loan mods vs loss mitigation

Anonymous · ‎09-20-2008

Has anyone been able to negotiate successfully with their lender in changing the terms to

equal the current mortgage values, and change an ARM to a fixed rate?

Personal home devalued from 551,000 to <350,000 .

I have 2 rentals, and a personal property-all upside down. The ARMS will adjust

this year.

I would like to make a move before my FICO score decreases due to not being able to pay the

higher payment.

Don't feel confident that anyone would want to buy the rentals even at a short sale. The real estate agents keep telling me to stop paying the mortgages to do the short sale.

AAAHhhh my score!

any experiences or professionals out there?

Anonymous · ‎09-20-2008

Personally, if I was in that situation, I would short sale the rental properties and try to modify my "home" loan. Get rid of the investments as they will be losses for years to come unless that area defies the rest of the country (that is unless the rent would cover the adjusted payments and upkeep). At least then you keep one home and with a single mortgage still showing as current, hopefully you regain FICO fairly quick.

Lel · ‎09-22-2008

@Anonymous wrote:
Has anyone been able to negotiate successfully with their lender in changing the terms to
equal the current mortgage values, and change an ARM to a fixed rate?
Personal home devalued from 551,000 to 350,000 .
I have 2 rentals, and a personal property-all upside down. The ARMS will adjust
this year.
I would like to make a move before my FICO score decreases due to not being able to pay the
higher payment.
Don't feel confident that anyone would want to buy the rentals even at a short sale. The real estate agents keep telling me to stop paying the mortgages to do the short sale.
AAAHhhh my score!
any experiences or professionals out there?

Your lender is not going to forgive nearly $200,000 in debt, offer you a fixed interest rate, and allow you to stay in your home. In addition, since your home value has dropped so much you are not going to be able to refinance the current balance to a fixed rate.

Based on the numbers you posted in your other thread, you got yourself into an option ARM and have been paying the minimum amount. This has led to an increase in your debt, which has compounded your equity dilemma caused by the drastic drop in home prices in your area.

Selling off your investment properties (which I'm guessing are also minimum-payment-option-ARM situations) might be of limited benefit to you. You're not going to get any equity out of the properties since you're upside down, but you'd be able to divert the money you've been spending on those mortgages to your primary residence. But I'm also guessing that the rental income is what's paying the mortgage on these places, is this correct?

You don't have much time. You need to contact your lender(s) directly and start negotiating short sales of the rental properties now, before your payments rise and you start defaulting. Sadly, it sounds like you're going to have to do a short sale on your residence as well. Your scores are going to suffer greatly and it will be some time before you can buy a house again, but when that time comes you can give yourself a fresh start and proceed in a more prudent manner. Good luck.

Anonymous · ‎09-22-2008

Thank you so much for your reply.

Yes, I am upside down on the rentals. On 1 i'm paying an additional 900 a month.

Yes, that could go towards my own home.

BUt it just seems that I am sooo upside down. no one wants to touch it.

I was reading that it's really hard to negotiate with Countrywide , and that they tell you not

to make the payments, and don't return calls etc.

Is it better to go thru a counselor or attorney to do the negotiating?

And if i try to short sell it and it doesn't sell, my scores will still decrease when the ARM

adjusts. and OOOOHHhhhhhhhh..................

trying to keep it together.

I was reading that sometimes they will reduce the principle by 30%.

Is that possible in my case?

Attorneys are so expensive.

Are the loan counselors good at what they do and knowledgeable?

thanks

Lel · ‎09-22-2008

I don't know anything about lenders reducing the principal by that amount. Where did you read this?

Salvaging your home is going to be tough unless you somehow come up with the money to pay the existing mortgage when it resets. You won't be able to refinance. Given how complex your situation is, I would recommend working with an attorney to help guide you through the mess. I don't think a loan counselor is going to help you solve your problem, but he/she might be able to refer you to someone who can. Check if there are any local services that you can use.

The last option would be to let the lenders foreclose on your properties. You're going to take a major hit regardless of whether you complete a short sale or whether things go to foreclosure.

Anonymous · ‎09-24-2008

Are there tax implications/consequences on the 2 rental props and or on

my own home?

What about the mortgage deficiency on the rental props.

Does the new law only cover for a personal home?

You're right it really is a mess.

Getting a bit dizzy at to where to start....

spoke to 2 attorneys yesterday. it's still confusing....; (

i'm trying to make it so that there won't be any wage garnishments or

liens on personal assets.

no one is giving a definite answer .

Lel · ‎09-24-2008

@Anonymous wrote:
Are there tax implications/consequences on the 2 rental props and or on
my own home?
What about the mortgage deficiency on the rental props.
Does the new law only cover for a personal home?
You're right it really is a mess.
Getting a bit dizzy at to where to start....
spoke to 2 attorneys yesterday. it's still confusing....; (
i'm trying to make it so that there won't be any wage garnishments or
liens on personal assets.
no one is giving a definite answer .

I don't know whether the new law will cover your investment properties. That's what you're paying the attorneys to figure out.

If you manage to find a way for your lenders to make your hundreds of thousands of dollars of debt disappear, then you should consider yourself very, very fortunate. Based on what you've written thus far, you're hoping to come out of this mess with little more than a decimated FICO score. I don't know if that is a realistic expectation. You made some highly risky bets on the real estate market and lost, so you should expect to pay some price to get out from under this burden.

Nevertheless, I do hope you find some way to put this behind you soon.