Financing in 94566>Question Details

Rebecca, Home Buyer in Pleasanton, CA

How willing will the bank do loan remodification ?

Asked by Rebecca, Pleasanton, CA Sat Jun 2, 2012

We had been out of income for almost 2 years and have stopped keeping up with our mortgage for 10 months now. My husband finally got a new job with a much lower pay. We would like to try to negotiate a loan remodification with the bank, how likely will the bank accept it if we can do the following?

1. Catch up with our missed mortgage
2. Pay 10% down on the first mortgage (1 million)

In return, we want the bank to default our second loan ($250000), and give us a lower 30 year fixed interest rate.

Our concern is that we may still have to short sale our house at the end if it doesn't work out. The little saving that we have left is from our 401K, and that $100000 is my personal saving from Asia and my name is not on the loan.

If we give the bank all these data, will the bank think we have money to pay the loan and refuse to accept a short sale later?

Do we have enough time to do a remodification before the house is foreclosed on us?

Thank you for your input in advance.

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Why not catch up on the mortgage, sell the house, buy a smaller house and live within your new means? Not even sure what you mean by "we want the bank to default our second loan (250K)".

Do you mean you wish them to forgive the 250,000 dollars? HOLY COW. I think we ALL wish someone would lend us 250K and then forgive it. I have never purchased a home over $250K in my life. Why? because I live WITHIN MY MEANS. You realize that we all end up paying for these forgiven loans through bank fees, higher interest rates, or government programs paid by our taxes or debt instruments passed on to our kids and grandkids...right? I do not wish to keep paying other people's mortgages, especially ones in MILLION DOLLAR HOMES. You must be KIDDING!

You top off your question that you have 100K you COULD have used to keep the mortgage current, but chose not to....because you are "not on the loan". So you are married, live in a MILLION dollar home, yet use this as a good reason not to pay what your husband agreed to? It boggles my mind.

You made a commitment, live up to it. Pay the mortgage current and do what most of the rest of us do, work hard, and live within our means.

Please write back and tell us this was a PRANK question.

Best wishes, Jim
1 vote Thank Flag Link Sun Jun 3, 2012
Really long time and its not always worth it. Banks like Wells often just bundle everything into a new loan including back payments and late fees. I would say to go for a short sale.
0 votes Thank Flag Link Sat Sep 29, 2012
Hi,

The TYPICAL way a modification works:

We now have several options for modifiations:
1) Hamp Tier 1 Mod, this is for the first mortgage with a balance below $729,950.
You need to be Net Present Value Positive and not have excess forbearance.

2) Hamp Tier 2 modification Your servicer needs to be offering this: same loan criteria however you can be NPV negative, meaning you can have equity, the servicer have the option of going down to
25% of your gross income but also up to 42% of your gross income.

3) PRA MOD This is the principal reduction mod, your first loan again needs to be $729,950 or below BUT if you are 115% or more underwater you MAY qualify for a principal reduction.


Now, if you have a second loan that is 100% underwater you may qualify to settle it and wipe it out. What ever the servicer does on your first, ie, principal reduction extend the loan to 40 years reduce the rate to 2% the lender on the second loan should also do if they are participating.

You can always wipe out an underwater second in bankruptcy.


If your loan is above $729,950 you will not qualify for hamp but typically most servicers have in house programs that mirror hamp, again if the loan is upside down

I highly suggest doing your Net Present Value, per California Civil Code 2923.6 if your npv positive and the servicer will make more money doing a loan mod the servicer should make every effort to modify you unless it is in the pooling and servicing agreement not to modify you.

Please do remember there is no guarantee that your lender will modify you but by knowing where you stand before you even submit your file, and knowing that your file is prepared properly you are starting out in a much better position.

If you dont pay your mortgage there is a good chance you could loose your home. this is not legal advice and we do not work for your lender or the government.
0 votes Thank Flag Link Wed Aug 22, 2012
Hi,

Depends on a few criteria:

1: if your first loan is $1 million your not going to be approved for the hamp mod. However most servicers have their own modification program that mirrors hamp.

2: you need to have your net present value calculated.

3: the only way to settle your second loan is if a good portion of it is underwater. You can then offer then lender a % of the loan balance to pay off the loan.

Lenders are doing loan mods. A new program was rolled out on June 1, 2012 for homeowners who are NPV negative or had excessive forebearance. Additionally if it is a Fannie may loan your chances of getting a loan mod are that much better.


If your meeting someone and they tell you only to do a short sale but are not able to qualify you for a loan modificaiton I would consider having a second opinion. Even lenders tell home owners to modify their loan before considering a short sale...

JoAnna Jensen
0 votes Thank Flag Link Tue Jun 19, 2012
Hi Rebecca,
Modifications have been quite difficult to get from banks. Some people do manage to do so, but my understanding is that they will extend your loan an additional 10 years and possibly reduce some principle. When all is said and done, I think that is merely a band-aide that doesn't necessarily fix the problem. What happens if in 2 years down the road you find yourself needing to move? It would likely still be a short sale.
I encourage you to give it a try. If you visit rhondafee.myhafaagent.com website, you can find lots of necessary information about modifications and short sales to help you through the process. If you'd like to chat, please feel free to give me a call!
0 votes Thank Flag Link Mon Jun 4, 2012
Hi Rebecca,

Have you contacted the Keep Your Home California organization?

Website: http://keepyourhomecalifornia.org/
Phone: 888-954-KEEP(5337)

There are four programs. If any of these apply to you: call them right away.

Your situation? I am currently collecting unemployment benefits.
Program: Unemployment Mortgage Assistance

Your situation? I can't catch up on my payments.
Program: Mortgage Reinstatement Assistance Program

Your situation?I can't afford my payments.
Program: Principal Reduction Program

Your situation? I can no longer afford to stay in my home.
Program:Transition Assistance Program


Fraud Alert: Homeowners will never be asked to pay a fee for any Keep Your Home California program. If you are asked to pay a fee or suspect fraud or misrepresentation of a Keep Your Home California program or representative, you are encouraged to contact the United States Treasury's Antifraud Unit by email at OFS.AntifraudUnit@treasury.gov.


Good luck Rebecca.
I hope this helps!!
Paula
0 votes Thank Flag Link Sat Jun 2, 2012
Rebecca,

No one in this public forum can accurately predict whether you can obtain agreement from your lender to satisfactorily modify your mortgage. But…it is more than a modification that you are looking for. You want to modify your first loan very substantially and have your second wiped out. (I am not sure, but I guess that is what you mean by “default our second loan”.) I think you are hoping for more than the bank will approve for you. But…I don’t make the decision, your bank will and that is to whom you need to talk.

You also mentioned the possibility of a short sale if the bank will not agree to a modification. That is certainly a possibility.

By the way, I am getting mixed messages from you. On the one hand, you have been out of income for 2 years and your husband now has a lower paying job than before. On the other hand, you imply that you have the resources to make up the missed mortgage payments and also pay down your first mortgage by 10%. It would be unfair of me to speculate on your motives but the bank may wonder why it is being asked to forgive substantial debt when you seem to have to ability to make the payments.

Also, in a short sale, retirement assets are usually protected and are not available for debt repayment unless you want to toss those assets in the pot, suffer possible tax consequences for withdrawal of tax deferred assets and not have the retirement money available when you do retire.

Your situation is complex and you should seek legal and tax advice to aid you in making your ultimate decision.

Good luck working through this difficult situation.
0 votes Thank Flag Link Sat Jun 2, 2012
Hi Rebecca,

Even though your husband had a new job, your still going to have to qualify for the modification with your lender. Most lenders have Loss Mitigation phone numbers and forms needed to apply for a Loan Modification on their websites. I would highly suggest getting in contact with them immediately to discuss this option.

Unfortunately, I've never heard of a Lender wiping out a second mortgage during a Loan Modification. You may have to negotiate with the Second lender on modifying that loan as well.

Now since you've stopped paying your mortgage for the past 10 months, you've most likely have a Notice of Default placed on your home, this is a very serious matter. This is the beginning of the foreclosure process, and you need to find out if a Trustee's Sale date had been set (you should receive a notice 27 days before the date). This is the date your lender will sell your home at the courthouse completing a Foreclosure. This is critical if your attempting a Loan Modification or a Short Sale, as there are 2 different departments handeling things. So it's essential to get the ball rolling on either as quickly as possible, in the event Trustee Sale date postponement is needed. A Loan Modification and Short Sale can take many months to complete, it depends on your lender, and how proactive all parties are in getting supporting documentation readily available when needed.

Please let me know if I can be of any assistance to you in either your Loan Modification or Short Sale needs. I've personally been through both and have assisted others as well.

Good luck! Keep hope alive, and be proactive in contacting your lender. There is no judegement and they will attempt to help you if they can.

Best Regards,

Ramon Concepcion
REALTOR, SFR
Better Homes and Gardens Tri-Valey Realty
(925) 480-7183
DRE#01888274
0 votes Thank Flag Link Sat Jun 2, 2012
Rebecca,

I am sorry to hear that you and your family have gone through such a difficult time but know that you are not alone. Number of homeowners find themselves in your current situation and banks have come to realize that they need to work with each homeowner and make their best effort to keep them in their homes. This does not mean to stay in their home mortgage free and/or for the banks to write off portion of the loan balance, however they are generally willing to lower the interest rate, increase the loan term and whatever else they can in order to reduce the monthly mortgage to a manageable level for the homeowners and keep them in their homes.

Having said that no one should be comfortable to answer to your questions in such national forum as there are specifics to each scenario. You need to reach out to your tax advisor as well as your attorney to a proper advice. Each state has its own set of guideline for the bank as to how they will go about foreclosing on a property. What I can tell you is that you probably still have time but I would not delay it any longer.

Best of luck,

Steve Mohseni
0 votes Thank Flag Link Sat Jun 2, 2012
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