Should I try for modification now or wait?

[ssmdem]

Just got 1st notification in the mail from the bank regarding our mortgage. We're now two months late - saying that the account is in default, yada, yada. Should we call now requesting modification or wait longer?

[HHM]

To what end?

First, how upside down are you (be honest)?
Second, how much is your total mortgage payments?
Third, what is the total of your mortgage, if your income will not allow proper servicing of the debt assuming your payment was 31% or less of your gross annual income, modification is a non-starter.

[ssmdem]

In all honesty, I'm buying time. Foreclosure is a pretty much in the cards for us.

We're VERY upside down. By appraisal, about $50K. In reality cause I know what homes are really selling for in this neighborhood, it's more like $100K.

Our current payments with escrow and PMI are $2800. To get to the 31% mark, they'd have go to about $1500. Our interest rate now is 6.75%. I don't see them ever approving it without a balloon payment at the end that I'm not agreeing to.

So again - I guess it's more of a last ditch attempt to at least say we tried. Plus hoping it buys us a couple of extra months in the house. Planning to stay until the sale so want to stretch it out as long as possible.

[espo1357]

In all honesty, I'm buying time. Foreclosure is a pretty much in the cards for us.

We're VERY upside down. By appraisal, about $50K. In reality cause I know what homes are really selling for in this neighborhood, it's more like $100K.

Our current payments with escrow and PMI are $2800. To get to the 31% mark, they'd have go to about $1500. Our interest rate now is 6.75%. I don't see them ever approving it without a balloon payment at the end that I'm not agreeing to.

So again - I guess it's more of a last ditch attempt to at least say we tried. Plus hoping it buys us a couple of extra months in the house. Planning to stay until the sale so want to stretch it out as long as possible.

with a high interest rate, and upside down, you have to really like the house to stay.

that's my "problem", a good one I guess. that is, I love my home. And now that I got the HAMP, I am not as concerned about being 100k under. but, its going to take about 5 to 10 years before I break even.

Life is about trade offs. We can't have it all.

[ssmdem]

with a high interest rate, and upside down, you have to really like the house to stay.
that's my "problem", a good one I guess. that is, I love my home. And now that I got the HAMP, I am not as concerned about being 100k under. but, its going to take about 5 to 10 years before I break even.

Life is about trade offs. We can't have it all.

Well, and right there is the issue. We LOVE this house - designed it and built it ourselves - lot of memories there. And it's been all about trade-offs for three years now. We've done without just to make the mortgage - and I'm just tired of living that way. I know it will be YEARS before we break even on this house. If they can get the payment down to an amount we can comfortably pay, we've got a decision to make - because the fact is that we're still upside down. If they tell us no - then the decision has already been made for us. Life will go on if we have to move - but I know I'm going to bawl my eyes out the day we close the door for the final time on this house.

[espo1357]

Well, and right there is the issue. We LOVE this house - designed it and built it ourselves - lot of memories there. And it's been all about trade-offs for three years now. We've done without just to make the mortgage - and I'm just tired of living that way. I know it will be YEARS before we break even on this house. If they can get the payment down to an amount we can comfortably pay, we've got a decision to make - because the fact is that we're still upside down. If they tell us no - then the decision has already been made for us. Life will go on if we have to move - but I know I'm going to bawl my eyes out the day we close the door for the final time on this house.

Sorry to hear about your situation.
Once I got the loan modified, I thought I would be set. And, in many ways I am, because the home is affordable.

However, it is still 100k plus under, so even in that spot, I am considering alternatives. It just feels like I am going to be stuck in this house/city, and maybe it is better to take my loss now rather than wait it out.

Most important consideration is the think of the LONG TERM plan you have for your life, imo.

[ssmdem]

Yeh, and you know "stuck" just isn't a good position to be in either. Regardless of the modification or not - I'm not reaffirming the loan when we file for bk. I've learned alot through all of this. I had always said this would be where I would raise my kids, grandkids, and eventually die. I had absolutely no intentions of ever leaving this home or town. I've learned to never say never. Right now - I don't know where I see us in 10 years - but I do know I don't want to be in a position that I can't take full advantage of whatever doors life might open.

[espo1357]

Yeh, and you know "stuck" just isn't a good position to be in either. Regardless of the modification or not - I'm not reaffirming the loan when we file for bk. I've learned alot through all of this. I had always said this would be where I would raise my kids, grandkids, and eventually die. I had absolutely no intentions of ever leaving this home or town. I've learned to never say never. Right now - I don't know where I see us in 10 years - but I do know I don't want to be in a position that I can't take full advantage of whatever doors life might open.

Good point. Those of use that are underwater can only go for the short sale or foreclose if we want to move.

It limits our future opportunities, which would be a good reason to walk.

That is why it is important to have a vision for your life, for your family. If you don't see much of a future in your current city, for example, then walking sooner rather than later is probably the correct move.

I do see a future where I am, so I am likely to stick it out. I still don't like it, but my other choice is to live in an apartment complex or something, and I would rather not do that.

This real estate thing just really stinks, and there are so many people to blame (bankers, agents, appraisers, brokers...all crooks that took advantage of people, and other liars that applied for the loan). Regardless, if you have that long term vision for the place you live in and the city, and can afford the home, then I would stay. If not, then get out. Sorry for the repeat, but I just want to make this clear, and see what you thought.

take care. enjoy the weekend!

[ssmdem]

I really can see us here (as in here in this town) forever. My husband has a job that is pretty secure. I'm finishing up my teaching certification now (hence, why I'm online on a Saturday afternoon instead of out enjoying the sunny Florida weather) and have made the connections here that I wouldn't have anywhere else if we moved. So in about 2-3 years, we'll be in a much better situation then we are now.

I love the house - but I've also learned it's just a building - and home is wherever we make it. Thankfully we have options. We own another property we could move into. We have friends who have offered to let us rent their property. All situations have negatives and positives about them. Just really going to have to weigh our options and see what's best.

Again, I have serious doubts that the bank is even going to get us into a payment or modification that I'm comfortable with. My husband will retire in 17 years - we've still got 27 years left on the current mortgage now - heaven forbid they throw in a balloon payment on the end or tack on even more payments. I really think it's probably time to throw in the towel on this one and just walk away. I guess the modification request is 1) buying time, and 2) at least giving it some sort of effort to save it instead of giving up.

[ssmdem]

Well, think we've decided to just forget trying for the modification. Even if it's modified successfully at a payment we can handle, it still doesn't change the fact that we're upside down by a substantial amount on the loan, not to mention that we have, at a minimum, 27 more years to pay off the mortgage, and my husband retires in 17. So, I just can't imagine paying a mortgage 10 years into retirement.

So - what do I tell them before we file -- same as the credit cards - "lost job and have no income to pay right now."

We're willing to walk once they foreclose and will just stay until they do so. Several options available and not sure what we're doing at this point.

1) A friend has offered to possibly even try to buy it at the auction and let us rent and stay here until we can buy it back from him. Obviously hoping that works out - but have a lot of serious talking to do before I want to think about that too much.

2) Move into our rental property until we can afford to buy something else again. We could walk from the rental at that point (hate to have another foreclosure on our credit though 3 or 4 years after bankruptcy) OR we could simply rent it back out again. It stays rented, but we do lose money on it each month, as the mortgage is more than we can draw in rent. And yes, upside down on that one too so selling it isn't an option right now.

3) Walk from both now and rent until we can get another mortgage. This scares me as we're essentially crossing our fingers we can find somewhere that will rent to us - credit, 2 dogs, kids, etc.

Right now - our rental property mortgage is current. I'm scared to let it get behind until we're certain what we're going to do. If #1 option happens, we'll quit paying on the rental then, but that puts it way after bankruptcy discharge starting the foreclosure process. Really wish we could have both properties foreclose about the same time - but guess that won't happen.

[ssmdem]

OR ----- walk away from all of it - house and town and really start over somewhere else!!! I love this option - no one else in my family does though.

[SMinGA]

I don't see any harm in trying for a modification. Best case scenario? You get it modified, you file ch. 7 and stay in the house but do not reaffirm. Can still walk away down the road (in months or years, depending on what happens for you & the market) with no strings attached.

Though I would wait a month to start the process - one more month mortgage to the arrears - and since you're not making mortgage payments at the moment you could work on setting aside ~$1800 or so. In the event they offer a mod, and you choose to accept it, you may be expected to send 1 month of the new payment within 7-10 business days of when they approve the mod. I added 20% to the $1500/mo payment you stated, figuring if you like the house so much you might be willing to work with a slightly higher payment - since you know you can walk away after a ch. 7 if you ultimately decide that is best.

If you request - and get - an inhouse mod and it works out like our schedule did (fairly quickly) you'll need to make a modified payment when you send back your signed agreement, within about 6 weeks of starting the process. For us it was fairly pain free, never had to refax paperwork (did have to write loan # on each & every page), and no red tape of dealing with a government program.

Here was our schedule:

4-16: started process
5-21: BofA sent mod paperwork/offer (we did not make a 5-1 payment)
6-1: certified funds = 1 month new payment were due back to BofA w/ paperwork (they received on 5/28)
6-15: (today) online account info updated to show new details
7-1, 8-1, etc.: we'll make modified payment

Worst case scenario? You move out during the foreclosure/bankruptcy process - which is where you may land if you don't seek a mod.

[ssmdem]

You've got a point. I guess that's really no different than the option of living in the rental and walking away from it some point down the road, except we're living somewhere we actually want to be versus in that tiny rental house.

Of course if we go that route then we never get to find out if playing that hand of our friend possibly landing the house at auction would work. That would be SWEET if that worked out. Just alot of research and planning to do before we even go for it and obviously have to be prepared to lose as well. The way things are now though, modification or not - it's not going to be our "stay in forever" house as we had planned. We absolutely do not want to be paying a mortgage that late in life. So, giving it a shot and going for it - we really have nothing to lose that we haven't already lost anyway.

Still confused - wish I had a crystal ball. And really wish I could go back in time about 10 years and make some different decisions!!!

[SMinGA]

Either way is a bit of a gamble. Whether or not your friend can buy it at auction, and at what price. Plus the potential regrets of doing business with a friend.

I just don't see any reason to not try - unless its a situation where the process could not benefit you regardless of the result. It sounds like a successful mod would give you more options (but not lock you in to anything) while a denial would put you back in the same place but a few months down the road.

[ssmdem]

You're right. All I do is think about this anymore, so my mind changes daily on what I want to do.

Part of me wants to leave - be somewhere smaller with less upkeep - although I know I will regret that "smaller" part pretty much after getting there. We really need a middle of the road house - smaller than this one, bigger than the rental. There are so many for rent right now which would be perfect - and several friends who are having trouble selling theirs who would be willing to rent to us as long as they can keep it on the market at the same time (not loving this idea).

The only way of staying here forever is to gamble on the auction. We just have to decide if this is really where we want to be forever. We've got a price in mind that we could comfortably pay off a 15-year note in a few years. Ironically, it's the same price our friend threw out there when he brought it up. He's been looking at foreclosures for several years as an investment but just hasn't jumped yet, so this isn't a new thought for him.

However, if it's not going to be our forever home, I guess I'm just antsy to get moving. Paying $1500 (or even $1800) - while we can afford it won't free up the money to save like we would need to be doing in order to get a downpayment for a new mortgage. Paying the $1100 mortgage at the rental would.

We're definitely not losing anything by trying for the modification though. Think saying "forget it" this morning has more to do with the fact that I'm two weeks behind with my school assignments, still haven't filed 2009 tax returns (expecting a small return so need to do that and get it spent), and just really don't want ONE MORE THING to have to do! It's summer and I really wanted to relax and enjoy our possibly last summer here. (Geez, I still get choked up when I say that!! )