Background: My proclivity to spend above my means culminated in me creating the dental practice of my dreams (costs be damned) which never broke even and forced me (and my wife, who had been compelled to sign the office lease agreement and was linked to the CC debt) to file for chapter 7 Nov of '09 ($1.4M no asset case); we recieved a discharge in Feb of '10.
The Mortgage: We had 2 (80%/20%) GMAC 30 yr fixed (@6.5%/10.5%) loans when we bought the house in 2007. 1st Mortgage had about $245,000 left when we stopped paying in 12/09; 2nd Mortgage has about $60,000 left (plus GMAC sold this loan to SLS right before our bankruptcy, dumb luck for them I guess).
The House: We had it valued at $275 for the BK; bank had a drive-by appraisal done this summer for $310,000. Not sure what it is really worth. We paid $306,000 in '07 (this is in a very nice suburb of Hartford, CT where property values have held up pretty well) and have upgraded the windows, added a deck and fenced the back yard; but the northern side exterior paint is peeling, the water heater and furnace are near their ends, chimney needs relining...75 year old house stuff...
Anyway, we decided that the $2600 a month that it was costing us to service the two loans with escrow was too much for us. We settled on a housing payment of $2000 and were going to ride out the foreclosure and then rent. In the middle of the summer we got an unprompted modification letter from the 2nd, forgiving the missed payments (principal and interest) and cutting the % for the rest of the loan to 4.5%. I didn't call the 2nd, but that offer encouraged me to enquire with GMAC about a modification of the 1st. The sent me the HAMP stuff, for which I knew we wouldn't qualify; I dragged my feet and let the foreclosure keep going, but finally sent the stuff in, was rejected last week for HAMP and got called with an in-house offer today.
The Offer: I don't have it in writing yet (I told her to send it along and I would look at it). Lawyer's fees, missed payments, etc. get dumped into the loan; term goes to 40 yrs at 4.25%. So $1774.45 on Oct 1st (which would be fore November) then $1695.70 due 1st of the month starting in December. That payment includes escrow. Unclear on the phone whether the discharge would still stick (she said it was just a reamortization of the original loan, so I would think we would be good).
So what do you think? Obviously we would be paying a lot in interest due to the 40 yr term and very slowly building equity, but we are only planning on living here for 3-10 more years, and if we can get a decent settlement (or modification) on the 2nd we would instantly get at least some equity, which makes this better than renting (not to mention not having to move). Also, if it just doesn't work out with the 2nd, we can still walk away.
Sorry for such a long post.
Thanks in advance for your thoughts.
The Mortgage: We had 2 (80%/20%) GMAC 30 yr fixed (@6.5%/10.5%) loans when we bought the house in 2007. 1st Mortgage had about $245,000 left when we stopped paying in 12/09; 2nd Mortgage has about $60,000 left (plus GMAC sold this loan to SLS right before our bankruptcy, dumb luck for them I guess).
The House: We had it valued at $275 for the BK; bank had a drive-by appraisal done this summer for $310,000. Not sure what it is really worth. We paid $306,000 in '07 (this is in a very nice suburb of Hartford, CT where property values have held up pretty well) and have upgraded the windows, added a deck and fenced the back yard; but the northern side exterior paint is peeling, the water heater and furnace are near their ends, chimney needs relining...75 year old house stuff...
Anyway, we decided that the $2600 a month that it was costing us to service the two loans with escrow was too much for us. We settled on a housing payment of $2000 and were going to ride out the foreclosure and then rent. In the middle of the summer we got an unprompted modification letter from the 2nd, forgiving the missed payments (principal and interest) and cutting the % for the rest of the loan to 4.5%. I didn't call the 2nd, but that offer encouraged me to enquire with GMAC about a modification of the 1st. The sent me the HAMP stuff, for which I knew we wouldn't qualify; I dragged my feet and let the foreclosure keep going, but finally sent the stuff in, was rejected last week for HAMP and got called with an in-house offer today.
The Offer: I don't have it in writing yet (I told her to send it along and I would look at it). Lawyer's fees, missed payments, etc. get dumped into the loan; term goes to 40 yrs at 4.25%. So $1774.45 on Oct 1st (which would be fore November) then $1695.70 due 1st of the month starting in December. That payment includes escrow. Unclear on the phone whether the discharge would still stick (she said it was just a reamortization of the original loan, so I would think we would be good).
So what do you think? Obviously we would be paying a lot in interest due to the 40 yr term and very slowly building equity, but we are only planning on living here for 3-10 more years, and if we can get a decent settlement (or modification) on the 2nd we would instantly get at least some equity, which makes this better than renting (not to mention not having to move). Also, if it just doesn't work out with the 2nd, we can still walk away.
Sorry for such a long post.
Thanks in advance for your thoughts.
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