[slowbutspeeding]

Hello, I am currently working with my mortgage company - First Franklin - to modify the terms of my loan. I have a $190,000 loan at 8.5%.

Here's the situation: A year ago my co-borrower lost her job and she is now earning a little over half of her previous salary. I started to lose work hours in late July and by mid August I was working only 3 or 4 days per week until finally I was laid off in October. I was only out of work for a month before I found a new job, but I wasn't earning near what I had been. Luckily by mid December I was called back to my first job and rehired (at 30-35 hours per week).

I decided to keep both jobs to help with the mounting bills. The summer months were financially very hard on us (unexpected auto repairs, high gas prices, high a/c bills) and we started to fall behind on bills by August.

We requested help in early December and submitted all the required paperwork. We have worked out a pre-modification payment arrangement with our mortgage where we are required to pay $1,900.00 per month for the next 3 months. We have already made the first payment.

I spoke with the loan modifier today to ask what he thought the modification might be and he said it looks like the new payments will be between $1,900 and $2,000! I told him that it didn't make sense that a modified loan would increase our monthly payment. My logic is how are we expected to pay $1,900 when we couldn't manage $1,770?

Apparently, because I've had a second job for 3 months, we can now afford the higher payment. I explained to him that the second job is only temporary, as I can not physically handle two full time jobs for very much longer. I explained that the job is only to get over this financial slump and help get the mortgage current. But he said while I have this second job, those are the figures he has to work with.

Is this normal? Do we have any other options? We have been in this home for 10 years and have put tens of thousands of dollars worth of upgrades and additions into this home and we don't want to lose it.

Any advice and information greatly appreciated. Thank you for reading.

[Komaraconsulting]

Do you have an escrow account? Do you have an option arm? are you currently in foreclosure? Those are usually the things that can make your payment go up. I cant really tell you much without looking at your financial form but it sounds like the second job put you too much over the top. How much was your monthly surplus?

[slowbutspeeding]

Thank you for the reply, Komara. Yes, we have an escrow account that is currently in the negative. We do not have an option arm. Foreclosure proceedings have begun, but they are on hold while we work with the mortgage company and await the modification. The monthly surplus is what I am bringing home from the second job: anywhere from $1400 - $1800/month. As I've explained, the second job is temporary, but I need it right now just to keep our heads above water.

The person we are working with told me that if I quit my job before the 3 payments are made (March, April, May), then the terms of modification could be different. As it stands now, our payments might be going up by $200 or more per month. That just doesn't seem fair - or make sense - to me. I don't want to have to give up that second job, but if I need to sacrifice it to get some help from First Franklin, then I will do it.

I asked about the possibility of getting the interest rate reduced and he said it didn't look like that was going to be an option. I've heard that some companies are agreeing to add the past due balance to the end of the loan. Is that an option we might have? Also, I just found out that neither Fannie Mae nor Freddie Mac own our mortgage. Is there something in the government's foreclosure plan that can help us?

I look forward to any advice you may have. Thank you for reading.
One more question: since my co-borrower is pregnant and expecting her baby at the end of the summer, can we amend the financial request form to include a second dependant for her?

[Komaraconsulting]

Thats the reason why your payments are going up is to collect the negative escrow and any costs that occured while foreclosure proceedings were taking place. On a payment plan, you resubmit financials during the middle of the second month as an update to the lender on your financial situation. If you are showing that great of a surplus then its very hard to negoiate with the bank because you are looking pretty comfortable on paper. The only thing I could suggest is if your paid hourly at your 2nd job. This way you can work less hours for a month and that would show 2 pay stubs of less income that shows a smaller surplus which would give you a better chance of the bank meeting your need to lower the monthly payment. The bank is looking at your case and is more concerned with just bringing it current because your financial situation shows that you can keep up with the payments.

[slowbutspeeding]

Thanks, Komara. That is what I am considering: either quitting within the next month and a half or cutting my hours drastically to get something reasonable from my mortgage company. What will happen if I no longer have that second income and we show that we are just breaking even? If we can get them to at least lower the interest (which is at 8.95%) it will make a big difference. But they don't seem too willing to work with us to find something within our budget. Are we in a situation where we can negotiate the terms? We feel that we are doing our best to show that we want to keep this house and continue payments. We are showing a good faith effort to work with our mortgage company, but it doesn't seem that they are doing that much to help. What are my options if I let go of that second job?

[Komaraconsulting]

If your just breaking even you probably wont get qualified or put in a hope team/hud modification program that really wont help you. Each financial situation is unique and the key is to know what the bank is looking for. I would have to see what you look like on paper to make a better recommendation for you.

[slowbutspeeding]

Thanks for your quick replies and information Komara. I'm providing our monthy income and expenses information in the hope that you'll look over it and provide suggestions or other information that may help our situation.

As of mid-December, our combined monthly income is $6000 and our monthly expenses are approximately $4750 (however, last summer our electric bills and gasoline expenses were double what is displayed below):

Mortgage: $1770
Car Payment: 500
Groceries/Household 400
Credit Cards 400
Auto Insurance (two cars) 350
Gasoline 300
Cell Phones 300
Electric (average) 180
Other 150
Gas (average) 100
Water (average) 25
Home Phone 75
Cable 75
Medical 50
Internet 30
Trash 20
HOA 20


As you can see, I have a surplus of approximately $1200/month with my second job. When/if I quit that job my income will go back to $2200/month and we will be $350 in the negative each month, which is where we had been from February to December 2008. How possible would it be for them to lower the interest or at least add the past due balance to the end of the loan?

I look forward to any further information you may provide. Thank you again.

[admin]

You are exactly right if you show too much surplus income you will be placed on a repayment plan. Your best bet would to quit the job because it is making it harder to work the numbers. You will be dragged through the credit bureau each and ever month during a repayment plan/forbearance. First Franklin does usually require a forbearance to mod typically 3 months and with a loan modification you will be current and reported current with the credit bureau, or at least not reported late. A mod will cover all but in some instances not capitalize late payments or other charges. A mod will capitalize attorney fees, past due interest and corporate advances.
You probably need to break the plan and report new income without the job, your call but First Franklin will probably reduce your rate if you are showing a deficiency or a slight surplus monthly. Hope this helps
Thanks for the assistance Komara - good stuff - right on

[slowbutspeeding]

Thanks for the information, Admin and Komara. The process of modification/forclosure certainly is lengthy and confusing. The information I have received both on this thread and throughout this forum is appreciated. I have a few more questions I'd like to ask:

Just for clarification, is the payment arrangement I made with First Franklin termed a forbearance or simply that: a payment arrangement? We started the modification process before the Making Home Affordable Modification program was in effect. Can we request to be considered for that program or is the process/requirements the same?

I am very wary of quitting my second job since currently at my first job I am only working 24-32 hours a week and there is speculation that my company may file for bankruptcy protection and I don't know how safe I am with respect to my job (although employees have been told that for the foreseeable future, nothing will change). If my hours continue to dwindle, can I call First Franklin and tell them that my income has been reduced? Also, due to a high risk pregnancy, my co-borrower has been visiting the doctor and specialists quite frequently, adding an additional $100 per month to her debt. Can we modify the financial information to show that?

We want desperately to keep this house, but feel that our good faith efforts (getting a second job) are being taken for granted. We are feeling forced into taking whatever arrangement they want to make because there doesn't seem to be any alternative for us. We aknowledge that we are behind on payments, but we just need a little more help to get a more affordable housing payment and a reduction in the interest would help a lot.

I look forward to any added information/advice you may have.

[Komaraconsulting]

First Franklin are one of the more stubborn banks I deal with (Saxon mortgage is the king of stubborn). It should be a forbearance plan but they should have sent you a detailed explanation and breakdown before starting the forbearance. The only reason why they do that is to show the investor that you can make monthly payments. As far as your job situation, remember that your target monthly surplus is around $450 a month. Just do what you can to stay the course until the payment plan is worked out. Once that is complete they will modify you. After you know what your new payment is going to be then you can make a better decision in regards to your job situation