Posted on: 28th Aug, 2009 09:14 am
HOW IT BEGAN
Due to job loss, we haven't paid our mortgage since Jan. 08 (past 19 mos.). Well Fargo started the foreclosure process in April of 08. We stayed in constant communication with them and also put our house on the market at that time. I'm not sure if this bought us any time or not but when we finally went to court in Oct. 08, we told the judge it was listed and he gave us until Jan. 5, 09. We ended up with an offer on the house but it took the bank too long to respond and by the time they did respond agreeing to the offer, the buyer pulled out. This was in December 08. At that point, with the option of a short sale out of the question, we asked for a loan modification. It took them several months to finally get back to us but in April of 09, after submitting our debt to income information, they asked us to submit three consecutive payments of $1,165. We did that. Upon completion, Wells Fargo then sent the loan modification with the new terms, they are as follows: 5% APR fixed for 30 years, $1,165 monthly. That part was completely acceptable. What was not acceptable is that: (1.) They want to tack on $22K of capitalization for the past 19 months (16 really if you subtract the 3 from earlier) of non payments. The actual amount owed on our home is $155K. The current market value is $70K. (2.) They also want us to pay $3,600 by Sept. 6, 09 for attorneys fees and administrative cost. (LOL) In the end, the grand total amount for our home will be $177K. Our home is a 1944 frame house of 1000 sq. ft. We could live here a lifetime and never recoup the the value. In fact our kids (7 & 4) might not see the day this house reaches $177K.
THE CURRENT STATE
So the latest is, I sent them a letter stating that I would like them to consider my terms: 5% fixed for 30 years, the total value of the home not to exceed $155K and no up front money. These terms would sill put the lender in a position of positive expectancy while allowing us to keep our home. If they do not agree to our terms then they can have the house back which will guarantee them only one possible outcome...a loss.
MY OPINION
This was a difficult decision but look at the big picture. Is the bank really working with us/others? Ok, so they've agreed to lower our interest rate, great. But they're still making up all their losses by adding it to the back of the loan. Basically they've told us that not only is your home upside down now, but it will likely remain upside down the entire length of the loan. Come on! Are you kidding me? Do they really expect people accept that? At some point we are going to have to take the loss. That being the case, I will chose to take the loss now and get it over with and move on. Wake up investors! There's nothing like cutting your nose off despite your face.
I will keep you posted as to the final outcome. I'm not expecting much.
Due to job loss, we haven't paid our mortgage since Jan. 08 (past 19 mos.). Well Fargo started the foreclosure process in April of 08. We stayed in constant communication with them and also put our house on the market at that time. I'm not sure if this bought us any time or not but when we finally went to court in Oct. 08, we told the judge it was listed and he gave us until Jan. 5, 09. We ended up with an offer on the house but it took the bank too long to respond and by the time they did respond agreeing to the offer, the buyer pulled out. This was in December 08. At that point, with the option of a short sale out of the question, we asked for a loan modification. It took them several months to finally get back to us but in April of 09, after submitting our debt to income information, they asked us to submit three consecutive payments of $1,165. We did that. Upon completion, Wells Fargo then sent the loan modification with the new terms, they are as follows: 5% APR fixed for 30 years, $1,165 monthly. That part was completely acceptable. What was not acceptable is that: (1.) They want to tack on $22K of capitalization for the past 19 months (16 really if you subtract the 3 from earlier) of non payments. The actual amount owed on our home is $155K. The current market value is $70K. (2.) They also want us to pay $3,600 by Sept. 6, 09 for attorneys fees and administrative cost. (LOL) In the end, the grand total amount for our home will be $177K. Our home is a 1944 frame house of 1000 sq. ft. We could live here a lifetime and never recoup the the value. In fact our kids (7 & 4) might not see the day this house reaches $177K.
THE CURRENT STATE
So the latest is, I sent them a letter stating that I would like them to consider my terms: 5% fixed for 30 years, the total value of the home not to exceed $155K and no up front money. These terms would sill put the lender in a position of positive expectancy while allowing us to keep our home. If they do not agree to our terms then they can have the house back which will guarantee them only one possible outcome...a loss.
MY OPINION
This was a difficult decision but look at the big picture. Is the bank really working with us/others? Ok, so they've agreed to lower our interest rate, great. But they're still making up all their losses by adding it to the back of the loan. Basically they've told us that not only is your home upside down now, but it will likely remain upside down the entire length of the loan. Come on! Are you kidding me? Do they really expect people accept that? At some point we are going to have to take the loss. That being the case, I will chose to take the loss now and get it over with and move on. Wake up investors! There's nothing like cutting your nose off despite your face.
I will keep you posted as to the final outcome. I'm not expecting much.
Hi scrabo,
I can understand that you must be facing a tough situation. However, you should note that in case of a loan modification, the lender has the right to add up the past due amount with your new payment plan. The lender will not be able to recover the mortgage payments if he does not do so. Though you are facing a financial crisis, the lender will also want to recover the dues or else he will have to bear the loss.
Check out if you can negotiate with your lender. If you can convince your lender, there are chances that he may come up with a better payment plan for you so that you would be able to save your property.
I can understand that you must be facing a tough situation. However, you should note that in case of a loan modification, the lender has the right to add up the past due amount with your new payment plan. The lender will not be able to recover the mortgage payments if he does not do so. Though you are facing a financial crisis, the lender will also want to recover the dues or else he will have to bear the loss.
Check out if you can negotiate with your lender. If you can convince your lender, there are chances that he may come up with a better payment plan for you so that you would be able to save your property.
scrabo look i think you should work for repayment plan first make a plan how you want to repay first and then goto your lender with your plan and talk with him with all the possiblities i think he will agree with you but u have to find good points first ...thanks
Thanks for the feedback guys but allow me to address a couple of things:
First Adonis: I fully and completely understand that the lender "wants" to recover the money lost and "has the right" to do so. What I'm saying is this...It's NOT going to happen. Period. With that said we are now faced with a couple of options. Option 1. They accept our offer, take a slight loss (relatively speaking), we stay, they get their money. Option 2. They don't accept our offer. We leave. The house short sells in two years for a fourth it's value or it gets auctioned off for a sixth. The math is simple. They are guaranteed HUGE loss. I really can't be any clearer to them than that. It all boils down to who cares less. And I'm pretty sure I care less about losing my home than they do about losing $150K. But I could be wrong.
Captcharwp007: Go back and reread my post. Everything you recommended is covered.
Thanks guys.
First Adonis: I fully and completely understand that the lender "wants" to recover the money lost and "has the right" to do so. What I'm saying is this...It's NOT going to happen. Period. With that said we are now faced with a couple of options. Option 1. They accept our offer, take a slight loss (relatively speaking), we stay, they get their money. Option 2. They don't accept our offer. We leave. The house short sells in two years for a fourth it's value or it gets auctioned off for a sixth. The math is simple. They are guaranteed HUGE loss. I really can't be any clearer to them than that. It all boils down to who cares less. And I'm pretty sure I care less about losing my home than they do about losing $150K. But I could be wrong.
Captcharwp007: Go back and reread my post. Everything you recommended is covered.
Thanks guys.
Hi scrabo,
You should note that if the property is short sold in the market by the lender, you will be responsible for the deficient amount resulting from the sale of the property. If you do not pay off this deficient amount, then the lender can charge it off to a collection agency which will again ruin your credit report to some extent.
You should note that if the property is short sold in the market by the lender, you will be responsible for the deficient amount resulting from the sale of the property. If you do not pay off this deficient amount, then the lender can charge it off to a collection agency which will again ruin your credit report to some extent.