New and Perplexed!

[Suzanka]

Hello, I am so grateful to be able to post my story to the forum. I'll start with a question then share my story. Do you have to default on your mortgage to get anywhere with a modification?

I am a single mom. I purchased a home last November. I am a 1099 employee therefore I didn't qualify for a traditional mortgage. I told my lender, Fifth Third Bank, I would feel most comfortable with a payment no more then $1400.per month. They privately funded my mortgage with a first and second. Paying intrest only on the second I was able to keep my payment close to what I needed.

The month after I closed on my mortgage my company made a 25% across the board paycut. I had a lot of debt. I tried juggling it all but in May filed for Chapter 13. Before I filed I locked in the interest rate on my second mortgage. I was told the interest rate was based on my credit score so I knew it would be much higher after filing. Now my house payment was $1550. a month. I had never been late on any payment throughout this mess.

Last month I received a letter from 53 bank stating they were raising my monthly mortgage payment by 10% because they made an error in calculating my escrow. I told them I just couldn't pay it, I was struggling with the payment as it was. The increase would make my housepayment 40% of my income. They suggested I filled out paperwork for a modification which I did. I submitted it and spoke to the loss mitigation dept. The agent said based on my numbers he didn't think there would be problem lowering my payment. One week later I was informed his manager turned it down since I hadn't had the mortgage a year yet. He told me to resubmit in December.

I cannot make my full increased payment. I asked the bank if it really makes sense to have me default when I had never even been a day late in the past. The representative told me not to worry they wouldn't start proceedings for 90 days. He told me "off the record" I might stand a better chance negotiating if I wasn't current on my mortgage.

I do not want to lose my house. I have been taking a financial class and even the instructor told me my budget is as lean as it can be. I just don't know what the answer is. I can pay $1500. a month, should I do that until the bank decides it's the right time to negotiate with me?

Thanks for your insight.

[ama125]

Welcome to the forum. You will learn much from this site. As for getting help, some have gotten the help while staying current but it's not without an uphill battle. Servicers are far more inclined to help those behind in payments (it is very much like a triage unit, the help goes to the most seriously wounded first). Concerning the length of time that you have had your mortgage, I have read different things depending on which programs exist. This may also vary from one servicer or lender to another. You could try NACA and see if they can help. If your servicer is saying to wait, then that may be the truth. I'm not an expert in these things, just been reading a lot and going through the process myself. I do wish you all the luck in the world as this is no easy task. Stay strong, stay positive, and don't be defeated! Best wishes!

[Suzanka]

Thank you so much for your response. The system is truly fractured when someone has to be late on payments to get any attention! I am writing a letter to the CFO of 53 bank to state my case. If nothing else it will make me feel as though I have truly tried. I just don't want them to take my house. I appreciate your opinion, thanks again!

[caldwellb02]

Right Suzanka. If the loan docs you SIGNED said nothing about their raising the rates at their own discretion, I believe you are in the driver's seat. Re-read the loan docs and make sure. I'm not an attorney, but seems from what you've written that you hav a good case.