My husband just lost his job in the process of loan mod. (insurance, 401k)

[angelzeka]

My husband who is the sole provider just lost his job. we were in the process of a loan modification. I am able to make the first 3 trail payment on time,but I have to submit all the documents. should I notified the mortgage company or would this disqualify us from the program. We will be able to live off of my husbands 401k for 6 months under the new modification. What should I do?

[CAVA1990]

I would imagine you'd have to tell the lender. However, you might want to talk to a housing counselor first. You might be better off not paying anything at this point and hanging on to your cash if you're going to have to end up losing the house anyway. You might be able to work something out with the lender where you do a deed in lieu of foreclosure. I hear Citibank is even doing something where they rent the house back to you for a few months while they sell your house and give you some cash to move to a rental.

[SmartMoney]

50% of all mods don't make it beyond the trial period.

Chances are the mod will take longer and there will be a need to update your file.

I agree with the above poster - you may not want to part with your cash if you are going to lose the home anyway. The two of you need to evaluate all options.

[Modification Specialist]

Angel

Thank you for being honest in your PM. You need to realize your lender is not you friend, they are in business to make a lot of money from you. You defaulted on your loan, and now you are asking them for a favor. People try and study as much as they can to learn about mortgages, then attempt to work with their lenders attorneys. End up not getting the results they were hoping for. It is the method of mitigation done, to receive the best modification.

Losing his job does complicate things - your lender is going to want updated paper work (pay stubs & bank statements) until your modification is finalized.

Answering your question, if your go late in your probationary period. If that happens, your lender doesn't need to advise you that they are going to start a foreclosure on you. To make matters worst - you live in a non judicial state, meaning your lender doesn't have to go through the court process to sell your home which can accelerate losing a home to foreclosure.

What kind of work does your husband do? Can he be consistered as self employed. Then you can fill out a P&L statement, with updated bank statements (using money transferring from your 401k, making it appear as he is getting cash and depositing into his bank account). You didn't tell the bank you have a 401k, did you? I am sure you know this - any time you borrow against you 401k, there is a time constraint to put it back or you will be further penalized.

Important - they lowered your regular payment to them, be sure to check if your bank, by reducing the payment, are they paying your taxes and insurance.

You may be subject to a lump sum payment for your escrows in the near future. If you insurance is not paid, your lender will get you "Forced Insurance", which does not benefit you, and possible being expelled with renewing your old policy with your previous insurance carrier.

Your lender will pay your taxes. This is done because if they do not get paid - the state can come in and do a government auction because they are in first lien holders position to your home. Your lender is in 2nd position. Be advise anything they pay, they will require you pay them back before they will approve your mod.

They approved you for a 3 month trial period? What is going to happen after the three months? On interests rates originaly below 7%, seeing modification structured for five years. On original rate over 7%, seeing rates fixed for the life of the loan.

Seeing more step mods - the best I've seen has been 2.5% for the first five years, year 6 rate 3%, year 7 rate at 4%, year 8 rate 4.875% for the life of the loan. Have seen four in the last two weeks like this.

I just signed a client today, after she attempted to do her own mod. She has been stringed along by her lender. She was being put into a forbearance modification, resulting in a temporary reduction of her payments. Then after six months her payment was going to revert back to what is was originally, with a 2nd payment for the arrears. There was no way she could afford that being retired living on SS income. I have seen lenders temporarily modify peoples mortgages to a 1/2 payment, then wait till the a few months. Then surprise the home owners with a 2nd payment for the 1/2 payments they didn't receive. They can say they modified the loan. The arrears is something totally different. Your lender is looking anyway to get back their money any way they can.

Most loans can only be modified once a year (there are loans out there that can only be modified only once in the loans lifetime), you will have to to wait another 12 months before doing applying for another modification, and possibly be stuck with a 2nd payment.

Are you upside down on the value of the property? Right now across the country most people are. This actually benefits you when negotiating your with your lender. As the value starts to return, and home owners will have equity again. Not making your mortgage payments, the lender could foreclose and sell the property, making a profit. Again right now if they foreclosed and evicted people with no value in the property, they would lose more.

I realize I said some hard things to be digested. I am telling you from experience. Though every modification I have seen as been different. If I could look into a crystal ball on read to future. I wouldn't be doing what I'm doing now.

From the sounds of things, you have given your lender everything, with no recourse to an alternative plan. With your husband out of work - most likely you are going to have to rework to modification. You are leaving yourself at the mercy of your lender.

Do you self a favor since your modification is not permanent yet - check to see if you loan is Fanny Mae or Freddy Mac owned. You may be subject to even a lower payment....

Your options are - try and rework your modification your self, or have a Mortgage Attorney help you if you want to save your home. If you decide to let your home go, the best way is a Deed in Lieu to walk away with no further future recourse upon you.


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[Grainraiser]

I work for a large bank in the loss mitigation department. If your husband is out of work and you don't see him getting back on his feet quickly I would suggest you keep those mortgage payments in your account. Making mortgage payments without a job to back it is putting money into a sinking ship. The very first thing I would do is determine who holds your mortgage. Is a Freddie or Fannie Mae, Bank owned or a group of investors. Your answer will determine what options you have. Since he is the sole breadwinner of the house save your cash until you know what the future is going to hold. Nothing worse than sinking your money into the home and losing the home anyway. Just sock the money away and if he goes back to work pay your mortgage up. Any mod is going to require a income (ability to pay). You will be declined without it.

[angelzeka]

Thanks everyone for all the good advice. We decided to continue paying the mortgage for two months if we dont find something by then we'll ask the bank to take back the home.

[lindylou821]

Originally Posted by SmartMoney

50% of all mods don't make it beyond the trial period.

Chances are the mod will take longer and there will be a need to update your file.

I agree with the above poster - you may not want to part with your cash if you are going to lose the home anyway. The two of you need to evaluate all options.

I have been waiting for BofA to get back to me re: Loan Mod. I was told over the phone that it would go though as we are upside down, loss of income, etc. Today I rec'd a letter stating" we regret to inform you that there are no available workout options based on thr finanical info that was provided. This was the same info I provided when they said it looked so good..

Does anyone know what I can do next?? Since I started this process I have moved out of the home and plan on filing for divorce..Will this change their mind? as hubby needs to refin in next name only.

Need answers asap

Much Mahalo
Lindylou

[CAVA1990]

Originally Posted by lindylou821

Does anyone know what I can do next?? Since I started this process I have moved out of the home and plan on filing for divorce..Will this change their mind? as hubby needs to refin in next name only.

Need answers asap

Much Mahalo
Lindylou

You should call the loss mitigation dept. and talk to the person who handled your modification. He/she can probably tell you what the problem was. Better than never knowing why.