Non-profit w/ 5 prop. for disabled adults - Need Help

[Safford]

Hi Everyone,

First post.

I have six properties that I am going to attempt to get loan modifications for. One of the lenders is ASC. I run a non-profit that provides supportive housing for adults with disabilities. With budget cuts, state budget delays, interest rate increase, and major decreases in property value, we are up against the wall.

ASC has asked for a 6 month P&L from the business to see if we qualify for loan qualification, I hope we do

Does anyone know what kind of debt-to-income ratio's they are looking at to make decisions? it seems if you don't make enough they won't work with you and if they feel you are making too much, the same thing. There must be a middle ground in there.

We have loans with ASC, AHMSI, Select Portfolio, and Indymac Bank.

If we can't get this done, there will be 84 people we need to find some sort of quality accommodations for...I'm hopeful we can make something happen.

[Moe Bedard]

Hi Safford,

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

I wish we had the "magic number" that the investors are looking for too.....then all members could be approved.....what they are mainly looking for is that you can afford the house and not just the mortgage..........
Here are the contact numbers that you would need to get started........they should also be able to go over the financials with you since yours might be a bit difficult to get together.............you should be able to use the figures that you put together for each of the modifications..........

Good Luck on the modifications............
and keep up the great work that you do..........
Please keep us posted on your progress...........



ASC ART Team
1-866-398-7569

AHMSI
Jeanne Drake-VP Home Preservation Dept.
Direct: 1-949-784-6011
Fax: 1-866-642-4196

IndyMac
Eric Friedman
SVP, Loss Prevention
Default Risk Management
Phone: 1-512-250-2776
Fax: 1-626-432-8802

Select Portfolio Servicing
Loan Resolution
1-888-818-6032

[Safford]

Thank you very much!!!

I will definitely keep you posted. It is great to have a safe place to talk about these things, get positive support, and useful information.

[Safford]

I had posted previously, but wanted to start one post that covers everything.

Here are some facts:

1) We are a non-profit providing housing for disabled adults

2) We took advantage of the easy doc loans to acquire properties for our clients

3) At the time of purchase our credit scores were in the 600's and income was not solid

4) Now credit scores are in the 700's. As far as income, with State and local budget cuts we were hammered financially. Unfortunately, we had to lay people off and cut spending dramatically. However, now that we have gone through that painful process, our income is solid and consistent.

5) Property values have dropped between 25%-30%, so all the loan balances are more than the values of the properties. So, even with good credit and income we cannot refinance.

6) Hope Now does not help people with rentals, so I am not sure where to turn for solid advise.

7) interest rates on 3 of the mortgages have increases, with payment increases of approx. $1,500 a month.

8) Although we have been able to maintain the mortgage and insurance payments, our property taxes are over one year delinquent.

9) The bottom line, if we can get our property taxes paid current and get a loan modification that would reduce our payments minimally including an escrow account for taxes, we will be in decent shape.

10) As stated in my previous post, our loans are with ASC, AHMSI, Indymac Bank, and Select Portfolio Servicing.

Concerns/Questions:

1) Do we need to let the mortgages go into a delinquent status before they will really deal with us?

2) Should we get legal representation? The process seems fairly straight forward: hardship letter, income, and bank statements. I'm wondering if I should provide comps that show the current values in the neighborhood.

3) While our credit is good, do we try to get into new properties at the current reduced values and just turn our existing properties back to the bank? I have some ethical issues with this, but am considering all options.

4) We've been able to negotiate some new contracts and diversify our income sources. This new revenue is do to start coming in Jan. 2009. How hard do we promote this? Even with the new income we will not be able to get caught up on property taxes and cover increase mortgage payments.

5) Do I have to accept that fact that our credit is going to get messed up through this process? I want to minimize this if possible.

5) Are there other things I should be considering?

Whomever started this forum, thank you very much. I've been struggling with how to handle this. I am responsible for a group of people that aren't able to care for themselves and I need to do everything possible to keep them safe.

Thanks again...

[Moe Bedard]

Safford,

I you are going to try the process on your own, you would need to begin by calling the loss mitigation contacts that I posted above to get the process going with each of the properties.............and you don't have to be late to get help..........you just have to be in a hardship situation.
Buying other properties and letting these properties go is fraud...........it is considered material misrepresentation and is currently being investigated by the FBI, FannieMae and FreddieMac as well........ by presenting to a new lender on new properties that you are going to purchase, that everything is fine with the current properties when you are planning to let them go is misrepresentation.

Doing modifications yourself with five properties could be a bit overwhelming.........we do offer help with modifications if you would like to go over that option with a representative of the attorney firm, just go to the Home Page and click on the Safe Loan Modification Service Tab.

[Safford]

Thank you. Yeah, that didn't sound or feel right to me, someone had suggested it so I thought I would throw it out there.

I will contact the law firm to discuss further...

Thanks again...

[Safford]

I talked to Annette Mitchell, she was very friendly and we'll see what if anything we can do. I'm sending her my P&L latter today. I will use this forum to chronicle the journey...keep good thoughts

[Safford]

I e-mail our six month profit and loss and a list of everything 30 days past due. I've hear a number of people talk about having "surplus" when you work out a budget. Is that surplus based on a budget showing the loan modified? I currently have a surplus, however it isn't enough to catch up on the past due property taxes. I am hoping they will be able to modify the loan, bring all taxes current, and reducing the payments a little...

I feel a lot better having a little help...thanks for the referral

[Moe Bedard]

Because when you are just starting the modification process you do not know what the modified payment is going to be, you would need to use current payment amounts in the financials.

[Safford]

O.K., so the current financials show a negative and the lender will have to determine whether or not they can rework the loans so there will be a surplus...right?

[Moe Bedard]

You really need to go over the financials with each one of the lenders that you are working with.................what they require will be different with each one............

[Safford]

Thanks for the input...

I have sent everything to Annette Mitchell. She has been excellent!! She is going to talk to their attorney today or tomorrow and will let me know how they may be able to help. I'm keeping my fingers crossed

[Moe Bedard]

Good Luck on the modifications!

Please keep us posted on your progress..........

[Safford]

O.K., here's my first cut at a hardship letter...any suggestions/feedback?

Dear:

I operate a non-profit organization, XXXXXXXXXXXXX Inc.,that provides quality housing for adults with disabilities. The properties that are financed with you allow our clients to live in a stable, welcoming environment. We are committed to retaining these properties and doing whatever is necessary to avoid any trauma our residents might experience if the properties were lost to foreclosure.

As a result of local and state budget cuts, interest rate and payment increases, shifts in the economy, and some major property repair bills, we have fallen two years behind on our property taxes and are behind on other business expenses. We have used all available resources to keep our mortgage payment current but this has meant that we have been forced to get behind on other expenses. We have now hit the wall financially and are very concerned that we will have to default on the mortgages if we can’t work something out.

We have worked hard to maintain strong credit scores (700’s) in the hopes we could refinance into current low rates (5% range). However, our properties have dropped in value by approximately 20%-25%, making the loan balances substaintially higher than the existing property values. So, even with good credit and income there are no loans available at this time.

In addition to maintaining good credit, we have completely re-organized our business and reduced expenses. To accomplish this, we’ve had to lay off employees, aggressively promote our housing, replace some staff with volunteers and interns from the local university, and cut costs everywhere possible. With these changes we are able to cover basic operating expenses. However, we don’t see any possible way to catch up on our back due taxes, other outstanding expenses, and address important maintenance that has been put off because of our situation (the roofs are leaking and need replacing and several other important maintenance issues). In addition, the budget cuts have meant eliminating meaningful services that allowed for an improved quality of life for our residents.

We had intended to hold onto the property for 20+ years and still hope we can fulfill that commitment, but we need some help. We really need your help in the following ways: 1) provide a 2-3 month forbearance, giving us time to complete a loan modification, 2) bring property taxes current, 3) set up an escrow account, 4) reduce our interest rate to 5% fixed for the remaining term, and 5) if at all possible, reduce the loan balance to the current market value of the properties.

We appreciate your consideration and are very open to any creative solutions you might have. Please feel free to contact me with any questions and/or additional information you might need.

Sincerely,

[Moe Bedard]

It looks good............I think you explained the circumstances and hardship to the point............

[Safford]

Thanks, it is hard to squeeze everything into one page. I intend to fax this letter to Jeanne at AHMSI tomorrow, keep your fingers crossed I will continue to post updates...

[Safford]

Quick update: I FedEx'd my hardship letter to Jeanne Drake and she received it yesterday. I left her a message this morning and received a call back from Rosa in her office within an hour. I've called back and left a message.

I will keep everyone posted on the progress...

This forum has been invaluable

[Safford]

Quick update 11/7:

I have three lenders I am working with: AMHSI (2 loans), ASC, and SPS

AHMSI has been very responsive. I have delivered everything they requested and received a call from them yesterday saying all they are waiting for is escrow information (taxes and insurance). I have only been working with them for approx. 2 weeks and have received 4 phone calls from them with updates, etc...

ASC - I am working with a law office on this one. They have been extremely proactive as well. I've submitted all of my paperwork and received a call from my "negotiator" (I think that is what they call themselves) late yesterday.

SPS - I just submitted my claim yesterday, they say they respond within 72 business hours.

I have been current/never late on any of these loans. But, I am not making payments this month, so I can get caught up on everything else that has fallen behind.

I'll update this at least once a week. Feel free to ask any questions. People on this site have been extremely helpful and I want to return the favor.

[elpjohnson]

Safford....

Just wanted to offer you some kind words and support. I wish you all the best and will pray for you to get mods on all of your properties.

Good luck and God bless!

Thanks for all that you do!

[Safford]

Thank you very much!!! That means a lot....

[elpjohnson]

Oh you are very welcome! Just have a lot of patience and perseverance on hand and you will get through this. This forum helped me through my loan mod and was my crutch....I still come here everyday and read everyone's stories.

[humbleowner]

Safford, how much surplus did each lender require to be qualified for your loan mod ?

[Safford]

The Law Office provided me with a cool excel spreadsheet that allowed me to plug in income and expenses and it automatically calculated my current deficit with the existing financing and also showed the monthly surplus I would have in the event of a modification. I have a few loans and showed a surplus in the range of $150-$200 with a modified loan.

This is the range the law firm recommended and I have heard others quote pretty consistently.

Good luck and keep us posted.

[humbleowner]

Safford, to get to the surplus in the range of $150-$200, how much mortgage reduction did you put in the spreadsheet as the requested/proposed modified loan/month (is it $500-$800 reduction from your current payment/month) ? Thanks.

[Safford]

I used a 5% fixed rate with principal and interest to calculate my payments. It may be a little aggressive, but we will see what they propose.