3 Home Mods in progress (Suntrust & Fannie Mae | Wells Fargo & Freddie Mac | Central & ?)

[Revivalist]

Hi everyone! . . . My name is Nathan. My wife and I currently have three homes that we are attempting to get loan modifications for. One home is our residence and two others are rentals. . . . My wife lost her job and consequently we have a monthly deficit in our budget. We can not sell any of the homes because they are all upside-down. . . . I have been studying a lot of the information in this forum and I have learned a lot. I thought I should also report my experience with pursuing loan modifications for others to benefit.

Our efforts began in the beginning of October. We stopped making payments on all three homes because we figured we might as well save the money since we don’t know if we will be able to keep the homes. (We have saved about $20,000 by doing this.) Our credit took a hit of about 70 points (from 650 to 580) but it was worth it to us to save the money. Suntrust (the lender for our residence) said we have to be behind at least two payments to be eligible for a loan modification. So we figured if we’re going to take the credit hit, we might as well get as much out of it as we can and miss payments on all the houses.

Some of the lenders still managed to collect their payments for a few months because our mortgage payments were set up on auto-debit from our checking account. They still charged the account even though I called and request to remove the auto-debit. (So beware!) We had to move our money to a new account in order to prevent any more debits from occurring until the mortgage companies finally acknowledged our request to stop auto-debits.


Here is a summary of the three homes we are working on getting modifications for:

1. Residence
• Lender: SunTrust
• Investor: FannieMae
• Estimated home value now: $370,000
• Primary loan: $416,000 at 6.625% (adjustable, interest only)
• Secondary loan: $78,000 at 8.875% (adjustable, interest only)
• Monthly payments: $3,241.78 (primary) and $576.87 (secondary)
• Last payment on primary loan: September
• Last payment on secondary loan: November
• Status: We were told that FannieMae requires two missed payments and a deficit of no more than $700. We missed the payments and reported a deficit of about $650. The loan was sent to a reviewer on Nov. 13 and it was supposed to take 30 days but the reviewers are behind. The home was “recommended for foreclosure” on December 19. I am calling weekly to check on the status of the review.


2. First rental
• Lender: Wells Fargo
• Investor: FreddieMac
• Estimated home value now: $250,000
• Loan amount: $332,000 (7% adjustable)
• Monthly payment: $2,333
• Last payment on loan: September
• Status: We were told that with FreddieMac there can be no monthly deficit unless a mod would cure it. They will try to satisfy a small deficit which they have on file as $490. Otherwise there would need to be a moratorium (which would resume regular payments without requiring catching up on previous payments) or forbearance (which would allow for payments to be lowered for a temporary amount of time.) We received a letter on Dec. 13 with an offer for a modified loan.

The new conditions are as follows:

• Loan amount: $341,000 (5% fixed) (missed payments and late fees were built into the principle)
• Monthly payment: $1,992

We are very happy with this modification as it shaved off about $350 a month. We also liked that Wells Fargo processed the mod faster than any other lender. But we did wonder if it may have been possible to try to negotiate for an even better deal. Have others obtained better deals than this?

We were informed that if we do not sign this modification that there is no guarantee that it will remain available for us. We did not want to take this risk so we signed and sent back the documents. Hopefully that was the right choice.


3. Second rental
• Lender: Central Mortgage Company
• Investor: They would not disclose this
• Estimated home value now: $160,000
• Loan amount: $212,403 (6.25% adjustable)
• Monthly payment: $1,320
• Last payment on loan: October
• Status: Central said they cannot work with a deficit that it is more than half the current monthly mortgage. They ask for a tremendous amount of detailed information (lease agreements for all homes, paycheck stubs at the beginning of every month, bank statements, etc.) They even pulled up our credit report and indicated that the total minimum payments that we pay to credit cards is too high compared to the mortgage amount. They suggested that we contact credit card companies and request modifications with them as well because they are doing similar modifications to what mortgage companies are doing. They said they will continue to process the application but it may get kicked back due to the high credit card payments. Overall, Central Mortgage seemed to have the most strict and tedious process of all the lenders.


So that’s all my information. As I said, I have been working on this since the beginning of October, calling each of the lenders every single week and keeping a log of all the information I collect. I am optimistic about getting all three properties modified. We’ll see how it goes.

If anyone has any experience with these lender or any suggestions we would be incredibly grateful to hear about it . . . Thanks!

[Moe Bedard]

Hi Nathan,

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

Thank you for sharing your modification story with us here at LoanSafe....

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

Good Luck with the remaining mods!!

[HopingtoFind]

Hello Nathan,

Congratulations on your mod with Wells Fargo! I have heard a lot of negative things as far as them agreeing to modifications, so sounds like you did a great job with them.

We have a home that we were trying to sell, but haven't been able to at this point, 1st and 2nd with Wells Fargo... haven't tried to approach them yet, but need to do something... Can you tell me which number you called to get things started and also any pointers in working with them?

Thank You.

[Revivalist]

Thanks for the welcome and congratulations. I must admit that it was very encouraging to see at least one of our loans get modified. It helps to see that this can really be done.


@ HopingtoFind - I just called the service number on the front of one of our bills. Or you can just get the number off the website. There wasn't much to it. I just called and told them that we are experiencing financial hardship and we are wondering if there are any options available to us. Then just follow their instructions.

I'm looking over the log that I kept of my conversations. Here are a few things that might be useful to note.

• I was told that the loan must be past the grace period of before hardship information should be submitted and then loan will be evaluated. We decided to stop making payments completely. We saved about $9,500 which was added back to the principle later. For us, that was very helpful.


• Be prepared with your financial budget information before calling them. Many times they will take this information right over the phone. They need to update it every month so make sure to call at the beginning of the month to update it again.


• Ask them who the investor for your loans if you don't already know. Ask if the investor has any guidelines (Do payments have to be missed? Is there a maximum amount of deficit permitted? etc.) Then plan in advance what deficit you will report. Remember that the only information they will have about accounts or expenses are what are shown on your credit report. The rest is up to you to disclose or not disclose.

[HopingtoFind]

Thank you Nathan, very helpful suggestions.

[Revivalist]

Well, we just got notice from Suntrust that our home is now officially in foreclosure. It was "recommended for foreclosure" on December 17. We're still waiting to hear from our negotiator about what program might be available for us. We were originally told that it would only take 30 days from the time it was assigned to a negotiator on Nov. 13. Now they say they are extremely backed up. . . .fficeffice" />>>
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My wife is getting nervous. She suggested that I call them and tell them that we are concerned and that my pregnant wife is getting stressed out and that we need to make sure we have a stable place for our new child on the way. . . . Basically, she's thinking that maybe they need to try to plant a sense of urgency in them. . . . I may try that tomorrow. But I think I'm not going to bother writing another hardship letter and trying to make it more touching than the last one. To be honest, I really didn't put much effort into trying to make it heart-moving. I just indicated that my wife lost her job and we can't keep up with the bills now. I hope that's enough. . . .

[eporter727]

I'm encouraged as I'm in the same boat with a primary and two rentals. I'm current today on all but am sinking fast. Perhaps I should have stopped making payments sooner but will now. Did you tell each lender about the mod's you were attempting on the other properties? ANd how did you handle that?

[Lisa in MN]

Revivalist,
I dont know that making a hardship letter "heart moving" is the way to go. Remember, these companies are hearing many of these stories and they are looking at it is a business transaction, not an emotional one. I tried to keep mine as factual as I could and keot emotion out of it as much as possible. The bottom line is they are looking at the $$ and don't really care if you have a home for your baby on the way. I dont say that in a negative way, but they are truly looking at money. You would not be able to approach say Target to get free things due to financial hardship in an emotional way. Does this make sense?
My advice is to keep things as factual as possible and take the attitude that based on those facts they will either help you or not help you. Period.
With my attempts at negotiations, I felt that the reasons I had hardship really didnt matter, what did matter was moving forward- they either help or not. Luckily they helped, but if they wouldnt I was fully prepared to walk. Your home is what you create inside the 4 walls, whether it's an apartment or a home you "own", not the structure itself. Looking at it this way made my decisions much easier.
Good luck to you. Hopefully you will get the help you need.

Lisa

[Revivalist]

@ eporter727 - Yes, when my wife lost her job I stopped making payments immediately because I wasn't sure if I would be able to keep the properties so I didn't want to be dumping more money into them for nothing. Also, I knew that some lenders will not work with you until you are at last two payments behind. But I saved the money that I would otherwise use to make payment so if I decide to bring the loan current again before foreclosure, I could do so.

As for informing each lender about the other mods, I chose not to. Wells Fargo (FreddieMac) and SunTrust (FannieMae) didn't ask much questions. I just turned in the budget worksheet each month and called every week to follow up.

Central Mortgage on the other hand is extremely thorough in analyzing our finances. They required that our deficit be no more than half of our mortgage payment. So for them I needed to report the mod that I completed with Wells Fargo to improve the budget figures. . . . . So basically I only mentioned other mods to each lender on a need-to-know basis.

[Revivalist]

@ Lisa in MN - I agree with you that keeping the hardship letter factual and concise makes the most sense. I figured they're not really interested in people's personal problems. They just interested in how they can reduce loss and maximize profit on each loan.

The reason I became concerned is because my wife works with a real estate broker who has modified loans on her house several times before and she said that she always writes a very heart-moving letter. I guess she was convinced that the letter made the difference. But the modifications were made in the past few years. Perhaps years ago they had the time to sit and read heart-moving letters. Now they are probably bombarded by so much volume that they can't give nearly as much attention to each one. . . . So I don't think I'll bother writing another one. I'll just see how this one goes. . .

[The Professor]

Revivalist:

I would encourage you to also look at the downside risks associated with not successfully negotiating a practical resolution of your problems with your lenders by going to the "deed-in-lieu -- walkaway" forum. I spend a lot of time there, providing insight based upon my experiences. You will find it helpful I suspect.

Take care,

Daniel

[Revivalist]

Thanks Daniel. I tried to find that forum last night without success. I put "deed-in-lieu -- walkaway" forum into Google but it didn't come up. Let me know how I can find that forum. Thanks!

[Lisa in MN]

Revivalist
Just go to the main forum page. It is listed there in the same section you found this subject

[Moe Bedard]

Here is the link to the section of the forum that Professor Shays is referring to...........
Deed in Lieu of Foreclosure - Do You Need Help to Walk Away? - Loan Modification Forum - Loan Safe

[Revivalist]

Thanks everyone. I didn't realize that we were just talking about a different section of this forum.

Should I be studying the threads in "deed-in-lieu -- walkaway" if I am not planning to walk-away at this time?

[Revivalist]

I just thought I'd update my thread on the current state of affairs . . .

Today I called and they said the loan is still being reviewed. I asked about streamlined modifications but rep said the negotiator is the one I would need to ask. I asked if there is a way I can speak with him and the rep said she will submit an e-mail to him requesting that he contact us but he is backed up.

I also asked about the second loan being reviewed and the rep said that it will not be automatically reviewed. Previous reps I spoke with were wrong about the second loan being automatically looked at along with first. An application must be sent for the second loan as well. The rep did this for me on the phone. She used the same info that I had there for the first loan. I asked if there is paperwork that could confirm that the application for the second loan was submitted. She stated that this would only be possible if I applied online because I could print out the paperwork. However, it is faster that she submit the application for me on the phone because she can send it directly to the person who is supposed to receive it. Doing it online will be delayed until someone goes into the system and collects all the applications. The application for the second loan should be active in 2-3 days. I can call back to make sure it is.

I asked if it is permitted for her to forward to me the e-mail she submit for the second loan so that I have a record of that. She said she will ask her supervisor if it is possible and she will do so if it is. She said this won’t happen until after 6pm because she is in an inbound call center until that time.

I asked if the house is already in foreclosure and she said that it is not because we are active with Loss Mitigation. There is a tentative sale date set for April however we will get a response about the modification well before that time to determine if we are granted a modification or if we need to look at other options.

I asked if the loan can be reviewed again if we can not work with the offer. She said this would only be done if our financial status has changed otherwise they would be running through the same numbers.

So at this point, we just wait . . . wait, wait, wait. . . . there's lots of waiting with this process.

[Revivalist]

Central Mortgage contacted us yesterday with a loan mod offer!! . . .

We’re very happy with the results. Our loan currently was at 6.25% interest only, with payments of $1,320.

Here are the terms of the new loan:

3% for two years, payments of $736/mo (interest only)
4% for next two years, payments of $918/mo (interest only)
5% for next one year, payments of $1,100/mo (interest only)
5.125 % for remainder of loan, payments of $1,600/mo (interest and principle)

Everything about this mod is nice except for the fact that in the sixth year the payments are actually going to be HIGHER than they are now. But at least it becomes interest and principle. I suppose if we’re not happy with this payment at that time, we can consider selling the house or if it’s still up-side-down then we’ll walk away from it. Unfortunately, I am hoping that our credit will be much better at that time so I would hate to have to damage it again. But that’s all way in the future anyhow . . .

In the meantime, we are happy because we are able to rent this house for $1,350/mo which means that we’ll have a positive cash flow of about $600/mo for the next two years.

One thing I should note is that the negotiator said they still need to get this modification offer approved by the investor. So it will still be another 3-5 weeks before the modification is accomplished. But this is actually nice because the first payment won’t be until March. So we can totally pocket the rent we collect in February.

The other nice thing is that we would have gone four months without making a payment. That saved us $1,320 x 4 = $5,280 that we didn’t have to pay over the last four months. This is much needed relief with our current income.

The other thing I should note is that they will require a $1,200 payment for the modification to be processed. I’m not sure what this money is for. I guess they are basically charging for the modification because it didn’t sound like it goes toward the loan, although I didn’t ask for clarification. All I know is that the rep sounded eager for us to pay this money and strongly urged that we at least start with a partial payment that we could send in right away. But I don’t think I’m going to pay anything until I have the modification papers in my hand and ready to go. Otherwise if the modification falls through for some reason, I know I could kiss that money goodbye. . . .

[LHarveyMadman]

Congratulations on the Central Mortgage modification. It definitely buys you some time; hopefully the housing market will recover in that time.

Your payments will be higher after the 5 years of interest-only payments, because the principal will be amortized over 25 years instead of 30 years.

Also, Central probably added the unpaid interest to the principal balance. So that is another factor that would drive the payments higher after the interest-only period.

Lastly, that $1200 upfront payment is a fairly common requirement for modifications if you are behind, based on what I have read here. It is essentially a good-faith payment on your part to show that you are serious about meeting your obligations of the modification. It probably would not be a good idea to fight this, but I think it's reasonable to find out whether this will be applied to your loan.

[Revivalist]

Thanks for the feedback, LHarveyMadman.

That makes sense why the payments are going to eventually be higher than they are now. So basically the future payments will need to be higher to compensate for the money that wasn't paid for the next five years.

I wasn't planning to fight the requirement to pay the $1,200, however, I just didn't feel comfortable making the payment until I really see that the modification is going to go through. I'm guessing that it probably doesn't go toward the loan because the loan has been an interest only loan anyways. So basically I have to just consider it to be one of the payments that I missed since October.

Well, we're two down and one to go . . . I really hope the modification on our residence goes well . . . . That's the really big payment that we need lowered . . .

[LHarveyMadman]

For B of A, any upfront payment is due at the same time you send in the signed and notarized final modification documents. That is, the mod is approved and just needs signatures. Maybe other lenders do things differently, so you'll have to play by their rules, but it seems reasonable to request the details in writing before sending them any money.

[less_stress]

Our efforts began in the beginning of October. We stopped making payments on all three homes because we figured we might as well save the money since we don’t know if we will be able to keep the homes. (We have saved about $20,000 by doing this.) Our credit took a hit of about 70 points (from 650 to 580) but it was worth it to us to save the money. Suntrust (the lender for our residence) said we have to be behind at least two payments to be eligible for a loan modification. So we figured if we’re going to take the credit hit, we might as well get as much out of it as we can and miss payments on all the houses.

Does anyone know how much your credit score is affected when you miss payments? I didn't realize is just dropped a bit, not all the way.

Another question: Is anyone having success modifying when they are not late? I have a Central Mortgage loan, too. And wonder if they are lying when they say I don't have to be late to be considered for modification.
I've been afraid to let my credit score drop, b/c then all my cc debt would probably be adjusted to a higher interest rate.

Advice?

[LHarveyMadman]

less_stress, I'm sure the requirements vary with lenders, but I was able to modify my B of A loan while current.

Depending on where your credit score is, a late payment may knock your score down by 25-50 points, possibly more. Longer lates (e.g. over 60 days) will hurt your score more.

[HopingtoFind]

One property that we are trying to modify with Chase/Freddie Mac we were never told that we have to be late.. analyst has been working on it since November. I have heard people say that they were told by Chase that they have to be late in order to be modified..The other property with BofA/Fannie Mae is telling us that we have to be late. It may depend on the service agreement investor has with the servicer...

[Revivalist]

Originally Posted by less_stress

Does anyone know how much your credit score is affected when you miss payments? I didn't realize is just dropped a bit, not all the way.

Another question: Is anyone having success modifying when they are not late? I have a Central Mortgage loan, too. And wonder if they are lying when they say I don't have to be late to be considered for modification.
I've been afraid to let my credit score drop, b/c then all my cc debt would probably be adjusted to a higher interest rate.

Advice?

Yes, I was surprised to see that the credit score drop was only 70 points for missing payments on three houses. But I don't know if it is still going to drop more. . . .

I have heard success stories of people getting modifications without having to be behind on payments. But that was a while back before the market really took a dump and countless people are in foreclosure. Now it seems they are focusing on people who are behind and about to lose their house. They are generally too backed-up to worry about people who are current on their loans. So the sad reality seems to be that to really get their attention and immediate help, you need to be behind. . . .

In my case, I felt that missing payments was very beneficial to save the money. I was willing to essentially sell my credit score for the purpose of saving that money and making sure to be as elgible as possible for modifications.

As fore credit card companies increasing interest rates, I didn't have that happen. However, some credit card companies may reduce their credit limit. That is something I did see happen.

[LHarveyMadman]

Since a lot of credit card interest rates (especially the rates for prime cardholders) are linked to the prime rate, a lot of people are seeing their credit card interest rates go down. However, they are also cutting the credit lines (sometimes drastically) of many cardholders, especially those with weaker credit profiles.