Why is modification bad? In a dilemma....need help!!

[ccpat]

We have a 30 yr mortgage (21 years left) with Ditech - formally Green Tree.  It is only in my husband's name.  We also have a $30,000 tax lien against the house that we are paying on monthly.  We were in a bad situation and got behind on our mortgage and owe about 10,000 (4 months) that is past due.  We have been very fortunate there has not been a foreclosure because we pay a monthly payment every month.  So for the past 1 1/2  years we have never gone above or below the 4 months late.  The credit bureau has the tax lien on both our reports but the mortgage lates are only on my husbands report.  

Because of the tax lien, I can't refinance.  Because of the tax lien and lates, he can't refinance.  We have the modification papers that will reduce payment down about $500 per month but of course take us back to 40 years.  

What I would like to do is roll that $30,000 tax bill into the loan (which would make it about $220,000) and modify.  Then try to refinance after a year.  Is that possible?  If not, should I just modify, add more to the monthly tax payments and refinance the modification in a year or so (even if I have to do it in my name).  By the way, does the modification worse on the credit report?

I know that's a lot but I appreciate any advice I can get.

Thanks!!

[iv]

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@ccpat wrote:

We have a 30 yr mortgage (21 years left) with Ditech - formally Green Tree.  It is only in my husband's name.  We also have a $30,000 tax lien against the house that we are paying on monthly.  We were in a bad situation and got behind on our mortgage and owe about 10,000 (4 months) that is past due.  We have been very fortunate there has not been a foreclosure because we pay a monthly payment every month.  So for the past 1 1/2  years we have never gone above or below the 4 months late.  The credit bureau has the tax lien on both our reports but the mortgage lates are only on my husbands report.  

Because of the tax lien, I can't refinance.  Because of the tax lien and lates, he can't refinance.  We have the modification papers that will reduce payment down about $500 per month but of course take us back to 40 years.  

What I would like to do is roll that $30,000 tax bill into the loan (which would make it about $220,000) and modify.  Then try to refinance after a year.  Is that possible?  If not, should I just modify, add more to the monthly tax payments and refinance the modification in a year or so (even if I have to do it in my name).  By the way, does the modification worse on the credit report?

I know that's a lot but I appreciate any advice I can get.

Thanks!!

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Well, a loan modification isn't a positive factor on a report... but it's better than a continuing string of 120-day lates!

It sounds like the loan mod would also be a positive thing for your finances, so go for it.

You won't be able to roll the tax lien into the loan mod (that would be a cash-out refi instead...)

But refinancing the modified loan after a year isn't likely to be possible.  Those 120-day lates effectively count as foreclosure - and the foreclosure waiting period is likely to apply.

[ccpat]

Wow....Thanks so much iv for the reply.  Was able to dig through the forum and find that my husband will need to wait out the three years.  What if the house is in his name....can I refinance and just put it in my name?  Also, if I try to buy a new home will they eventually penalize me for this mortgage because I live here and am married?  In TX (if that matters).  Technically on my credit report, I have no mortgage.

[IOBA]

Is Texas a community property state? 

I started to say yes, you could refinance, but I don't think you can.  I think you have to get a new mortgage for yourself, by yourself, on the house.  Then the bank would not use DH's credit and income.

The tax lien stays with the house.  So the bank should be able to give you a mortgage without the lien being paid off.  If there is enough equity in the house, and all other mysterious bank requirements are met, you might be able to pay off the tax lien at closing, with the new mortgage.  Worth asking the lender.

Let us know what the lender says....

[CaliforniaLoaner]

Yikes. I think you're better off getting a home equity line of credit to pay off that tax lien. This would entail just your husband giving you authorization to take out a loan secured on your home. I can't speak on the cash-out refinance in Texas, they have their own special rules in mortgage. But I can't imagine there not being a showstopper in there somewhere with the tax lien and the current late, even if it is on your husbands credit and not yours. I could be wrong about that part.

[ccpat]

Thanks for the advice! You're right, California. Unfortunately banks are hesitant because I live there and Texas is a community property state even though it is just in his name. I'm still searching for a more lenient lender. The major banks don't want to touch it. The tax lien is really hurting. Chase said they wouldn't even consider a new mortgage or home equity with the lien on my report. I'm wondering if a credit union will be more lenient. May try Penfed next.