What is "Mortgage Relief"

[HCE SuiGeneris]

and how would one procure such a thing?

Here's the lowdown:

In the last 2 1/2 years I have lost 40% of my home's value. Now I am approximately 20% upside-down. A move to another state was necessary, in order to secure a decent paying job, and I am currently renting a 500 sq. ft. studio here for $1050/month.

I cannot 'afford' to sell my home in XX as I would owe approximately $30,000... so, I have a renter in the town home but still have a negative cash flow of about $700/month. To say the situation is tenuous would be an understatement.

The loan rate is 8% and is an interest only note... (I know, what the eff was I thinking?) However, there is no second mortgage, and to this date I have never been late on a payment. Credit score near 700.

I need to have a phone call with Countrywide, or I stand a very good chance of defaulting on my loan.

Do I wait and skip a payment or two to add more impact?
What do I say to them to convince them to either lower the interest rate, or lower the debt so that I can make an attempt to short sell?
If this were your future (and I absolutely know that there are others here in as dire or worse situations), where would you turn to seek capable advice?

I feel very alone and ashamed that I have placed myself in this predicament. No friends in the new state, and no family left that are able to proffer helpful suggestions...

Listing any resources available on the internet that I could pursue would be an invaluable aid. Sometimes a small boost is all that is necessary to help scrabble over the wall.

Thanks for listening, and thanks for any suggestions.

Peace

[BlooInBloo]

1. I don't know, but if it ever gets to foreclosure, immediately ask them to produce the deed....

To prove they own the place.

With securitization, a lot of the deeds have been lost/misplaced, and that can buy you months, even years, of time.

Rood ruck!

[HCE SuiGeneris]

4. Thanks, Bloo

Rotts o ruck is always a good thang

[montanacowboy]

2. You will not be able to do anything

since you are not owner occupying the residence. I think you have to be the resident for any relief if any, and not renting the property. This happened to my sister and she is losing her home to Countrywide.

[mnhtnbb]

3. Just to clarify, the value of your house is 20% less than your mortgage amount?

[HCE SuiGeneris]

6. Yes -- the house is worth 20 % less than the mortgage amount.

[sinkingfeeling]

5. Oh my. Talk about all the wrong moves. Is it possible to raise the rental amount you're getting?

You probably won't be able to refinance at a decent rate because you're renting the town home out. You also chose an interest-only mortgage to save a few bucks on the payment, but actually acquired a higher interest loan. How old is the property? Are there still units for sale by the developer? I take it the home is in Arizona, which is a hard-hit state for foreclosures. The market is probably glutted with them.

[HCE SuiGeneris]

8. You pretty much nailed it.

Out of 90 units -- there are now 9 for sale... all of them driving down the previous asking prices *sigh*

Edit to add -- I have about the maximum rent that can be derived...

[sinkingfeeling]

9. I did find this and maybe it will help.

http://www.azcentral.com/arizonarepublic/news/articles/2009/04/06/20090406housingplan0404.html


Housing help

• Go to the new government site makinghomesaffordable .gov. Answer four to five questions to find out if you are eligible for either the loan-modification or refinancing option of the $75 billion federal housing plan. The site also has a list of HUD-certified housing counselors.


• Call the Arizona foreclosure hotline at 877-448-1211.


Loan modifications

A loan modification is an adjustment to a mortgage that lowers the monthly payment.


• The adjustment can be temporary, but under the current federal housing plan it must bring the payment down to less than 31 percent of a borrower's income.


• Both interest rates and the principal amount of the loan can be reduced to modify a loan. Years also can be tacked on to a 30-year mortgage to make a loan more affordable for the borrower.


• A forbearance agreement is a temporary suspension of loan payments but is not a loan modification. Borrowers are expected to make up any payments they are allowed to miss.


Are you eligible?
MakingHomeAffordable.gov is a government Web site designed to help homeowners determine whether they qualify for a loan modification or refinancing.

Housing advocates say the site is the place for borrowers to start if they want to find out if the plan can help them. People facing foreclosure should also call Arizona's foreclosure hotline at 877-448-1211 and contact a U.S. Department of Housing and Urban Development-certified housing counselor. The HUD counseling is free.

There are also a growing number of firms, not federally certified, that negotiate loan modifications for a fee.

Regulators caution struggling homeowners to check out a firm offering help before paying any fees. Legislation that would require loan-modification firms in Arizona to be licensed is being considered.

[HCE SuiGeneris]

14. Thank you very much.

I am afraid that my mortification at being in this predicament has caused me to do the old head-in-the-sand routine. I much appreciate your digging up the information for me... it is very kind.

[lumberjack_jeff]

7. My mortgage was sold to freddie mac. I am getting a relief refi

It will be the same 30 year term, I do not need a new appraisal (although this is not an issue for me they'll refinance up to 105%) and the closing costs are small... in my case about 1% of the loan. My new interest rate is 4.75%.

http://www.freddiemac.com/sell/factsheets/relief_refi.html

[HCE SuiGeneris]

11. I am afraid my employment history is too short of a term right now...

and, as other posters have pointed out, renting the town home has now put me in jeopardy of potential negotiations.

Crap

[lumberjack_jeff]

Renting is probably an issue. But in the words of the my banker....

"Truthfully Jeff, all I need is your $80 application fee and your signature and we're good to go."

It's apparent from the program that their intent is to refinance as many mortgages as possible to slow default rates.

[notadmblnd]

18. Can you tell me a little about the process you went through?

how did you go about re financing with freddie mac? Is there an application process?

[lumberjack_jeff]

22. In my case I filled out a new application and paid $80.

There was no appraisal required, as far as I know they never verified employment or income. I don't know if they checked my credit, but I doubt they did.

My good faith estimate indicates that my closing costs (not counting accrued interest during the settlement period) will be something like $1500.

The attraction to me is the low closing costs and the point-and-a-half lower interest rate.

Using this program you can't refinance to get any cash back (you can finance your closing costs up to a limit of $2500) or to lengthen the term.

Edited to add:
This loan was issued two years ago by my neighborhood bank as a construction loan which was converted to a regular mortgage when I finished construction. Soon thereafter, it was sold to freddie mac. I don't know if you have to go through your original lender to get the refinance, but in my case it was convenient because my bank still had my file.

[jmg257]

10. Can you refinance? New rates are WAAY down compared to 8%.

Or would they not cover the full original mortgage?

[taught_me_patience]

16. Hard to refinance when you are 20% underwater

and live in another state.

[sinkingfeeling]

12. Go to the web site listed in reply 9 and answer the questions there.

[Terran]

13. You might find the links here helpful

http://www.dmh.mo.gov/ada/housing/HousingGuideandResources.htm#ForeclosureResources

This is a Missouri-state agency site, but the links are national in scope.

[HCE SuiGeneris]

19. I am relying on an unsecured wireless connection,

was unable to respond earlier as it fades in and out... thank you so much for your help.

[taught_me_patience]

15. I think you're going to have a hard time lowering your rate

on an out-of-state rental property. Mortgage relief is for primary residences. Traditional refinancing would probably yield a higher interest rate because you are now living out of state. I would suggest trying to find a second job to cover the monthly losses on your home.

[HCE SuiGeneris]

20. A second job on top of the 60 hours I work now?

I want to sell the home, but can't afford to. This is NOT an income rental property -- it was where I lived and worked until I was laid off

[notadmblnd]

17. Google 'foreclosure prevention counselors and look for your state

there should be free housing counselors listed that can maybe help you. I'm in the same predicament and it's a catch 22. The mortgage companies will not work with you until you're behind even though they tell you to contact them before you get behind. I'm working with a counselor now in my area to try and get a mortgage re-work. Although I'm not too optimistic that the mortgage company will be willing to do anything. I now have the assistance of a middle man that knows the workings and can provide me information to help me make better decisions regarding my situation.

here's a link, I hope it helps

http://www.hud.gov/foreclosure/

[HCE SuiGeneris]

21. Thank you very much.

The catch 22 issue seems to be a recurring theme for me... I wish you success in obtaining a better situation, notadmblnd. There is always a solution, and for help from you all at DU, I am truly grateful.