Several months ago a homeowner in Southern California contacted us for some guidance. Her family was deeply upside down on their home, with the first and second mortgage adding up to more than $100,000 greater than the current value of the property. Initially we were hoping that the Hope For Homeowners programs would be a success and help the family out. But this fall it was becoming apparent that H4H was a flop so we recommended she proceed with trying to get a loan modification with her current lender.
Well things apparently worked out. We learned a few days ago that her current lender offered her a 5 year interest only loan at less than 4%. That significantly reduces the family’s payments for the next five years and keeps them in the home.
Why would a bank offer such a program? Well in this situation it makes good business sense. The bank knows that if they did nothing the family might be forced to simply not pay at all. That would likely lead to a a foreclosure in 6-12 months. Foreclosures cost banks a lot of money in legal and administrative fees to begin with, and in this case the bank would only net a home that is worth $100,000+ less than they lent to begin with. Plus the bank runs the risk of vandalism and all sorts of other bad things if it tried to foreclose.
So the bank apparently decided it would better to keep the family in the home even at a very low interest rate. It is true that the family might not be able to make the pending higher payments in five years as well, but in that time the values of homes in the area could be back up again so foreclosing would make more sense if it came to that.
The good news is that banks seem to be coming around and seeing the light when it comes to loan modifications. The moral of the story is that if you are upside down on your home and can’t keep up with payments, and you don’t currently have an FHA or VA loan, your best option is to contact your current lender about a loan modification. (If you are upside down and have an FHA or VA loan now contact us about a streamline refi). With any luck stories like this one will soon be commonplace because as the housing market heals the US economy will follow.
January 6th, 2009 at 12:27 pm
Has anyone had any success working with GMAC and/or GreenTree (Bank of America). I am hitting alot of walls and heading in the opposite direction. I am upside down but very willing to get caught up, I just need some leeway for a few years. Any ideas?
Thx
March 9th, 2009 at 11:06 am
I have been trying to work with Countrywide, but as mentioned in the post above, they are not willing. I am current as of today, but I have lost 20% of my pay (not complaining, thankful to have a job), but I am trying to be proactive instead of reactive. Countrywide has been most unhelpful.
March 12th, 2009 at 3:18 pm
My mortgage was through CitiResidential Lending and YES, they did get part of the bailout, but were not willing to do anything for anyone who is current on their mortgage payment….even though I have lost $100k on the value of my house. Now they have sold my mortage to American Home Mortgage Services. I have to start the process all over again. If anyone has had any positive experiences….I’m all ears.
April 5th, 2009 at 3:02 pm
We are more than 100,000.00 upside down never been late on payment have 30 yr fixed rate at 6.37500%. Has anyone had success getting help from anybody or are you always forced to walk away?
April 19th, 2009 at 7:20 pm
Well, I have GMAC 3 year ARM on a upside down loan to home value, and they won’t return my calls. I’ve checked with Wells Fargo, but all depends on the current market value of my home, which is in the worst area in the country for unemployment and forcloseures. How did I get sooo lucky? I put $200,000 down on my home, 40% of its value in the day–so I don’t feel I was irreponsible as the news and banks try to make out. THE Banks were irresponsible letting people have mortgages with little or nothing done, and letting them walk away. No help in sight, just alot of BS from Obama and the banks, so people think they are helping. No one is helping
May 7th, 2009 at 10:43 pm
I WOULD LIKE TO KNOW IF ANYONE HAS HAD ANY HELP FROM CHASE HOME FINANCE. LIKE EVRYONE ELSE THEY HAVE BEEN VERY HARD TO WORK WITH, FORGET A MODIFICATION, THEY TRICK YOU BY TELLING YOU THEY WILL DO A FOREBEARANCE ON YOUR LOAN, EVEN THOUGH YOU DO NOT ASK FOR THAT, AND THEN NO MORE CONTACT, TIL 3 MONTHS, AND YOU GET A LETTER THAT YOU ARE BEING FORECLOSED UPON, THIS IS OUR CASE,NOTHING BUT LIES, AND DISCRIMINATED AGAINST, AND FRAUDULENT ACTS. I WORK HARD EVEN BEING CUT BACK ON MY HOURS TO PAY MY BILLS, AND WHEN A HARDSHIP FALLS ON YOU LIKE IT HAS MOST EVERYONE, THERE IS NO REAL HONEST HELP OUT THERE, AND MY HUSBAND IS DISABLED, SO I WOULD LIKE TO KNOW WHAT HAPPENED TO THESE BANKS AND COMPANIES THAT ARE BEING BAILED OUT..THEY SHOULD HAVE JUST GAVE THE PEOPLE ALL THAT BAIL OUT MONEY AND LET THEM PAY THE BANKS AND COMPANIES WHAT THEY OWE, AND EVERYONE WOULD BE OKAY.
June 5th, 2009 at 8:42 pm
We are at a loss as to how to deal with our mortgage company AmTrust. We are a military family living on one income. We have my two teenagers, (one with mild autism and cannot be left unsupervised)and have not been able to locate the father for support. We also have a toddler and a baby under a year old. When we bought our current home we put 20% down, but still got stuck with a horrible rate 8.375, due to some errors on our credit with documents proving that they had been taken care of and should not have ever been reported, and a couple due to relocation that once discovered were taken care of. Between the money down and appreciation we have over $100K equity in our home and we were getting ready to try and refinance when we ran into difficulties that caused us to be about 45 days late on a payment. When we realized it we sent the payment plus. We still got a letter warning us of the intent to foreclose. We also got a letter from the state telling us who to contact. We did so and at that advice since the mortgage company had stopped applying payments since it was about to foreclose. We were told just a few days ago on a conference call that they had received our documents and they would be reviewed which could take up to six weeks. The very next day they overnighted us a “modification”. They knocked a whopping 1% point off of our rate which saves us only $108/mo. We received this document today, in it was stated that if we did not get them signed, notarized and returned to them by next Friday – 5 business days that they would assume we were not interested in bringing our loan current and keeping our home. When I checked the mailbox, there were summons for me and my husband to appear in court in one month for foreclosure and a notice that our house would be auctioned about 3 weeks after that. We had been told that although foreclosure was not cancelled until negotiations were over, that it was in a holding pattern until then. I do not believe that these documents arrived on the same day by accident. I think that they are using scare tactics to force us to sign an agreement that is in the banks best interest and does nothing for us. I have begun searching to find out what guidelines there are in place for these mortgage companies/banks before they can get incentives from the government for “helping” homeowners. Now it looks like there are NONE! They can get them for simply offering any changes, no matter how insignificant, to a homeowner.
Now we are in danger of losing our home, our credit is trashed – making another home next to impossible – and there seems to be no course of action.
Does anyone out there have any suggestions…I am scared!
January 20th, 2010 at 9:57 am
i have been paying them for 9 yrs.. and it has become a mess since i have went under the refinance thing with them.. they r putting me off because of the interest money they get every mth.. i can’t get them to do their job.. and the goverment wants to know why people ain’t refinanceing ,, its because of companies like chase… they lie to you…
February 20th, 2010 at 9:38 pm
I bought my home in 2003 for 256,000. 2 years later we refinanced and rolled in the closing costs since the home was valued at 290,000 for a mortgage of 242,000. Now I have no job (lost it a year ago and Michigan’s unemployment rate is at 11% and getting worse)and my current lender says we can refinance if we bring $7,000 to close (our house is now valued at 200,000) and our payments will rise $600 a month. Whoopee. We have never been late and are obviously facing some rough circumstances. I have no idea why i shouldnt just walk away and move in with my mom, me and my family are totally screwed and no one seems to want to help. Tis a sad situation, but at least we have our health I guess.