By forum member, Ms Thistle –  Hi everyone –

Wow. I can’t tell you how much better I feel having stumbled upon this place! I’ve felt so lost in this process, and we are told we have a unique situation.

Our story in brief (because it’s long, I’m only giving the highlights!): We live in a rural area of Northern CA, where the economy was already somewhat depressed before all this hit. We had a 5/1 ARM, and we were clear on the terms but planned on refinancing – we felt financially strong and had well over 125K++ equity, at one point, in our home. We took out a second, invested in a small rental for future income. We tore out the master bath, thinking we would redo it.

However, our ‘wealth’ turned downward over the coming years: we had two children, we acquired a lot of debt from my failed business and bills, etc. We went from almost no debt to 30K in the last 8 yrs. We kept thinking somehow we would turn it around, but these last two years has seen a slooooow snowball getting worse and worse.

A little over a year ago, I saw what was coming down the road with the economy and started trying to refi (all told, we tried 3 x in the last year and a half). We were told over and over how great we looked, regardless of our debt to income ratio we had a credit score of over 700+, our home while it had lost equity still was good (used to be almost 800+). Sadly, I got a loan agent that was not savvy at all, and she dragged her feet, constantly messing up and misquoting,etc – during this time, a span of 9 months or so, our appraisal and lock expired, requiring another one, and during this time our home had lost a lot of value in the market. Not to mention we now had a ripped out master bath, adding to the loss in value.

I had a meeting with the manager of the bank, very scared we would be denied, I asked her to make certian that it was a go, as I needed to prepare if we could not refi. She said it was great, close within a few days. Within a few days, we were denied. I was livid – by now, our credit score was even lower due to more debt as we were struggling even more than before, and now our home also had lost well over an additional 30K in equity. (This house once was pushing 700K, it is now valued at under 420K, with 1st and 2nd we owe a total of 357K ). We tried two other times to refi, and the last time we were told over and over how great we looked, no Worries! (Which we found hard to believe, but were hopeful). This agent was so certain we would be approved she paid for our (now THIRD) appraisal.

During this time, I wanted to sell our rental as it was costing us a lot of money (adding to our debt, as we had to charge and borrow to pay taxes, upkeep, etc), but it was underwater. Our agent/s told us not sell yet, as it would have to be at a loss and the sale would “ruin” our chances of a refi on our main home. In the end, the rental was one of the main reasons given for being denied, as it had a negative burden monthly on our income. That rental is currently in short sale process.

Our home mortgage has reset: in order to pay our mortgage and save our home, we are currently defaulting on all of our unsecured debt to the tune of 30K. We are really scared and upset, we have always taken our debt very seriously and never, ever thought we would slide so readily into default. We are hoping to avoid foreclosure, even if it means filing bankruptcy.

– I’ve been told to not make my payments on the mortgage, in order to get them to talk with me about modification (so far they won’t because we are not in default).
– I’ve also been told that I’d better make sure to pay the mortgage, since we still have equity left they may actually come after our home.

– I’m worried that our defaulting on bills will effect our ability to mod, but then if I pay the bills I can’t pay the mortgage, and I’m back to not knowing which is best, as we are told something different all the time.

I don’t know what to do at this point, other than keep begging for a mod.
At a recent financial meeting, we were told based on our income and debt, we are “insolvent” and need to sell out main residence(yet months ago we were told we look so great we could refi?!). We want to grow old here. We are raising our family here. We are going to do everything we can to stay.

Thanks for listening, and any input you may have!

Please read more here:

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.