Running Ahead of the Deluge for how long?

[RockysMom]

Hello. We have our first payment due on 3/5 to Countrywide for a refinance we just did to pay off credit cards we suddenly could not afford because the interest rates jumped from 9% to 31%. We also paid off my car and saved a little bit there.

We are not delinquent on our mortgage, the problem is we can't afford our mortgage, we are not solvent. I estimate we are about $300 short every month. Right now I'm selling everything we own on ebay and I can hold off the wolves for probably two months. Then I don't know what I will do. We thought my husband would get a good raise but most people at his company did not even get raises at all and he just got a very small one, only enough to cover the hike in health insurance.

We cannot sell, cannot move, cannot cut anything else out of our budget. I cannot just go out and get a job, I have MS and lately have barely been staying out of the hospital due to stress (my parents just lost their home of 25 years).

Is there anything I can do ahead of time about a mortgage payment we cannot afford? We have had so many hits, 70% hike in energy bill, the gas prices, water bill way up, everything else going up except our income.

Anything we can do? I am worried sick I will end up like my parents just did. The stress is killing me. We are not a victim of predatory lending. We had a pretty good interest rate before we refi-ed, now it is so so (7.2% fixed). But you know it was obvious that we would have nothing left to live on, I don't know how we even got that rate. We live in Maryland.

Anything? I don't know how I'm going to avoid being one of the sad stories on here down the road. I'm having panic attacks almost every night.

[imadreamer]

Good morning - I will defer this to the experts - but right off the top of my head - you state your parents just lost their home - could they perhaps move in with you and help pay your overhead ? At least temporarily ? My mom has MS too - the level of stress you're carrying can't help that insidious disease. Please hang in there and wait until the experts come on board this morning.

Karen

Welcome to the forum and thank you for joining, sorry I slept in this AM...

What I am reading here is that this is a brand new loan? You have your first payment in March on the refinance. Please correct me if I am wrong in that assumption.

With the tighter underwriting guidelines I am confused as to how the system was able to allow this to go through with that high a DTI (debt to income)ratio if you are already experiencing stress financially. The credit cards were paid off, all of them? The car, so that there was no consumer debt left at the end of the day? Please let me know if there was anything left in this equation and what kind of loan this is. Did you go to a Broker? That rate is actually a little high in today's world for a fixed rate loan, Agency or Government should have been not much more than 6.50% to 6.75%. Please let me know the loan type and the document type that you used to obtain the loan i.e. Full Doc, Limited Doc or Stated (FNMA still had stated at the time that you got this loan if the FICO was over 680 to 700 and the LTV was under 90% or lower). They are presently cutting that program out entirely, so that the loans now will all be full or limited/alt doc with DU doc relief.

Please let me know some of the details, with the loan as new as it is and the fact that it is fixed and Agency or Government you are going to have some real issues with the fact that modification this early in the game is a real stretch. Do you have consumer debts left, i.e credit cards? I have some ideas and they generally work if you have some that are left. Otherwise the problem that you have is that the loan is so "fresh" and you qualified in the last 60 days, unless there is significant hardship since you qualified, there are issues with modification this early and frankly a fixed rate Agency or Government does not modify unless there is significant third party documented hardship that is demonstrated well into the term of the loan.

[RockysMom]

Hi Poppy and thanks for your reply. I was gone two days helping my parents move into their new apartment. What a heart breaker.

The loan was full doc. The LTV was 90%. Loan was for 166K, house value 187K to be exact. Not all consumer debt was paid off although it 'was supposed to be' as a condition. We went through a broker subbed out from Citi. Called the Citi number and got her.

We have 3 low balance credit cards (2K, 1K, & >1K) and 1 car loan (8K) left after this. I have since paid the 1K CC off, still have two left. I will pay another one off this week, and the 2K one in another month or so. The two Citi cards (10K, 4K) got paid off, and 1 vehicle (20K).

My parents have given me so much of their stuff to sell on eBay, I can stay ahead of the game for another couple of months but that's it.

Our first payment on this loan is today, you are correct.

Our previous loan was fixed 6% with Citi I was sad to let go. It was new, we had just gotten the house transferred to us from my dad. He did a quit claim deed and we got a refi and took over the deed.

I do feel the broker baited us. She first told us and we signed for locked in for 30 days at 6.5% on 11-21 and she said everything would be paid off. Then she gave us the 'holidays and we're short staffed' excuse until the 30 days were gone and then the rate jumped to 7.2% and not everything would be paid off. I feel we were cheated on that but had no choice but to go along with it.

I appreciate any ideas you can possibly share. Hardship? I'm on assistance for my MS meds which have a $350/month copay so I don't pay anything for that now at least. We have to have 2 vehicles. The remaining vehicle loan is for a 10 year old truck which we couldn't sell for 8K anyway.

(Karen, thank you but my folks are safely moved, though barely, Dad still in the hospital - of all things - Mom having nervous breakdown after the move, she's a stroke victim - they definitely were predated upon by a shark lender but they have already decided to file Chapter 7. This house is too small to take on boarders anyway. I am working hard on some work-at-home work but the pay is low and slow to build. I'm doing it though as hard as I can.)

Thank you so much.

[mreedlaw]

RockysMom, good morning. I'm sorry for the difficulties that you are going through, I really am. It sounds like you have gone over the numbers a bit...I think that a very good initial step would be to prepare a monthly expense report and being to draft a hardship letter...it cannot hurt to have a draft of those items saved on your computer in case you need them. Examples are located at the left side of your screen in the Tool Box.

Also, you wrote in your first post that you were not a victim of predatory lending, but your most recent post states that you felt baited by the broker. And while the broker might argue that "these things happen" around the holidays, you still may want to explore making a QWR request.

Otherwise, I would recommend a reputable non-profit credit counseling company for the open credit card debt.

Moderators- would CCCS be an appropriate counseling agency?

Please keep us posted and all my best, RockysMom.
Thanks, Michael

Given the balances on the Credit Cards and the fact that they are so minimal, CCC is not the answer....however, you are paying cards off, how is the house payment, current? The car is not a CCC item, they do not do secured debt. CCC would not allow 2 cards to become so minimum with the fact that you are lump sum paying them off in the fashion that you are, the best that they could do on these two cards is lower the payment and freeze them for you, and the payment that they would be lowered to would most likely be right around were you are at on minimum payments today.

If you are able to pay the cards down in chunks of 1,000.00 or 2000.00 in a short period of time...then my question is how is the house payment such an issue to tame? I would be more prone with cards that are this low to make the minimum payment, put the funds from the E-Bay sales in the bank and get a modification on the loan with Citi...

The problem is that this is your first payment...I am horribly confused if at the time of signing the payment was outside of the realm of manageability...then you do not sign. You are to soon into the loan to get a modification and the fact of the matter is that they will not modify on a loan that is this new, they are relying on the validation of the income documentation that they gathered in the loan approval process initially. You refinanced out a "new" loan with Citi, "sad to see it go"....so that was a new loan too.

They have full doc qualified you and apparently had enough income in the loan package to support the request at the time the loan was approved. There are a lot of issues here that appear contradictory, what has changed since you signed for the loan 30-45 days ago?

At this early point in the loan they will not accept a Hardship, they still have docs from the loan approval that prove that the loan was affordable, those doc have a shelf life of 90 to 120 days depending on the underwriting model that they are using. The loan was obtained with full documentation and in their eyes viable at the income that was used to support the request and since it is a fixed rate....this is the loan that they expect the repayment on as they have verified through their sources that it was viable.

At this juncture I would set money aside from the E-bay sales and make the minimum payment to the CC's that are left and cash flow the sale from e-bay like a business to allow the house payment to be affordable in lieu of paying off the CC's, make minimum payments to the CC's and flow the income from the business until it gets on it's feet to allow the CC's to be paid in full. Also close out the CC's and do not charge to them any more....this will also assist in helping to tame the debt issues.

If the wolves are at the door, set the funds aside from the E-Bay sales and hold them off until your business gets on it's feet.