Our experience w/ Homecomings Loan Modification

[Bridgette79]

Backstory....

We refinanced our home in April 2005 (previously with Chase) with Homecomings Financial. At the time our payment was $1640 - which was a higher than what we were paying with Chase but we had rolled in some debt my husband was responsible for after his first wife died.

My husband, at the time 31 - knew little about loans. His first wife used to handle "that stuff." And I was 24 and didn't know a damn thing about any of it.

The terms of the loan (which we both now understand) was fixed for 2 years at 6% and then an ARM for the remainder of the loan - but we were told we could refi after 2 years and get into a fixed so... no problem.

After 2 years - in 2007, we applied for a re-fi and were unable to get into anything desirable. In fact, I think all the shopping around we did trashed our credit.

In 2007 I also lost my job. My family's 54 year old electrical contracting company tanked. So now our ARM was starting to climb and I was looking for a job to no avail. I was doing freelance work as a web designer earning the odd $1000 every other month when my clients felt like paying me. In the beginning of 2008 our ARM had reached 10% and we weren't making enough to cover even half of our bills. We sold things on ebay, we depleted our savings, we stopped eating.

Last summer I found a great paying job - making more than I had previously made working for my family. We worked out a payment plan with Homecoming's Loss Mitigation department where we'd make a payment & 1/2 every month until we were caught up. Things were still VERY tight and we needed to charge necessities - like groceries and gas.

So, currently we're paying Homecomings our normal mortgage payment of $1979 - We're never on time but we do pay within 30 days. Usually we pay the last day of the month. We still have that pesky 10% ARM. We can barely breath between that and the credit card payments. We've called HOPE. We've applied for the Loan Mod under the Making Home Affordable program and we've been approved.....

Today I found out what they want to fix our rate at. 9.175%. I felt like I got kicked in the face. My ARM is set to adjust to 8.75% in a month and they want to mod my loan to 9.175%??? I UNDERSTAND that at 9.175% our payment is in the 31% of our monthly, combined, gross income but..... seriously? That's the extent of the help I can expect?

Any advice?
I haven't agreed to this modification just yet.

I'm not making my April payment........ no way.

[Moe Bedard]

Is your loan currently below 31% of your gross income then?

[Bridgette79]

No, it's not currently. But the loan modification would put it right at 31% I'm just disappointed that the rate will be fixed at 9.125% - that's not even a full point reduction. My payment will only go down $70 a month.

[Moe Bedard]

The modification doesn't always change the rate itself..............the modification plan is working to get the payment on the first lien to the target of 31% of gross income.........


From the Guidelines:

With respect to adjustable rate loans where there is a rate reset scheduled within 120 days after the date of the evaluation (a “Reset ARM”), the monthly mortgage payment used to determine eligibility will be the greater of (i) the borrower’s current scheduled monthly mortgage payment or (ii) a fully amortizing monthly mortgage payment based on the note reset rate using the index value as of the date of the evaluation (the “Reset Interest Rate”). With respect to adjustable rate loans that reset more than 120 days after the date of the evaluation, the borrower’s current scheduled monthly mortgage payment will be used to determine eligibility.


If the loan is a fixed rate mortgage or an adjustable-rate mortgage, then the starting interest rate is the current interest rate. If the loan is a Reset ARM, the starting interest rate is the Reset Interest Rate.