Ride-Thru Payment Still Too Big

[Snax]

3 months out of discharge, we are still paying the mortgage as per the original note. We can probably continue to do so indefinitely barring any serious difficulties, but we are still running the ragged edge with finances every month with a house payment that is about 30% more than it should be at current market rates. (About $55k upside down and 1.5% over prime.) Essentially that means we could save about $400 a month by simply walking away to similar rented digs. While I do not have an issue with moving, the problem is that my wife wants to stay. It is our home and there are many things to like about not having to move. So to this point, we have decided to stick it out.

We have determined that we will likely be able to remedy the negative equity situation inside of 5 years - and hopefully be able to obtain better terms on a new mortgage at that point, eventually transitioning the current property into a rental. But that extra $400/month still hurts!

So given the assumption that we intend to hold onto the property for the foreseeable future, and the fact that our current terms are well above current market terms, I'm hoping to find a way out of the excess on the payments. The bank doesn't have to do anything obviously except to accept our money, or opt to foreclose if we stop paying. I've been searching all over for ideas on how to get the bank to work with us on this issue, but I've not found any helpful answers outside of simply making the choice to stay and pay, or walk away.

We are not opposed to signing a new mortgage, but they are going to have give in for that to happen, and that seems unlikely since the current situation still leaves them without having to write down a loss. So has anybody here or elsewhere uncovered a strategy for working with the bank on getting more amenable terms, or are we simply still stuck with what we have?

[Sweetpea3829]

Snax, we were in your exact same shoes.

We were 150k upside down and about 1.5% over current market prime.

We fought and scrapped and fought some more to stay current on that discharged, non-reaffirmed loan for three years. We'd never been late, we didn't think that there was any possible reason we could leave, we felt like we had no choice but to stay.

Last year in 2010, we started hearing about those mortgage modifications. We looked into it and based on HAMPs criteria, we knew we'd qualify. We applied, got jerked around for four months by Citimortgage and then received the decline on the basis that, since we'd never been late on a payment, we were not at risk of default.

That and we had too much in liquid assets in our savings account. Which was a farce...much of what was in our savings account was a mortgage payment that had not yet cleared and made our balance look higher than it actually was.

That was last August...we stopped paying and decided to see if we could "force" the bank into a modification. We knew it would be a gamble and that it was very possible they'd refuse to modify and we'd lose the home to foreclosure. But, we also knew that we couldn't keep on the way we were.

Our story ended up taking a different path as we ended up moving out of state.

We do still own the other home (it's a rental property) and I am told that a modification has been approved and I should have details concerning that modification next week.

In the meantime, we are in the process of buying a home out where we live now. If the modification looks good, we'll keep the first house. If not...SEE YA!

It's a gamble...but it is definitely an option to let it go into default and hope for a mod.

Before you do that though, see if your mortgage company is willing to do a modification even though you're not in default.

[Snax]

We actually had just completed a HAMP modification prior to filing our ch7. The previous terms were even worse and we knew it simply wasn't sustainable either way, but we knew that filing before the mod would put us in an even more weak position to bargain.

[AngelinaCatHub]

A house is only a house. A Home is made out of love and family. Four hundred extra bucks would do a lot to fix up an empty house vacated by other people who cannot afford the upside down payments. There are a LOT of empty places and bargains to be had. If the bank will not help you, punish them. Find a place with "contract for deed" or at least better terms. It can be done and you have time now to look. It may take ten houses to find one that will accept you, but, eventually you will. 'Hub

[Sweetpea3829]

Snax, you could try an in-house modification as well. Or that HOPE hotline, explaining to the counselor that you want to keep the house, but that you cannot continue to sustain the current terms of the loan. Figure out what would be able to fit in your budget and ask them to get you to that point.

You won't know if you don't ask.

And then, if they won't work with you...walk. Sometimes we've got to let go of the emotional aspect of a home and do what is best for our budget. :-)

[laurannm]

Do you have both a 1st and 2nd mortgage on the property? If you do, is the 2nd completely underwater?

[Snax]

No, just a 1st.

I'll try to talk with somebody at the bank this week. I don't have high hopes about it however, as they don't seem too interested in telling us anything more than the balance of the lien, escrow, and payments received.