Evil mortgage company maybe not so evil after all?

[Martha13]

Hmmm...ok, we've been slowly coming to grips with the idea of giving up our house. We are currently 2 mos behind, have a $10k plus fees property tax bill from last year (regular tax bill + 2 ugly supplementals) and an awful neg-am option ARM (no one held a gun to our heads, knew what we were getting ourselves into but thought we'd be able to refi in a yr or 2 then market tanked, same old story). We've been checking into rental homes, etc..most that would be in same area/school dist rent for appx the same amount as our "fake" monthly payment (but no taxes of course). A couple of months ago while we were still current we sent in paperwork to our mtge co for a loan mod (we have 80/10 with them for 1st/2nd). I doubted seriously anything would come of it. Yesterday, my husband finally spoke with the elusive loan mod rep, and he said he has everything ready to submit for approval--they actually are trying?? He described combining 1st/2nd, getting rid of option ARM, changing to interest-only for either 36 mos or 5 yrs, whatever he could get approval for. There are a few glitches--pretty serious ones, though, that have me very nervous! First, we would need to make the May payment -- he said they would immediately reject if 2 mos behind. Second, we aren't clear if we'd have to pay the delinquent property taxes in full before they'd re-do the loan (if so, we are screwed. While the County will allow us to begin a pymt plan in July, we can't come up w/the full amount). Finally--we haven't said a peep about the bk--and he is telling us it could take up to another month to get approval (which of course, there is no guarantee of) Should we delay filing on the off-chance this could all work out? We also "got rid" of 2 of our cars..i.e. voluntary surrender, but if they want proof of why we no longer have them, again, we're screwed! We don't know if they'd pull credit again or not...feeling seriously confused on what action to take. Any thoughts? Ideas? Experiences with this? (sorry my posts are always so long....)

[ThreadsSnapping]

If I were in your situation I would just let the house go and start over. Interest only mortgage isn't much better than the arm loan if you are just hanging on now. And frankly, I don't think the mortgage company even know what they are doing or if it can even be done. Shouldn't they know if it will be for 3 or 5 years? And what happens then?

If you get a rental you also don't have to worry about any property taxes and any crazy supplements. What are you going to do if there is another supplement next year?

I would let the house go and let them deal with the property tax bill. It doesn't sound like their plan is really going to make things better for you. As hard as it will be, let it go, get a rental and rebuild your lives without all the stress. Good luck with your decision.

TS

[Martha13]

Thanks, TS.....you bring up excellent points. We are definitely leaning in that direction...it's also starting to appeal to me to live in the home "rent free" so to speak while saving up some money. I do worry though about having anyone to rent to us in 6 mos, but hate to jump the gun and move out now, too. It's a tough decision. I also hate the public aspect of it--what to tell friends, neighbors, etc? I know that should be the LEAST of my worries at this point, but unfortunately, I let that come into play in my mind, especially if we decide to stay in the same area. Ugh. Wish I could let THAT part go...I think what might be a good plan, is make the May payment, that will at least not stall this so-called loan mod process, and will technically buy us another month in the whole foreclosure process, but not hold up anything filing-wise, and let the chips fall where they may...

[deafbroke]

Interest only is a little better than adjustable rate as the payment is the same and won't go up but interest only is based on a balloon note which means at the end of the loan agreement which may be 3, 5, 7 yrs or more you will either need to come up withe the entire amount of principle and pay off the loan or get new financing with either the origional lender or someone else. You may be able to get another interesto nly loan but since they don't know about your BK I think what would happen is you might be able to get away with the loan the first time but once the loan term is up it wil lbe difficult to get financing to pay the loan off or refinance so in my opinion you might be best off just letting the house go, do not reaffirm the mortgage and start over. A lot less pressure on you that way.

DB

[Martha13]

I do like the idea of the mortage, taxes, etc being tied up in one neat, tidy (if not painful) bk bow.... I'm still not clear on exactly what happens with a bk/foreclosure all at the same time, need to do some more research and ask questions!

[AngelinaCat]

If you voluntarily surrendered two of your cars, did you get signed receipts or some kind of paperwork proving that?

[Phillymanhere]

Martha,

Just a request and suggestion: If you want a lot of people to read your post, you might wanna write shorter paragraphs with spacing in between.

When we read a book or newspaper, we (unconsciously but very effectively) use our hands and fingers to keep track of the lines. But in online forums like this, our eyes have to do all the work. Plus, discussions of bankruptcy can get very detailed and technical. I typically skip over long paragraphs without breaks.

We're in this period of transition where we figure out the right rules/etiquette for online writing. But I think this has been one habit that is becoming widely embraced. Just a suggestion to maximize the number of responses.


Good luck.

[Martha13]

Hi AngelinaCat....I kind of jumped the gun on the "returned BOTH cars" part...We've actually only returned one so far, to the dealership (which took 3 visits, mind you) and yes, we received signed paperwork. They have since sent us an additional letter to sign which we have no intention of doing-it's basically the same form my dh signed when returning the car, but they added some lingo about the deficiency balance..We'll take the letter w/us to our atty's office when we have our appt to sign the final p-work before filing. Ironically just today I received a phone call from the auto recovery place saying they've been unable to get anyone from the dealership to call them back, but by the time I ret'd that call, they'd figured it all out, and are going to go pick up the car from the dealer. That's a load off, as the whole thing makes me nervous--case in point, at 3:15 this a.m. I was 1/2 awake, heard a "doorbell" sound and almost had a heart attack. Turns out my daughter had turned up the volume on the speakers for the computer, and it was someone logging into IM...So, for the 2nd car, we tried to return it, but this particulary dealer was being rather...hmmm...snippy about it, and said we couldn't do so until we filed and had a case #, then proceeded to berate the hubby over his "obligation" blah blah blah. So, he'll just keep putting miles on it until we have the case #, and then we'll make arrangements to return it.

[Martha13]

Will do, Phillyman, I tend to write as I speak, very quickly, and very much~!

[ThreadsSnapping]

With so many people being forclosed on and filing bk lately, I don't think you will have too much trouble finding a place to rent. Sure, there may be a few places that won't rent to you but most places realize that you have to live somewhere. If they ask just tell them the truth about the neg arm loan and huge property tax bill and someone will understand. And since you will be living rent free for a few monts, you could put that money aside and offer a big security deposit. That should be enough to sway at least one or two people into taking a chance.

And as deafbroke said, what will you do in 3-5 years when you have to refi? If the market hasn't recovered and you can't refi or sell, you are then really screwed.

Don't know what to tell you about what to tell people but make the decision on what is best for your family and not on what other people think. No matter what you do someone will think you should have done the opposite. If you keep it, why didn't you give it up and if you give it up, why didn't you keep it? If anyone has an issue with it just tell them that they can have a say in your finances as soon as they start paying your bills. And they can start with your 10K+ property tax bill. That should shut them up!

TS