Need help on what to do

[cvcsmkr]

First, this is a great site, I am appreciate the hard work it takes to keep it running and the help given.

My story:
We bought our home in Nov 05, in south florida. It was valued at $325k. We got $250k 5.8% 1st mortgage with Wells Fargo, The 2nd mortgage was for $50k 8% variable. We refiananced the 2nd in middle of 2006 paid a few bills and got a fixed rate. That 2nd mortgage is thru Citi, $70k 10.3% fixed. Our original plan was to pay off the 2nd mortgage, but the investment we were working on fell thru. We have not missed 1 payment and we have very good credit. But we will have some serious cash flow problems in 2 months time. The reason we are in this situation is we have had 2 children in the past 18 months & my wife is now working part time.

We spoke to a local loan modification company, they said i shoud have a short refinance done. But after thinking about it, i cant imagine it working out. After a lot of research my home seems to be worth between $180k - $220k. The problem i see is with the 1st mortgage. Why would Wells Fargo negotiate? Lets say the home is worth 200k, Both lenders would have to lower their principal amount. Why would Wells Fargo, in the first position, come down to say $150k? And citi come in at $50k? It seems wells fargo would be better off not negotiating.

I have no idea if i am on the right track. The loan modification company is asking for $2000 to complete the short refi, But with so many of these loan modification scams going around.

I dont know what to do?

[Dan Bailey]

cvcsmkr,
Paying money to a "loan modification company" is a risky idea...especially for a short refi....
The decision to modify is up to the investor, not the serviser of the loans(wellsfargo) so regardless of hiring a "company" they will only be able to do what you can do.
Principle reductions are just NOT being done by the investors on firsts...maybe a very small one on the second.
If you do decide/desire to hire someone, check with your local BAR association to find a qualified lawyer experienced in these matters.
On the Home page of the forum, there are some sections provided on how to start a modification process. Drafting a hardship letter to send to the serviser is a good first step(examples are given).

Moe or *** will be by as soon as they can to give you some more direction/advice on how to get the ball rolling for a modification if that is what you desire to do.
Hang in there and good luck!

[Moe Bedard]

Hi cvcsmkr,


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

I hate to be the bearer of bad news................but it isn't going to happen that way................and what they are proposing to you doesn't even work that way.

For, what is called a "short refi", the investors on your loans would need to agree to take a short payoff...........which the investors with Citi, and Wells are just not going to do............and then you would need to qualify for a new loan in the amount of the short payofff.............but only after the investor have already agreed to take the short payoff.


You can find out yourself the answer to the question, without paying a dime, by asking the servicer if the investor on your loan is willing to partipate in the FHA Hope for Homeowners refinance program.
The second through Citi would need to agree to release their lien and extinguish their loan and accept nothing..................to see if they are willing to participate.........which Citi is your servicer?

[cvcsmkr]

Originally Posted by *** Damiano

I hate to be the bearer of bad news................but it isn't going to happen that way................and what they are proposing to you doesn't even work that way.

For, what is called a "short refi", the investors on your loans would need to agree to take a short payoff...........which the investors with Citi, and Wells are just not going to do............and then you would need to qualify for a new loan in the amount of the short payofff.............but only after the investor have already agreed to take the short payoff.

You can find out yourself the answer to the question, without paying a dime, by asking the servicer if the investor on your loan is willing to partipate in the FHA Hope for Homeowners refinance program.
The second through Citi would need to agree to release their lien and extinguish their loan and accept nothing..................to see if they are willing to participate.........which Citi is your servicer?

Thank you very much for the info.
So it sounds like my only option is to ask for an interest rate reduction. I would need to get it down to 4.5%, whats the possibility of that happening?

[Moe Bedard]

Is this the only property that you own and is it owner occupied?

[cvcsmkr]

Originally Posted by *** Damiano

Is this the only property that you own and is it owner occupied?

This is our only property, and we are currently living in it.

[cvcsmkr]

***, what do you think our chances are of getting our interest rate down to at least 4.5%?
Also, My fico is at 771, my wifes is at 630, I dont know if that helps or not?

[Moe Bedard]

I was going to suggest that you go through NACA to get a low fixed rate modification............they will base it on an affordability equation and that will determine what rate they can restructure to and then they will negotiate that proposal with the investor on your loan through the servicer.........

click on the link for the info.............
https://www.naca.com/refinance/refinanceTenStep.jsp