Hangin in there but not sure why...

[JackDinLBC]

I’ll briefly tell you where I’m at.

I bought a 3bd/3bth condo in April 2008 in Long Beach, CA, for $490k
My first mortgage reset in April 2007
I have tried to refinance several times and gotten no where
Currently GMAC is “processing” my application for a Rate Freeze (ala Bush plan). They say I qualified, but no one has talked terms with me and when I call they say someone will be in contact…it was submitted Jan.
I have not been delinquent, but feel I may have no choice now. I feel it’s the only way they’ll talk with me.


I am overwhelmed with this. My family has been financially supportive but I don’t see that continuing, nor do I feel it should. I need to know what options I have at this point; it seems options change month to month now.




Below is the hardship letter I sent GMAC. It’s a little long, sorry.



GMAC Mortgage
Loan Modification Department


I’m writing regarding the status of my loan modification application initiated January 21, 2008. I understand this process takes time and would like this letter to be included in the record and review of my application.

I purchased this 3bd/3bth condo with the million dollar view in April of 2005. The mortgage broker, XXXXXXXXX and its agents wrote the loan under what I now know were predatory lending practices. My credit was pristine, scoring in the high 700’s. This brokerage took advantage of my naïveté and put me in a sub-prime loan. Being a first time buyer I didn’t understand the risks, or question the methods in acquiring this loan. When I did ask, I was assured time and again that I would be able to refinance before the rate adjustment. XXXXXXXXXXXXX also inflated the selling price of the home by using their own appraiser, insisting I write a personal check for it. Much of this deal was done under dubious terms. This brokerage is now out of business and its primary officers under investigation by the state of California.

When I bought the condo I was partnered with children. We had been trough a rough year prior, losing a child to cancer. Buying a home seemed like the right step for us. I had the good credit, so it all went under my name. We were both working and the costs of living were shared between us. But soon after, my partner fell into a deep depression and was unable to work. We went through counseling and I made up for the loss in income the best I could. I got a better paying position with a firm I’d previously worked for. It became more and more difficult, month after month without him working. I took out several personal loans with credit cards. This was a temporary fix. By December 2005 the utilities had been shut off and I was desperate.

2006 began with my partner and kids moving out of state, I could no longer support them. The house was my responsibility and I had to make it work. On my own was impossible, still. My mother loaned me money and I rented out a room. I have been unable to pay back the loan. Originally we had agreed that I would pay it back once I refinanced or sold. She is now looking at putting a lien on the house. I’m hoping there’s another way to pay her back.

In 2007 I received a raise and rented out the second bedroom which helped prepare me for the rate adjustment in April. With the payment increase I have not been able to pay any additional principle or cover other costs such as maintaining my car, getting a new one, education & exams fees for my architectural license, furnishing and fixing my home, as well simple needs like clothing and entertainment. I have no room for additional costs. Recently a leak from my unit into the one below has run up repair costs that will have to go on my credit cards. I only have what the association covers. And association fees are now running over $400 a month!

I make it month to month with little savings and my credit cards, slowly skimming off the savings and putting myself deeper into credit card debt. I have been through credit counseling to repair my credit, budget and utilize my tax contributions. I had thought this would help me qualify for a refinance, or to sell. But, several attempts at refinance failed due to LTV numbers and selling is joke. I keep holding out, living paycheck to paycheck, thinking things will turn around, but I have nearly exhausted all my finances and see little hope of relief.

When I started out with this home I had a family. I thought I was doing the right thing by providing a home for us. It has proved to be anything but. I now live with strangers. I rarely leave the house for fear of what it will cost me. The only reason I stay is to maintain my name and credit. I’m not sure it’s really worth all that now.

The only thing that’s come along to give me any hope is this rate freeze program. It allows me to honor the contract I signed while providing relief during these difficult times. Please take this into consideration while reviewing my application.



Thank you,

[Moe Bedard]

Hi JackDinLBC,
First let me start by saying I am so sorry for your loss....nobody should ever have to go through anything like that.....

What is your current interest rate that you are trying to freeze? Is there only one loan on the condo? If they did freeze the current rate would that be good for you? Would you be able to comfortably keep up and not fall behind in payments?

Thanks,

[JackDinLBC]

Thanks for the reply, ***.

There's a first and second. The first with GMAC is at 8.375 and due to adjust again in April. The second is with Homecomings (aka GMAC) at 10.6.

The Rate Freeze would be on the first, intro was at 5.375. The program would fix at that rate for five years....that is if GMAC has adopted those guidelines. I have nothing that says they are...they could come back and freeze it for a year, or come back with nothing.

If this went through it'd save me nearly $1000 a month that would help with living expenses and pay off credit. It may even help pay off some principle. I'm making the payments now, no lates, but I have no principle paid and no equity.

JackDinLBC

Please, please stay current on your payment with them at all costs, they may be your savior when the market returns to "normal" whatever that is, they are very aggressive with FHA Secure and if you can get to a point where you have a 3% equity on your first mortgage to the value of your property you can qualify for the Fixed Rate 30 year FHA product with them. Frankly have you checked to see if your first is viable for that concept. In other words...do you with the balance on your first mortgage have a 3% equity in your property .... Principle Balance divided into Value of Property ... if you get anything less than 97% you need to look at that program with them.

In this case they could be your best friend, hard to believe, but...the going rate on the fixed rate 30 year FHA is about 6.50% it would have a payment of P&I with taxes and insurance collected as all Govie loans do that.

Regardless, GMAC is modifying and yes they are all hard to pin down and get to respond....so you need my formula...call, call, call and fax, fax, fax....daily...let them know that you care...really care to the point of driving yourself crazy...

Please keep us posted and check out that idea for the FHA Secure, the second is allowed to exceed the value of the house, they subordinate and since GMAC holds both of them....(Homecomings, same difference) you may have better than a snow ball's chance in ______ (fill in blank). They only snag I see is that the condo project has to be either a FHA or FNMA approved project...they are reciprocal on project approval these days.

You will need a DTI of 41% with compensating factors 45%. Credit good, nothing real blemished, no late payments on mortgage 6 months prior to adjustment of the loan that you are in now. Let me know on that, you will not know about project approval they would have to look that up for you at the lender.

[JackDinLBC]

I went through GMAC to Refi back in October, it was at 97% LTV to consolidate both loans. That was before the new FHA lending limits, so we didn't go that route. I didn't take the loan because it was only saving me $50 after all the fees and points.

Now it's a bit worse. For one, the only condo units selling in the past six months are foreclosures. The sister unit to mine just got an offer for $390k. I bought at $490k and thats what I owe. It's been intrest only so far.

$392K is the balance on the first. No priciple has been paid on either. So appraisal would need to come in around $410k or more, no?

It's tight, just can't tell w/o the appraisal. Do you think there'll be a summer time bump in values, is that worth waiting for?

I plan on calling them tomorrow, I have been doing so mid-month, and faxing, I could turn it up. Only thing, I get emotional on the phone...its hard not to, then I can't focus on work or anything. I've been contemplating having someone handle this for me, like a lawyer. I feel that there's so much I still don't understand and they're counting on that.

I'm glad I found LoanSafe, maybe I'll get enough ammo to get where I need to be.

Thank you, Poppy. I'll keep ya posted.

It was saving you 50.00 at the present payment on your current loans, over the life of the 30 year fixed rate it will save you thousands, the adjustable rates are destine to just go up, up, up.....that is why I recommend going into the fixed 30 year.

As for a summer bump...no, not going to happen this year....it is still headed downward, there are so many more to go in to distress and the chances of the values stabilizing are slim and none in the next 2 years, and slim may have left town....

The price stabilization and value stabilization will be in the next 3 to 5 years and appreciation will be 5 to 8 years....that is my very jaded opinion. Please realize that what you are going through, is not something that you are alone in, and yes your personal life and work life suffers....

I would assume that the sister unit was sold due to distress at that price, it would be viable to have a realtor come in and provide you a CMA and get an idea of what the value is for free, they do not charge for CMA's and that could give you an idea if you can rip that nasty first out of the saddle, believe me that would save you some $$$. Alternatively, you can retain someone to assist you in the modification and tame the beast that way.

This is easy for me to say to you, but call them and do not get emotional this is business for them, make it business for you as well. Also you really need to call almost daily to effect the results that you need on modification. The squeaky wheel gets the grease.....call, call, call and fax, fax, fax......it works....

[JackDinLBC]

Please see my other post under Walk Away forum:

http://www.loansafe.org/forum/you-go...html#post13068

[JackDinLBC]

I managed to get a hold of a member of the Loss Mitigation Team reviewing my application. Apparently they didn't exist two weeks ago.

The review is still in process (so one more full payment into the fire) The team is in negotiation with the investor(s). Most likely terms are for a step gap modification, setting the rate back to 5.875 for one year, then up 1pt after a 1yr then back into an adjustable.

Now, there could be other factors that would effect final terms. If I have more than $250 left in my monthly budget then the 5.875 rate is a bust and would come in higher. How that makes sense I don't know.

I asked about other options, 40yr ext, FHA Secure...etc. I can speak to my application manager about that....so who is that?

I got a name, finally. But no email or direct number, I did get a fax number...so, cal call call call fax fax fax time!

So, sounds like a lil progress, or are they just leading me on?

[Moe Bedard]

JackDinLBC,
If they are giving you the possible mod term scenario that they presented to the investor, then that is a very good sign....

And you are correct........now that you have a name start the attack of call, call, call, and fax, fax, fax........

But this is great progress........

They have a cap for the surplus in the budget and anything over 250.00 results in them assuming that you can afford a higher payment ergo a higher rate at modification time.....

What they are looking at is the step modification it appears to be a favorite of some of the investors these days, no freeze, not set the rate for the term of the loan, step it for a period of 3 years and then back to the original terms of the note and the adjustments....

Please try to get a LO on the FHA Secure idea...it may just work for you over the long haul, as this modification will put you back where you are in 3 years.

[JackDinLBC]

I called a loan officer about FHA Secure. They do look at both the first and second loans even when refinancing the first only. I'm upside down and there's nothing they can do for me.

The Loan Officer is a DOLT!!!!!!!!! I am a DE FHA Underwriter....so take it from me, if the value in the property is there to support the requested refinance of the first mortgage then the second can exceed the value......

DOLTS!!!!!!!!!!!! I have approved these all day long to help people out, please call Flagstar and have them assist you, they do know what they are doing. The first has to be at 97% of the value of the residence and the Second can exceed the value of the property....

Here is FHA's RULE from FHA

*****If the new maximum FHA loan is not enough to pay off the existing first lien, closing costs and arrearages, the lender may execute a second lien at closing to pay the difference. The combined amount of the FHASecure first mortgage and any subordinate non-FHA insured lien may exceed the applicable FHA loan-to-value ratio and geographical maximum mortgage amount. If payments on the second are required, they must be included in qualifying the borrower. If payments are deferred, they must be so for no less than 36 months to not be considered in the qualifying ratios. Borrowers need not yet have missed any mortgage payments to be eligible for this type of subordinate financing.*******

This is for new and existing seconds in conjunction with the FHA Secure product.........you could actually have a 97% LTV (FHA Secure Loan) and a 150% CLTV with the second.....

[JackDinLBC]

UPDATE!

I called in today and was told I would RECIEVE a call in two days to discuss my loan modification. So, I'll be holding my breath till then.

Now I'm worried...

My rate on the first loan is due to adjust again this month. If I'm looking at it correctly it should drop a whole percentage point to 7.325%, which should be about $200 in my pocket. The second loan has been steadily declining as well, providing some relief.

I can't help but think the decline in rates will hurt my chances for a reasonable loan modification. I think GMAC will come back with a moderate rate, 6.125% or something above my intro rate of 5.875%. This will be fixed for a year or two, then adjust 1 point, adjust again in a year, and then back to an adjustable.

Am I just setting myself up for failure?
Do they tack on additional penalties for prepayment?
Will this modification show on my credit and hurt my chances for future refinance?

What should I be looking out for?

Hold the hopeful and good thoughts, but remember they were banking on something much different in their stream of income and as such the declining rates are not really affecting the modifications that we are seeing as that was yesterday's money, not today's money...granted these are ARMS, but the bulk of them were set not to go below a certain rate...like the most that I see are not below 8.0% on the Sub Primer and on the ALT-A not below the margin as with the A paper product.

So.....rates maybe down, but this again is yesterday's money with an expected stream of income for the investor in yesterdays $$$'s and terms.

What ever happened with that FHA Secure, I just checked with a GMAC source and they are still doing the ones with the CLTV over 100% all day long......so is US Bank...

[JackDinLBC]

I called in today and got a totally different message. They gave me the standard 60-90 day turn around excuse, much different from the 'you'll get a call in two days" I got last week.

Also, learned that they've charged me an ‘appraisal fee’ and pay off quote fee’ for the loan mod. $115 now, but I wonder what else they will be charging me for.

I talked to another FHA Secure lender and was told that I'm well above the 97% CLTV limit.

This hole just seems to get deeper an deeper.

Oh, and possibly the last straw, my water heater blew and the shut off valve failed. Water damaged my neighboring unit below mine. HOA's already denies any responsibility for the shut off valve. We'll see where this goes...

[Moe Bedard]

JackD,

I am so sorry that everything terrible is happening at once it would seem........

Did you try and talk with GMAC regarding the FHA Secure versus the modification? And also US Bank they are the ones that are going above the 97% to over 100% LTV for the FHA Secure?

[JackDinLBC]

Here the current situation:

I am in foreclosure. A notice of default was filed on August 8, 2008. GMAC tells me on the phone today that the auction date is November 7, 2008. I have no notice of Trustee Sale, no notice of foreclosure. The timeline doesn't seem right. I thought there were 91 days after Notice of Default before they could foreclose and 121 days before a sale could be made.

I am talking with an FHA lender into doing a short-refi. GMAC says I need to make a full payment under the current terms in order for them to review a short-refi and that I need a lawyer to stop the auction.

Is it just too late?

[Moe Bedard]

You might want to consult with a BK attorney and find out what options you have to stall the foreclosure..............this might be what they are referring too.

[JackDinLBC]

I may have misunderstood what they were saying regarding the Sale Date. The sale date will be set on Nov. 7th. Thats not the day of auction. This still means I have no recourse after this. Actually, I have five days before sale date is set to make amends and stop foreclosure. I would need to do this if I want to persure a short-refi or H4H.

[JackDinLBC]

Maybe this shoul be a different thread....

I don't even know if a short-refi would work. GMAC said they would 'review' one if offered, but I'm not even qualified with the new lender yet. That would take 60 days to work out. It seems crazy to start paying on the current loan, halting foreclosure to get a new loan, no? It's a big gamble for me.

Short-refi questions:


Can they come after me for the defeciency of the loan or personal debt after the refi closes? Does it become forgiven debt, is it taxable?

What happens to the second lein, is it extinguished?

What upfront costs are there? closing, points? who pays?

How does a short-refi differ from the H4H Program or loan modification?

What about selling, refinancing in the future?

What if I lose my job and default under the new loan? Do I lose my rights?

Am I disqualified if rent out a room? I read somewhere that earning income form the property, part or whole, disqualifies you from an FHA refi.

Can I get the late payments/default expunged from my credit?

Loan was made under predatory practices, would persuing action on this help or hurt the short-refi?

What's the success rate???