Homecomings & Chase-trying for loan mod's

[linnzy]

Ok, here's my story. Any input or suggestions would greatly be appreciated.
We live in the inland empire area of southern calif.
We have our 1st with Homecomings (it was a refi, took money out for the house and to pay irs). Loan balance is $240,959 @ 6.5% interest, payment is $1685 which includes taxes and insurance.
The 2nd is with Chase, $35,736 @ 9.87% payment is $407.
When we got the loans in 2006 we were self-employed and doing ok. The business paid a lot of our expenses and we had no credit card bills. Shortly after the we got the loans, our business failed. We cashed out both mine and my husbands 401k's. Used that money to stay current on our bills. Husband got a job. Still wasn't enough to pay all our bills, so continued to use the 401k money until it ran out. Then used credit cards (i know, not smart, but didn't know what to do) to keep current. At this point our daughter was old enough for preschool/daycare so, I was able to get a part-time job. Finally realized this couldn't last. Called Homecomings for help. Was told "you're not late, we can't help you". Credit cards got maxed out. Now had no choice but to be months late on mortgages. Currently we have not paid our 1st for 4 months and our 2nd for 3 months. Was really hoping for the Hope for Homeowners Program to finally take hold, but that has not happened yet.

I called Homecomings last week and they "ran our #'s" and it appears that we may qualify for a mod. The collections guy said that he's putting in a work order to the loss mitigation dept. and we will receive a letter from them in 30 days. If we don't get it in 30 days, call and check on it because they are very backlogged. I said, I have my hardship letter, check stubs, list of monthly bills, should I send it in? He told me to hold on to them, they will probably ask for it in the letter.
Called Chase to let them know that we're asking for a loan mod. from our 1st. He ran our #'s and said we definatly qualify for a loan mod, but we had to pay at least 1 month's payment. Said I didn't really want to pay on the 2nd when we don't know if the 1st will do anything.

We've lost so much in value, like everyone else, but the house next door to us sold 2-3 months ago for $90,000. We are wanting to get a principal reduction, but haven't really heard of many that are substantial enough. Husband has had his job for 2 years now and I've had mine for over 1 year. We have steady income, just not the level of income we had before.

Should we just be patient with Homecomings or should I start calling/faxing/emailing?

Also, do you think we are correct in not paying the 2nd until we hear from Homecomings on a mod?

Since both loans are recourse loans, if we don't get a good modification/principal reduction, we will have to file BK. I so do not want to do that, but a simple interest rate deduction will not be a long term solution. So, I am not ruling it all out. Would rather take the bullet now and begin rebuilding rather than...ok feel like I'm rambling now. Forgive me, stress and worry does that to me.
Please tell me your thoughts.

[Dan Bailey]

Linnzy,
Glad you found the forum and posted.
Unfortunately, there have been NO verified accounts of principle reductions on firsts. Loan mods are up to the investors, and they simply are not doing them...any that have been done on seconds are miniscule.
Noone here can reccomend to you to not make your payments, in fact, Moe has reccomended making all payments if at all possible.

There is a section of the forum devoted to BK and the options, advantages and disadvantages and effects on modifications.

Send you paperwork in when they request it, keep a running record of all correspondence with your servisor. Keep contacting them.
Hang in there and good luck! *** or Moe will be by as soon as they can and give you some advice/direction to take.

[Dan Bailey]

Here is a link to the BK section of the forum: Mortgage Bankruptcy - Loan Modification Forum - Loan Safe

[linnzy]

This is all so hard and frustrating. Trying to make the right decision that's going to affect us for many years. I do completely understand why Chase, our 2nd wants a payment before they proceed with offering a mod. But the mod. will do me no good if our 1st doesn't offer something quite substantial. So I feel like it would almost be just throwing money away, until we hear from our 1st.
The most frustrating part is that we can totally afford our house at it's current value. Our life has changed, we both have new steady jobs, and we've used all our savings, 401k's and credit cards to hold onto our house. These lenders are accepting short sales, why can't they consider us for a short sale on our own house, you know? If only the Hope for Homeowners Program was working.

[linnzy]

Thank you so much for your response. It's comforting to know that someone else understands what you are going through.

I had a message from my contact on our 2nd mortgage today, because he hadn't heard back from me. I guess I'm just going to be completely honest with him and tell him that I'm not going to send them any money until I hear from our 1st mortgage company-Homecomings. I'm not really good at saying "no" to people, but I really need to be strong and do what is right for us now.

As far as making sure that keeping the house is a financially smart decision....well, I guess I know the answer, I just don't like it. It's not smart for us in the long run (should have realized this before, just didn't see our jobs/business changing).

I'm going to fight for them to reduce our principal. I know it's a long shot, but for my own peace of mind I have to try. Maybe during my "fight" a new program will go into effect. (hey, I can dream, can't I?)

Thanks again for your advice. It means a lot.

[pjd123]

Hi Lynnzy,

Homecomings is our lender as well. We are 4 months late now (they wouldn't even talk about a mod unless we were behind). I told them this week that the only way we could stay here is if they would give us some debt forgiveness. They said that there is no way they will do that. I told them we will let the house go into foreclosure then. They basically said go ahead, you'll be notified by our attorney of your sale date. I'm just sharing this with you because I don't want you to get your hopes up. I'm not saying it will never happen but thats what Homecomings said to me a week ago. We are $70K upside down and its dropping every month. We will be better off renting for $1K less (an even nicer home by the way) and saving it for 5 years. That $60K in my pocket. I know there is no way I will recoupe the $70K that I'm upside down as well as a profit of $60K in 5 years. I was heart broken for a few months but am finally realizing its what I have to do. Again, I don't want to take away your hope, but do the math for your situation and make sure you'd be better off in whatever mod they offer before you decide.

Good luck to you.

pjd123

[linnzy]

Thank you for your post - and your honesty.

We are $187,000 upside down. At a 5% increase in value each year it would take ____ years to break even. (i can't figure the exact number out, just know it's really high) I don't think I'll live long enough to break even.

Yes, we could rent a nicer house for about $800-$1000 less a month. I'm just so afraid of the whole bankruptcy thing.
And good luck to our lender selling our house. The pool is half empty and partially remodeled (had to stop once our business closed) and the heater a/c unit is the original one which is 40 years old. But it does have a beautiful pond and patio cover that we did ourselves. I am going to miss that.

Would a loan mod. make us ineligible for any new programs that may come up? I guess there's no way to answer that, I was just wondering what the chances would be if we accepted a mod. to buy time until something like the Hope for Homeowner's Program (or similar program that would reduce principal) became available?

I am slowly facing reality that staying is probably not a wise decision, but...I just feel like the government will do something that will help homeowners in trouble reduce the principal to current value. That's why they came up with the H4H. It apparently has flaws, primarily the part where it's only voluntary to the lender. (just my opinion). But even McCain when he was campaigning talked about the depression and the government buying mortgages and changing the principal to todays value. That way the lender wouldn't take the loss since the government would buy the loan off them. I feel/hope that this may eventually happen, but most likely not soon enough to help me.

I so hate this emotional rollercoaster.

[pjd123]

Hi Linnzy,

I so know how you feel. My heart goes out to you. Something else you may already be aware of but was a HUGE factor in our decission is this: If the Gov't buys the loans - they will FOREVER get at minimum of 50% of your future equity. So lets say they step in and you can now afford to stay: For the 1st year, if you sell your house, they get 100% of the equity, 2nd year 90%, etc. At 5 years it hits 50% and STAYS THERE FOR EVER. Bascially, they become your co-owner. Another reason we couldn't stay. We're 50ish years old, can't afford to share our childrens inheritance with uncle sam, you know?

I know too well the emotional rollercoaster you are on - its a bumpy ride, isn't it? One thing I can tell you is, once you've really made your decission; gathered the facts and decided what you're going to do, it seems to get better. I don't know if you've read my other posts on other threads, but I cried everyday for about 3 months - then only every other day for about 30. I finally knew what our decission was and started planning for it. I'm not saying its a cake walk now, but it does get easier.

Hang in there. Some of us have a chat under the lounge blog "New Friends Chat" where we talk about our day, the kids, etc. Feel free to join us there too, it really helps. We're all here for you.

pjd123

[pjd123]

PS: That should have been "I cried everyday for 3 months and then everyone other day for 30 days"..... I should proof read

[linnzy]

pjd123- Thank you. I am trying to hang in there. This site is truly wonderful. It has helped me so much in many ways.

UPDATE:

So this is interesting. I called Homecomings today to check on status of our loan mod. request. I was told the computer shows that they took our financials over the phone on 1/9 but it doesn't show that the workorder was put in for Loss Mit. to send us a letter. This wonderful letter that we are waiting for is supposed to take 30-45 days to arrive. So she put in a workorder in. Anyway, the interesting part is when I asked if they had sent out a "breach letter" yet, she said no and because our area is labeled a disaster area it definately won't be sent out until Feb. 15th. DISASTER AREA? While I may agree the housing situation is a disaster around here I was a little confused. I asked who determined it was a disaster area. She said FEMA, due to the wildfires. I said we weren't affected by a fire and she said it still applies to the whole area. Good for us I guess. It'll give us a little more time to figure things out. Also, she said it is possible that they may delay the breach letter longer because we are trying for a loan mod. or we may be put on a trial mod. which could also delay the breach letter. We'll see what happens.
I made an appt. with a bankruptcy lawyer for a consultation next week. Just trying to get as much information as possible and make the best decision possible for our future.

[pjd123]

Hi linnzy,

Sounds like all of this may have at least bought you some time. I know it gets discouraging and its difficult to remain hopeful. My advice? Expect nothing and pray for everything.

Hang in there.

pjd123