great news about your loan!

[JACOBLANE]

We are 3 months into a 9month repayment plan, paying 2300 a month, regular payment on adjustable mortgage started at 1400, had adjusted to 1900, then we got behind, agreed to pay 2300 a month for 9 months. Anyway we have been struggling to meet this payment, just this week i had called to meet with a BK attorney to look into chapt 13, foreclsure, etc, when we got a letter yesterday......

This was from our lender, (you can probably guess which one, said "great news, we are temporarily reducing your payment back to our original terms for the next 60 months! " Your payment will now be 1480 a month, this doesn't include your past due amount of 3700 dollars. However call this number, we may be able to roll this into the term of your loan, which would only raise your payment less than 100 a month." Wow, my payment is going to go from 2300 to 1600, wow! This sounded to good to be true.......So I called the lender, the guy said they had reviewed files of several thousand clients like us, saw we were struggling, they want to help us stay in our home, he asked me a few questions, said we should be able to roll our past due into the loan, he would send us confirmation within 10 days. He also said not to make another payment until we recieved the paperwork! Wow, this sounds to good to be true,I asked him what the catch is, because I had asked for similar help several months ago, all they offered was a sort term repayment plan, which was killing us financially. He said, things have changed in the last several months, they are now more willing to look at better options for customers, due to record foreclosures. This all sounds great, but I;m still leery...If we were making the 2300 a month payment, why would they offer such a better deal as long as we were making it (even though we were leeting everyone else hang out to dry to pay the mortgage. Anyway, this is the answer to all of our problems if it's legit. 800 dollar savings a month, will allow us to get our life back, catch up on everything else. Has anyone else heard of any deals offered like this?

[lrprn]

Mortgage lenders are getting tremendous pressure right now from Congress to help homeowners who are in trouble because of balloon and ARM mortgages. Can't say if this is motivating your lender or not....just have seen a lot of press around this topic over the last months.

I assume you are not in an active bankruptcy, correct?

[JACOBLANE]

No I am not, have never filed, however was preparing to file till I got this letter. This is like x-mass early for my family if this works out.

[CindyLou]

This is probably less than interest only payments, which means you will have negative amortization over the next 60 months and the balance of your loan will increase. If this is ok with you then this may be an ok answer to your problems. But I would still recommend that you bring this info to an attorney as part of your decision on whether to file BK. It may or may not be the best answer to your problems at this time....so its worth a pro and con comparison.... I am happy that they are willing to work with you and I know it is a huge relief.

[SinkingFast]

Cindy makes a very good point.

Take a good hard look at the numbers and make sure you know what you're getting into.

Various articles I've read, experts are expecting the housing market won't begin to correct itself until 2009. Even then, financial gurus don't expect values to increase like they have in the past.

If your Lender is offering a Neg Am solution,........... You could be loosing equity for a couple of years, or more, before your market value begins to increase again.

[JACOBLANE]

There is actually a press release out from Countrywide about this I just found out, it's all over the news, they are lowering rates back down to the initial rate you purchased the home at, before the adjustment, in my case the difference in payment is quite dramamtic. After readind several different news sources about this announcement, I feel it's legit, however I am stilll gonna wait and see...

[Hillbilly]

The record number of foreclosures, and tremendous pressure right now from Congress, are finally adding up to a wake-up call to the mortgage industry, either they make the move and make the necessary adjustments in their policies and practice willingly, or the initiative will be lost to legislation from Congress that addresses the problems that they have caused by their greed, lack of foresight, and fiscal irresponsibility.
The level of losses are finally reaching a point where they are being forced into swallowing the bitter pill of the reality, that continuing to receive a payment at the original interest rate, is far better than pushing more debtors into BK and receiving no payments at all.
A few years ago this would not have mattered to them, as then they were easily able to resell foreclosed and vacant properties at a "paper" loss, and yet still make a continuing tidy profit. But now, with thousands of medium to high-end homes foreclosed and sitting on their books vacant and virtually unsalable, that tired old business model is no longer proving effective.

What to do? What to do? CYA and get "creative" again! offer to "adjust" those onerous loan terms so that the payments will become more "affordable" and tolerable.
Ahhhhh, the magic trick of "negative amortization" where the suck...'er, ah..er.....
The "creditors" will end up owing us even more at the end of each payment, and so everybody will again live happily ever after.
Wanna keep your house under those kind of loan conditions?
Hey! can I interest you in buying this really cool bridge? I am sure that we can arrange a loan that will fit within your budget....

[JACOBLANE]

Hillbilly, just curious, if they truly are lowering the rate, how can it be negative amor? I'm not sure what you mean by that. With my income of 100k plus, I can hopefully clean up some unsecured debt I aquired while struggling to make the bigger payment,with this new lower mortgage payment, so down the road hopefully build equity.

[Hillbilly]

Jacob, sorry that I came off so negative, as is obvious, I do not trust any lenders promises that sound just too good to be true.
It has been my life-long experience that lenders always set their lending policies so that they ultimately reap large profits come hell or high water.
I have no way of knowing what the exact terms of their offer to you entail, you quoted;

"great news, we are temporarily reducing your PAYMENT back to our original terms for the next 60 months! "

I do not see within that offer any mention of a returning to, or of any continuing or permanent reduction in the interest rate back to the original terms?
As SinkingFast says, "Take a good hard look at the numbers and make sure you know what you're getting into."
Hey, I would like nothing better than that this offer would turn out to be as good as it appears to be at face value, but my experience and gut instinct tells me to be both very skeptical and wary. Good luck.

[Hillbilly]

OK, I did a quick search and Countrywide's offer DOES appear to be legitimate! offering 5 years of payment and interest respite to their ARM customers.

But as a general caveat, we ought not to become over confident that all mortgage lenders will be as friendly or as straight up in their dealings when offering their own compromises.
All coming in far, far to to late to save a good many of us from foreclosure and bankruptcy.

[JACOBLANE]

Still waiting to hear from countrywide........be glad to get a written verification, I'm holding off paying some other things till I verify our mortgage is in fact going down.