I know it's a long shot, but I'm going to try to get in touch with my bank regarding a loan modification. I currently have an interest only loan at 6.5% with an ARM that doesn't reset until 2013. If it were to reset now, my rate would drop to 3%. An adjustment to just 4.5% with a payment of interest and principal would lower my monthly payment (slightly) while actually reducing the balance of the loan on my underwater home each month. I've never been late and can currently afford the payments, but I desperately want to start reducing the balance of the loan and try to catch up with the continually declining value. My mortgage is not Fannie or Freddie. The loan is with a local bank.
I'm wondering if some of the mortgage people here can critique the letter I've written and give me suggestions on where to send it...
I am writing to ask that you consider adjuting the rate early on my mortgage. I currently have an interest only mortgage at 6.5% that is scheduled to reset in May 2013. When I obtained the mortgage, my home appraised for $640,000. Since then, values in my neighborhood have drastically dropped. Earlier this year similar homes sold for $479,950 and $455,000 and the house directly across the street is currently listed with no offers at $435,000 with no offers and is schedule for foreclosure next month.
I don't want to walk away from this obligation, but the value of the house has plummeted so far in the past 3 years - without an adjustment to the rate, there's just no way that we can catch up. I know several couples in similar situations to us who have chosen just to walk away from the house and then used the other person's credit to purchase a new home at today's lower prices. My husband's credit scores are now sitting at around 700 and will be even higher in 2012 when his student loans drop off (just couldn't get these to budge!) so we would easily be in a position to purchase using just his income and scores. As I said, I don't want to do this but I wonder if I should include something along these lines in the letter?
Looks pretty good. I'd recommend you reach out to some of the upper level executives at the bank, get their names, title and of course their business address. I'd send one to the President, the Vice President and perhaps the CFO, CEO & COO if each of those positions exist at the bank. Usually the bank president & VP's have the final authority on those types of decisions though, at least ours do.