Chase what I can afford and then its up to them if they want to foreclose.

And to keep my sentences short and not be toooo pathetic

[classicgk]

Chase will run the credit report; I just sent in a personal financial statement - minus the monthly credit card payments I defaulted on - and leases for the properties being applied for. The underwriter would flip out with too much information at this point.

My spreadsheet was to just show how the four condos cash flow based on Schedule E's and on present rents.

If Chase wants to use 75% of rents for income and then say 40% of that is available for PITI on a thousand dollars of rent that means 75% or $750 available for income then say $300 would be available for PITI.

That makes for a very unleveraged property - but a foreclosed one.

My banker talks about the coming real estate recovery; the recovery will be of the properties that were purchased at foreclosed prices....

[classicgk]

The best analogy was that the banker starts out by goin for the cheese; after awhile he just wants outta the trap...