Not Sure To Modify Mortgage

[greatscotts]

I am defaulted on my first and second mortgage in SC. I called Homecomings and told them I do not have the money to pay them, they are the 1ST mortgage. They then asked me if I want to apply for Obama Trial Offer. This is where you pay 31% of gross. They gave me a good price to pay for the trial period while you apply to be accepted. They said can you complete the package and send it in. I said okay.

Then I called Second Mortgage Chase that I am also defaulted on. They also asked me I wanted to modify, I said yes. They made me agree to pay for one of my mortgage payments by getting my bank info. I gave it to them. I also have to submit a package to them.

I am thinking that I do not want to modify. I just would like to walk away and let them foreclose as I see that I will still end up in BK.

I think that this modifying and Obama plan may just be a Band Aid.
Does Anybody else think that?

[HHM]

Yes, I tend to agree. For "many" homeowners, the modification is a band aid. If you have significant negative equity, it really makes no sense to keep the house. It really just depends on the circumstances. But, if you have $385,000 in mortgages and your home is only worth $250,000, no mortgage payment modification is going to make a difference. The modification programs are still not reducing the principal to current market value.

Look at it this way, the "re-default" rate on modifications (that is, the percentage of homeowners that default AFTER receiving a modification) is over 60%.

[greatscotts]

Thank You HHM

WOW, 60% that is a high number.

I just see that even if you do modify there is a good chance of falling in to BK in the long run. I guess it seems to better to walk away than to modify. This is because you are going to waste a lot of your time and other peoples time and you might not get accepted into the modification. I believe that if you are not accepted you are responsible for all the original mortgage payments past due.

This equals filing for BK, am I right.

[DeadManCrawling]

Band-aid is a rather generous term, in my mind. This, to me, seems like it is kicking the problem down the calendar a few months, maybe a few years.

Many of the mods being made are doomed to fail, and I think banks, government and borrowers alike all think so too, but it is better to push the problem into the future and deal with it later, after there are either 1: More Government plans or 2: A housing market recovery. Both are pipedreams of course, and I think the worst is yet to come.

Other opinions differ of course, but I believe the worst is 3-5 years away.

One nice thing about the mods though. You can use them to extend the foreclosure time significantly if you plan well and can play the game as well as the lenders.

[hereforinfo]

I think it may be a band-aid solution, unless you believe the housing market will eventually recover. (Of course it will, the only question is when). Many areas are already seeing signs of a recovery, or at least we've hit bottom. Of course we won't know for sure until hindsight.

Whether or not to modify would really depend on a lot of things. Is the new payment less than you'd pay for rent for something comparable elsewhere? How far upside down is the mortgage? I believe that in many cases, even with negative equity it may be a good decision to do a modification - as long as you will get a ridiculously low interest rate. Many people are getting a 2-3% interest rate, some fixed for the life of the loan.

Let's say your mortgage is $200k, and the home is worth $150k. If your interest rate is 6% then your payment would be $1199/month. If they modify your rate to 3%, your payment would go down to $843/month. Or, at 2% it would be $739!

You decide to walk away, and in a few years you buy the same type of house for the current value of $150k. If you're lucky you might get 6% interest, and your payment would be $899. Even though you're paying less for the house, you would end up with a higher payment because you will never get the type of rate they may offer you on your current home. After a foreclosure or bankruptcy, you would be hard pressed to even get the 6%, so chances are your payment would be much higher. And you'd still have to come up with closing costs and a down payment.

But of course none of that matters if your goal is not to own a home. It also depends on how good of an offer they give you for a modification. Some people are getting a 2% rate, others aren't getting anywhere near that. And if the house is so far underwater that you could never climb out, that is a different story as well. It really just depends on your situation and future plans, and whether or not you have the income to afford the payments even with a reduced interest rate.

Good luck with whatever you decide.

[Scooter10]

I am defaulted on my first and second mortgage in SC. I called Homecomings and told them I do not have the money to pay them, they are the 1ST mortgage. They then asked me if I want to apply for Obama Trial Offer. This is where you pay 31% of gross. They gave me a good price to pay for the trial period while you apply to be accepted. They said can you complete the package and send it in. I said okay.

Then I called Second Mortgage Chase that I am also defaulted on. They also asked me I wanted to modify, I said yes. They made me agree to pay for one of my mortgage payments by getting my bank info. I gave it to them. I also have to submit a package to them.

I am thinking that I do not want to modify. I just would like to walk away and let them foreclose as I see that I will still end up in BK.

I think that this modifying and Obama plan may just be a Band Aid.
Does Anybody else think that?

Are youa a bk case? are the 2 mortgages discahrge and not re-affirmed? You may consider just paying your 1st and forget the 2nd. The chances of them foreclosing on you are slim, especially if there is not equity. They would have to by out your first mortgage. But it is a risk. Do a little more research on your lender and there currect practices. I work at a financial c=urrectly and we are charging of 2nds left and right. We dont even do anything, jus charge it off and issue the 1099C. It really depends on the numbers.

[greatscotts]

No, Not Yet in BK.

I spoke with a homeowner councilor. They will work with your lenders for the modification.
The modification is based on your gross income. Even if you receive a great mod offer you may still be losing. The price of properties today are very different than they were in 2006.
There are more homes available and the listing prices are very reasonable.

I just think if lenders would rewrite the mortgage notes at today's values it would be a win win for the lender and the borrower. I don't think the modification should be based on your gross income.

My second said they would start foreclosure process if I did not pay at least one back payment. The homeowner councilor said that just must of been a threat to get me to pay.

[hereforinfo]

If the banks write down one mortgage balance, they'll have to do the same for everyone. Then the banks would collapse and so would the entire economy.

[CCCrazy]

Scooter, when a 2nd is charged off and a 1099 is issued, does that mean there is a full lien removal for the 2nd too?

[Scooter10]

Scooter, when a 2nd is charged off and a 1099 is issued, does that mean there is a full lien removal for the 2nd too?

Congrats on your recent discharge~

Unless the charge-off is paid or settled, you cannot remove the lien. There is a way to do lien strips in a 13, but I see you have a 7

[hereforinfo]

Scooter, when a 2nd is charged off and a 1099 is issued, does that mean there is a full lien removal for the 2nd too?

No, they will not remove the lien until you pay in full. You could always try and settle for a lesser amount, but this would generally require having a lump sum to pay the negotiated amount. You would definitely want to get it in writing.