Loan Modification for multiple rental properties

[t2weati]

Hi, I am new to this site and wanted some advice from anyone who has tried a loan modification for multiple rental properties.

I own 13 rental properties which all have declined in value and rent (mostly negative cashflow). I owe more money on them than it is worth. It is getting harder and harder to keep up with the 13 mortgages, plus my primary residence. I have not been late yet with any of the payments, but I may be late for the first time this month. I've depleted savings and incurred a lot of credit card debt to meet the payments. How agreeable are lenders with regard to Loan Modifications on Investment Properties? Has anyone had any success?

The location of the properties and the lenders are:

California- GreenPoint Mortgage
Oregon- Chase Mortgage
Hawaii- GMAC Mortgage
Florida- Countrywide
New York- PHH Mortgage, IndyMac, Select Portfolio

I have 3 Florida properties and Countrywide holds all the mortgages on them. Should I try to modify the loan one at a time or all 3 together at the same time?

Foreclosure is something I want to avoid at all costs. I worked long and hard to accumulate what I have and I don't want to lose it. These investments are supposed to pay for my kid's college education in a few years time. Even if I can shave $100 a month off of each property, it would be a huge help financially.

Any advice is appreciated!

[HopingtoFind]

Hi t2weati Welcome,

We are kinda in a similar boat, although we do not have 13 rental properties. We have 3, two duplexes and house in the worst hit areas of the country. The duplexes are in California and a house in Florida.
We are attempting to modify these three. We are current on all three.

One duplex in California is way upside down and is one loan with Chase. We have submitted all our documents, expenses and income (including rental income) and at this point they have assigned an analyst and she is working on it. When I last spoke to her she let me know that she is working on it and will be ordering an appraisal this week... So we are hopefull. Our rent went down significantly as well from the time we purchased.

The other duplex, first loan is with Amtrust and equity line of credit with BoA. We have submitted all the documentation to AmTrust and are waiting for response.. BoA we seem to be having trouble as far as getting to submit documentation.

And lastly a house in Florida, first loan is with BoA, Equity line of Credit is also with BoA, we are still waiting for someone to be assigned.. so that we can submit our documents...

At this point we are having the most trouble with BoA, they seem very unresponsive especially with Equity line of Credit. Chase seems to be the most responsive of the three...

[t2weati]

Yes, Florida was one of the worst hit areas of the country. Rents have gone down significantly and there is a surplus of houses looking for renters....it's so competative trying to keep them rented.

I'm sorry to hear about your situation. At least you have started the ball rolling with the loan mods. How long have you been waiting on approval?

[HopingtoFind]

We started end of October.. beginning of November timeframe. Chase is moving along, Amtrust can't tell what is going on, they keep saying it is at least 30 to 45 days until we get a response, so don't know if someone is even looking into it. And BoA it wasn't assigned yet, so we didn't even submit our documentation yet.. we keep calling..

[Moe Bedard]

Hi t2weati,

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

Here is the contact info for you to get started..............also click on the link for examples of how to put together your hardship letter.........
Examples of a Hardship Letter

Greenpoint
1-800-784-5566 (press option 1, option 2, then ext. 5383)

Chase
1-800-293-0219

GMAC
1-866-899-5308

Countrywide
1-800-669-6650

IndyMac
1-877-908-4357

Select Portfolio
1-888-818-6032

PHH Mortgage
1-800-257-0460

[t2weati]

I'm hoping someone out there can answer my question.....
My Debt Analysis shows that I have a surplus of $1400 after all monthly expenses are paid, which I know may show I have the ability to meet my payments. My Income to Debt Ratio is at 97%. I own 11 rentals, plus my primary residence, so if you look at it logically a surplus of $1400 to spread between 12 houses is really not that much money. Does anyone know if they take the dollar amount of surplus into consideration or the Income to Debt Ratio?

Thanks in advance for any advice!

[t2weati]

For the previous thread entry.....Sorry, I forgot to mention that this is for applying for a loan modification on rental properties.

[yeswecan]

Hi t2weati, I am not so new to this site but still haven't gotten anywhere on our loan mods. Here's a link to a thread with our story:

HOPE not helping...berates me like the lender!

I sure would like to hear of somebody getting loan mods done on income property! I, too, don't want to foreclose. We have 2 income properties and a SFR, all upside down, with rents not covering mortgages anymore. All 3 have option ARMs, all in LA.

According to my counselor from HOPE, who was really not very helpful, each lender only cares about their specific loan, so, if you have a surplus, they want it paid to them on THEIR loan. Better to not have much of a surplus, is the idea I was getting from him.

[Moe Bedard]

Here is a thread from a member having success in modifying rental properties........
Non-profit w/ 5 prop. for disabled adults - Need Help

[yeswecan]

Thanks for that thread, ***, but looks like they haven't gotten a Mod yet.....unless I'm reading it wrong?

[Moe Bedard]

You are reading it wrong...........and he is in the process with the others.......he has 5 to work on with two loans on each..........

Quick update, I received my AHMSI loan mod paper work. I haven't gone through them with a fine toothed comb yet, but the basics are just as they stated 5% fixed for the remainder of the loan, they brought my back due property taxes current, my next payment is Jan. 2009 (get to skip both Nov. and Dec.) 5% fixed rate on two non-owner occupied 4-plexes is an EXCELLENT rate. I am extremely happy with the offer.

[HopingtoFind]

Hi ***,

I was confused with the following from the thread you posted:

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 modification. I have a few loans and showed a surplus in the range of $150-$200 with modified loan.

I always understood you say that one needs to have $150-$200 surplus with current financials and if you have a deficit they would not even work with you. Did I not understand you correctly? Or does it depend on the servicer and investor one deals with?

[Moe Bedard]

The surplus is just a guideline based on the averages with the over 200 modification success stories that we have here on Loan Safe and that is all...............what I do tell members is to go over their financials with the servicer because every situation is different and every criteria for the investors is different........which makes the outcome for each member different.........

[t2weati]

Hopingtofind, that is also my understanding....that there needs to be a surplus with your CURRENT situation and if there is a deficit, you will be denied a modification. I spoke with another real estate investor who owns several rentals (I can't remember the exact number...between 5-8) and she was successful in getting the interest rates lowered on both the first and the second loans of a few of them. Her advice to me was to try and keep the surplus to $100 to $200 a month. She has been using this as her guideline and it seems to be working well for her.

[HopingtoFind]

***.. Thank You.

t2weati.. Yes, that is exactly what we did, we submitted our financials on all three properties with about $200 surplus..

[t2weati]

I contacted one of my lenders, PHH Mortgage. They hold the loan for 2 of my duplexes in Albany, NY. They sent me a letter about my inquiry regarding modifying my existing loan. The only program they have in place is a "Principal Curtailment modification" that deals directly with reducing the principal and interest payment amount. The interest rate, maturity date, and escrow payment will not change. The principal curtailment request (the amount to be requested by me) must be at least 20% of the unpaid principal balance.

They also require a $300 processing fee to begin processing my request. That is $600 for 2 properties. My current terms are 7.625% fixed for 30 years. Principal balance on each are around $148,000. I still have another 27 years left to pay. If I request the 20% curtailment, it would shave $29,600 off of the Principal Balance, changing the Balance to $118,400...which would be fantastic as it would shave about $200 off of my payments ($400 for both properties), but here is my dilemma.... According to Zillow (which I know is not accurate), it says that one of my properties is worth $192,000 and the other property I own (right next door) is worth $181,000. There is a house next door that is for sale. The asking price is only $138,000. I am guessing that if I went ahead and asked for this curtailment, it will be denied based on the fact that the house is worth a lot more than my current loan balance and dropping the principal by 20% to $118,400 may not make sense to the bank financially. I don't want to waste $600 on fees that will get me nothing.

Has *** or anyone else heard of this type of offer? Has there been success with a situation like mine? I'd love to get opinions on whether I should proceed and try it or forget the whole thing and save my $600.

[Moe Bedard]

You may want to go over this with PHH because I am not reading that statement the same way you are............to me it reads like a special forbearance in which you make payments on principle and interest that are reduced for a period of time:

that deals directly with reducing the principal and interest payment amount.

That would be the PI payment not the principle balance.........if I am reading it correctly..........but you would need to go over it with PHH and than decide what to do from there.

[t2weati]

Thank you for that ***. I guess I was thinking if it were a forbearance, they would have stated "forbearance". Now looking over it again, I think your assessment is correct as it makes more sense. I will call PHH and clarify it with them.

Thanks again!

[HopingtoFind]

My guess is that the lender is not going to be looking at Zillow, which as you mentioned yourself is not accurate, to asses the value of your properties. We are going through modification with Chase and they have requested two different Realtors to go out and assess the value of the property... Realtors will look at what is currently selling in the area and for how much.

[t2weati]

HopingtoFind, what was your process and timeframe with Chase? I called and spoke with a Loss Mitigation rep on 12/3/08. I went over all of my financials over the phone and she determined that we qualified for a loan mod request. She said she was going to "Hot Transfer" my account and that I would be getting a call from an Analyst with a warning that the turnaround time is longer than it used to be due to the increased volume of requests. Well, to date we have not gotten a call. How long did it take for someone to contact you and how long ago did you start the process?

[HopingtoFind]

t2weati, we started this process with Chase at the very end of October. Initially we were also told that we would be assigned an analyst and that it would take aproximately 2 weeks for an analyst to be assigned. I kept calling every week and following up, the reason it is good to call is that they not that on your account and send messages to appropriate parties to take action.. I do believe that it took a little over 2 weeks to get assigned to an analyst. Once I found out that we were assigned I started calling an analyst directly, so we played phone tag for maybe a week and a half, finally when I was able to speak to her she let me know which documents to fax, that was I believe was a week before Thanksgiving... The first week of December she called and said that she'll be sending out an "appraiser", in reality she send a couple of Realtors to do a BPO... I am understanding that they made an appointment with tenants for this weekend, it took them a while to call the tenants and make arrangements.. There is a lot of waiting with this process... so have to be patient and persistant.

[Hansolo]

I thought that loan mods were only for those who need it on their primary residence?

Maybe that's only if it's a true reduction of principle that you are going for... not sure.

Anyway, with the way things are going I am not sure how ready to forgive debt on rental properties the lenders are going to be.

Where I live in California only 5 - 8% of "short sales" are working out (and these are mostly people trying to sell their primary residence and only home). That's because the people selling are asking the bank to eat more than 200K on a property. Sad as it is, most of these do not happen.

I wish you luck.

[HopingtoFind]

Originally Posted by Hansolo

I thought that loan mods were only for those who need it on their primary residence?

Maybe that's only if it's a true reduction of principle that you are going for... not sure.

Anyway, with the way things are going I am not sure how ready to forgive debt on rental properties the lenders are going to be.

Where I live in California only 5 - 8% of "short sales" are working out (and these are mostly people trying to sell their primary residence and only home). That's because the people selling are asking the bank to eat more than 200K on a property. Sad as it is, most of these do not happen.

I wish you luck.

I have read on this forum as well as heard from other sources that lenders are modifying investment properties... If anything I don't see any reason for lender to exclude rental properties from this process. Whether or not bank forecloses on an investment property or owner occupied property, results are the same... all parties lose.

[t2weati]

A few updates.....

I called PHH Mortgage to clarify the meaning of "Priciple Curtailment Modification" and it turns out my original thoughts were correct, this is not a forebearance and it is most definitely not the program I was looking for.... Apparently the letter they sent me was a mistake. That letter was meant for someone who wants to make a large payment (20% or more) toward the principle to bring down the principle balance, then the loan is re-amortized with the new balance thus reducing the monthly payment. This time the loss mitigation rep I talked to was on the ball and he faxed me the correct Loan Modification Application which I am going to turn in tomorrow for 2 of the loans I have with PHH Mortgage for two of my rentals.

For a week and a half, I've been working with an agent at Mutual of Omaha Bank (for the FDIC) who took over 4 of my loans (2 rental properties) from First National Bank of Arizona. One of the things I was asked to do was to write a letter promising that every month, I will pay these 4 loans before any of the other rental mortgages. Strange, but understandable request....I wonder if anyone else was asked to do this by other banks??? So today she finished all of my paperwork, verified income and expenses/credit report and submitted my file to the FDIC for approval. I should have an answer from her in 1 to 2 weeks. Communication with Mutual of Omaha Bank has been EXCELLENT and the process was very smooth and timely. I wish all the other lenders were this easy to deal with! I have a good feeling about this modification request because I heard her say under her breath, "these are very good terms" and I'm quite certain she was not talking about my current terms. Today I have a smile on my face...I hope it is still there in 1 to 2 weeks time....

[HopingtoFind]

That is great turn around! Good for you!

We finally got assigned to an analyst with BofA 2 weeks ago, when my husband called yesterday turns out nothing was done on the case and they just re-assigned it to another analyst. Unfortunately that loan is in my husband's name and he is not as diligent in following up.

Keep us posted on the rest of the mods.