Mortgage Forum

Joel Fraser

Hi,Here is our "story": I have a "no-doc" loan where like to many we were assured refi after 2 yrs no problem. We bought in my name only, due to my new hubby's bad credit and difficult-to-verify income (he was self-emloyed). One year later my credit tanked because I had to let my old house (turned into rental) go to foreclosure. It is an 80/20 40-yr ARM, originally both with Aegis Mortgage, but Wilshire bought the 2nd right off the bat. Aegis filed bankruptcy in Sept. 2007, so the loan servicing changed to Ocwen. It is an ARM, due to adjust next month--payment on the 1st goes up about $400. Due to medical expenses, job reduction, then loss, and his work reduction and fuel prices (he's a trucker), we got behind the first part of this year. I got a new job and he went to work for someone so now has regular pay (and doesn't have to pay the fuel bill!). His credit has improved slightly, low-to-mid-600s, but he still has medical bills in collections. We've been barely making regular payments, but not able to catch up (running ~60 days late), and I knew we couldn't afford the uptick in October. So I sent in for loan mod--submitted the online financial info (including both our info) and faxed hardship letter, 1040s, pay stubs, bank statements, and the online form said I would hear from them in 2 days. Well after two days I tried calling, and I seem to keep getting the same guy in India, who says he is a loan modification specialist, and he wants to repeat all the financial info over the phone! I tell him they should already have it, and he can't find it, but the call dropped as we were about to start over. So I called back yesterday, and spent an hour on the phone with him, and after putting me on hold forever, says if I can come up with 2 payments ($3375) by Oct. 10, they will proceed with modification. When I asked for the terms, he said it was fixed at 5.6% (we are currently at 7.025 now, and going up in Oct.), and when I pressed for length of the loan, he just said it ends 2036 (which is only 28 years--I guess we get credit for the first 2 years?). It actually increases our payments (from $1687 to $1742), although its lower than the new higher rate payment due to start in Oct. He stated that if we could not make the $3375 payment be 10/10, this deal would be cancelled. But he also said I have to call after Oct 5th to see if we got underwriter approval, and don't send any payments until we receive the agreement (via fax or email, according to him). Well, I told him I didn't know if we could come up with the money, but we would try. Unless we get really lucky and happen to sell my husband's truck in the next 2 weeks, the ONLY way we could do this is to take half of it from my 401K. I guess my questions are: 1) He said the late fees (many) and other fees are being added to the loan balance--should we just accept that? Do these numbers add up? Why is the P&I payment higher with a lower rate? 2) Is this a good offer, or is it possible we would get a reduction in the loan amount? (Loan bal is $286K, house probably worth ~$350). Are we likely to get any better terms with the pending bailout, or due to the fact that the mortgage holder is bankrupt? 3) If it is good, would you advise taking the 401K withdrawal? (we currently have about $10-12K in 401K accounts) I didn't find your site until I had already started my own financial worksheet, but my figures result in little surplus. If you want to know more (to help other members) let me know and I can try to calculate. Also, I noticed someone's comments that they don't count credit card debt--I was asked about it at the very end, he said he wanted the minimum we pay monthly. I wonder if they don't care much cause they figure you can always file bankruptcy? (Which we are planning, but my atty recommended trying to modify before we file). Thanks in advance for any help/advice...looking forward to the day when my bank isn't making bundles off my bounced check charges!