GMAC Loan Mod SUCCESS!

[MayBe]

BACK STORY -
My husband and I purchased our home in June of 2005 for $650K with an 80%, 3/6 Intrest only ARM with an interest rate of 6.89% (Morequity) and a second for the remaining 20% at 7.99% with a 100K balloon payment due at 20 years (GMAC).

Since we purchased the home at $100K under market (purchased from landlord, fsbo), and with the rate that home value was appreciating in CA., we thought it would be able to refinance to an 80% 30 year fixed rate after the prepay penalty expired and before the first adjustment in June 2008. Foolish, I know now.

In May I contacted Morequity to refinance and the offer they gave me was ridiculous - included prepayment penalty, added $30k to the loan and at a higher interest rate - thus we declined. We called several other banks (who didnt return our calls) and finally found a loan broker who thought he could get us into an FHA - only to discover that our house had depreciated to $580K and we wouldn't meet the 97% LTV requirement.

My loan with Morequity reset in june to 8.25% and the mortgage went up $1300 a month, giving us a $5,400/mo house payment (includes excrow) that doesnt even touch the principal. Since june we have cleaned out our savings covering the difference. I am currently selling some assets (garage sales, selling the spare car, etc.) to get enough to cover next month's payment.

I am proud to say that I have only been late on a payment once since we bought the home, and that was only because the loan had been sold, and the payment went to the wrong bank. I even had GMAC remove the late payment from my credit report a year after it happened. Our credit is good - around 740, and we both have good jobs. The loan is scheduled to reset again in December, so I have got to get help started NOW.

A few weeks ago the loan broker called and told me about the possibility of doing a short refi - basically getting an FHA loan and presenting it to the banks to see if they will accept it. I sent him my financials and waited.

I called the broker for an update last week and he said that before we could start refinancing, I need to call the bank to see if the bank would consider the offer and find out how much they needed to settle. I called the banks and, imagine that, I got the run around. They they would neither confirm nor deny that they would consider a short refi. And they asked me to submit my financials for a loan mod.

HERE's MY QUESTION

Am I better off getting a new loan and submitting it to the banks to see if I they will accept the short refinance, or should I start with trying to get a loan modification?

My thought is that if I start with loan mod, they wil most likely give me an offer that doesn't solve any problems long term; however if I start with the short refi, and they dont accept, it may help to expedite the loan modificatiion process and get me a better offer.

Does anyone have any experience with short refi's through Morequity or GMAC? If I start with the short refi process, and they decline, will it hurt my chances at a loan mod?

Any advice would be greatly appreciated.

[Moe Bedard]

Hi MayBe,

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

Under the new program you can not have any other liens on the property besides the first................all other liens would need to be extinguished by the second releasing the lien or the first negotiating with the second to release the lien, so I am not sure what the mortgage person is trying to do........if a modification is not going to help you, I guess you will have to see what this person is trying to accomplish..............we have not seen any short refinances get accepted yet here on the forum...........

Housing and Economic Recovery Act of 2008 FAQ

[MayBe]

Wow, ***! Thanks for the fast reply!

I have to say, I really appreciate this forum. I have learned a lot here, and it has greatly eased my fear over the entire process. Thank you, and to all for creating and maintaining this site.

I have another question. I have seen where the banks say that spending more than 31%( or other numbers, not sure what is the standard) of your pay for mortgage payments is a hardship.

Does this include the amount you pay in escrow for taxes and insurance, or is it P & I only?

[MayBe]

Update - Evidently, my loan guy, who approached me a month ago, and said he wanted to try to get me a short refi, really meant that if I could talk the banks into allowing a short refi, he'd find me a loan. I guess I'm on my own.

I'm really glad you're here.

I'm pulling together my financials, hardship letter, etc.

Question - how important is doing the QWR? I reviewed my original loan docs, and everything seems ok. Will the QWR show me anything different?

[Moe Bedard]

If you feel that the loan was predatory in nature, then doing the QWR comes in handy if you need to have the original docs reviewed for violations for use in leverage of a modification, or you have questions regarding the servicing of your loan and how payments and fees were applied.


If you want to try for the modification............

They have the application online for MorEquity and the contact number for a loan counselor.............
MorEquity

[MayBe]

Thanks ***.

The only thing hinky with my loan was with the estimated taxes, which was based on the original assesment, equalling about 1500 a year. After the home was sold, of course the house was reassessed and the taxes jumped - increasing our monthly pymt about 700 a month. That and the title company did not submit all the forms, costing me about a thousand in penalties. I'm still fighting with the title company over that one.

[MayBe]

Ok, I gathered all of my information, took a deep breath and called GMAC (my 2nd). After a couple of transfers and a thankfully short hold, I was transferred to Jamine in the collections department.

I explained my situation - how I have struggled to stay current, but needed a mod so that I do not fall behind. He was nice enough, but explained that since I had just made my payment, and was consistently current, that I would have to call back on November 1st to request a loan mod. Otherwise, because I was current I would be automatically denied.
I pushed, asking what the difference a couple of weeks would make. he said that since, as of today, I had no amount due, that they would not help me. I would have to call once ther was an outstandin balance, and before I would miss a payment.

I continued, and asked that IF I waited until I could not make payment, would they be able to do a loan mod within 15 days, so that I would not be counted as late.

That stumped him. He admitted that that was what he had been told to say, and that he really didn't know the process, but it was all he could do. AArgh. I know I've seen an extension somewhere on loansafe. If someone has it handy, I'd appreciate it. Otherwise, I'll dig.

Next I called Morequity. Gave them the same story, and immediately the operator offered to send me a loan mod package to complete. I should recieve it in 2-3 days. I am hopeful, since Morequity is a smaller servicer, that I might actually get somewhere.

So, first step taken. No progress made. Keeping on, keeping on.

[Moe Bedard]

GMAC Loss Mitigation
1-800-850-4622 ext. 2362609

[MayBe]

Thanks ***. I'll call tomorrow.

Is it too early to go directly to Javid?

[Moe Bedard]

Yes.........you just started the process..........you have to give it a chance to work........

[MayBe]

I'll have to remind myself of a very important part of this process...Patience, Patience, Patience.

Thanks ***.

[MayBe]

I recieved the loan mod paperworkto fill out and send to morequity today. Basically the same papers they had on thier website. As soon as I get in tomorrow, I'll fax back and give a call.

I also called the GMAC 800 number today and used the extension given above. After about a 15 minute wait, I spoke to Chun who told me I had the wrong department. He said I was speaking to default, when I should be speaking to Junior Default. I guess this means I'm only a little in trouble.

Once transferred, Regina picked up after the first ring and listened to my story. She said that Sarah was in charge of my case, and gave me her direct number. Sarah was unavailable so Regina suggested I fax my information and give Sarah a call tomorrow.
Information has been faxed and I'm ready to call first thing tomorrow.

Now, I am curious. Other than that first call, where I got blown off, I haven't engaged GMAC.So, how did I get "assigned" to Sarah? Not to look a gift horse in the mouth, but it seems odd.

Also, I did go to the 999hope.org website and did the online review. As soon as you start, it asks if I want them to share my results with my lenders. I checked no because I wanted to see the results first. When I entered my financials, I ended up with $144 left over, and clicked submit. 3 days later, I recieved my review and the numbers had somehow changed. They say that I have $560 left over. Also, in the asset review, they didnt take into account my 2nd mortgage, so it showed that I had $112K in assets. Even with the extra cash left over and the supposed l1quidity,

[MayBe]

(sorry, the dog pushed submit)

... the recommendation was to contact my lender and seek a principal reduction or a short refi.

Makes me wonder if the 999Hope folks sent the info to GMAC, and that's what caused me to be assigned to Sarah.

[Moe Bedard]

At least you have movement..............that is a good thing.........

Stay in touch with Sarah for frequent updates once she receives all of the items from you......

Good Luck with both!!

Keep us posted.........

[MayBe]

I spoke to Sarah from GMAC today. She let me know that my investor is Wells Fargo, and IF they were to modify my loan, they would only bring the interest rate down to 9.99% (I had asked for a reduction to 4%). Since I'm already at 7.99%, there wasn't anything she could do for us. She did note that my financials showed that I was -$62 a month, so I could afford the house, just not my loan. She said that no programs were availalbe to help me since this was a second mortgage, but she would give me a call if something changed.

So I pushed, gently asking for help. After 3 more no's - reiterating that if we even get a flat tire, we're giong to not be able to make the payment, and the fact that the balloon payment of 100K was going to be due far before I would be able to refinance - I was finally able to get a maybe.

First she said she may be able to get us to an interest only loan at the same rate, but her system didn't look like it was calculating correctly - would probably bring our payments down $150/mo. After further discussion, she said she might be able to get us switched to a fixed rate at 6.99% (I didn't want to risk asking what happened to the 9.99% she had said earlier.) While the 1 pt reduction isn't going to solve all my problems, its better than what I have now.

She's going to check with her boss and get back to me in the morning.

Keeping fingers crossed.

[Moe Bedard]

Another thing to ask Sarah is............if you accept the modification and if your situation should change or more programs become available that could help you out further................would you be able to at that time to apply for something else............

[MayBe]

Good Advice. I wouldn't have thought to ask that. Thanks.
I also plan to make sure that the loan mod doesn't take my loan from non-recourse to recourse.

[Moe Bedard]

Ooohhhh that is a good question too

Please post what you find out..........

[MayBe]

Sarah was supposed to call today - nothing. I'll try again on Monday.

I tried faxing my info to Morequity today and the fax # isn't working. I called the customer service number and was told to try back after hours or tomorrow. I asked for an alternate fax # and got nowhere.

Sigh.

[MayBe]

Sarah left me a message today. She spoke to her manager and they are putting together a package to send to the investor, requesting a reduction in interest rate. Woo!

She then asked me to fax in the paperwork we discussed. Whis is odd, since she had already confirmed she had recieved the docs and had reviewed them with me over the phone. Boo!

So, I will resend the papers to GMAC and keep you posted.

On the morequity front - still can't get through on the fax.

Any ideas or alternate fax numbers I can try?

[MayBe]

I called Sarah Yesterday. She picked up on the first ring - wow. She explained that she had the initially requested paperwork (financial analysis, hardship letter, pay stubs), but she needed W-2s and bank statements.

I asked if this would make my loan from non-recousre to recourse, and she said no - she said california loans were non-recourse. Also she said that if I do this loan modification I would not be able to modify again for another year, but if new programs become available, I would be able to avail myself of those.

She also said that the investor typically takes 2-3 days to review, and since she was off Friday, I'd probably hear from her Monday.

Morequity - Still haven't been able to fax to the # on the financial form, but was finally able to fax my documents to secondary number that was on the for listing what documents to submit. Calling today to confirm reciept.

[Moe Bedard]

sounds like progress........thank you for the update........

[FacingNorth]

"we have not seen any short refinances get accepted yet here on the forum"
Is this still true, ***?

I had someone tell me this morning that doing a short refi would affect my credit. They said that it would be on my report for the rest of my life, beyond the 7 years, just like a foreclosure. Does anyone know how serious a credit ding from a short refi is? Both how many points dropped, and how seriously it would mar my report for future mortgages?

Thanks.

[MayBe]

While I cannot give you a definate answer on the credit score (I am far from being an expert on this), I can tell you that my loan broker said the short refi should dink my credit about 100-200 points. It shows as a "Paid for less than owed". This can stay on your credit report for 7 years.

I too have not seen short refi's on this site, but have seen a few principal reductions as part of the loan mod process. I am not sure if the prinicipal reductions hit the credit score the same as a short refi would.

[FacingNorth]

Great, thank you for the response. I mean, not great that a short re-fi dings credit 100-200 points, but it's great that I'm aware of that now. An underwriter that I've been working with has been really pushing me to re-fi now rather than wait it out. I had mentioned that bloomberg articles are saying another 20% drop in values in the next year or two so it would make more sense to re-fi later, and he said it would be best to re-fi now to lock in the current market value, and he said I could always just do the same thing in another year or two if the market values do drop that much (He also said that it could be a disadvantage to wait to re-fi at a lower market value because it would mean that the lender would be less likely to want to loose that much value?). But I wasn't aware of the credit hit until now, so that certainly would be a good reason not to re-fi twice since that would drop my FICO as much as a foreclosure. Here's what I've now gathered from replies on this forum:

Foreclosure: 200-300 point drop
Short Sale: 100-200 point drop
Short Re-Fi: 100-200 point drop
Short Modification: Unknown