Home Loan Mod

[MaryLang]

Has anyone else done this?
My DH was laid off last year and we secured one of those "Home Loan Modifications" through Obama's new plan.
Well it has utterly destroyed our credit. The way it worked was, all of our lower payments through the trial period were put into a differed account and we were marked as late by the credit agencies for all of those payments.
At the end of the mod, any interest ect... was paid in a huge chunk by us, and they marked that as 60 days late because of the amount.
So our credit took a huge dive. All of our credit cards interest rates went up because of it, also all of our open credit disappeared which brought the number down further. So we are really struggling and may loose the house anyways.
Has anyone gone through this?
Is there any way out?

I feel so betrayed this thing that was supposed to help us has destroyed us financially. Even after all the work and money we put into this while he was without work, I can't believe it's come to this.

When I talk to the bank, they say it was out of their hands. They are only following government guidelines in how the money is handled.

[MyLilPwny]

Our home didn't "qualify" for Obama's plan, so we couldn't do it and we just stopped making any payments almost a year ago and now our house is in escrow for a short sale that looks likes its going through soon, but wow, it sounds like Obama's plan is a scam and if you can't make payments and can't get a mod then the only way out that I know of is foreclosure or sell it. We chose foreclosure, but then we found out that we can do a short sale for free, so now we're going that route.

[MaryLang]

Maybe it worked out in your best interest not to qualify.
This is a nightmare, and I think a short sale would have been a little easier to handle. I know short sale still damages credit, but in our situation we were hoping to rent this house out and rent a bigger house for us. Sell when the market picks up *hopefully* in a few years. We are 6 living in 900 sqft. Now those dreams are dashed and we can barely survive financially anyways.
Hopefully a short sale is an option for us.

Not to mention my old minivan is on its last leg, and as things stand I won't be able to secure even a small loan for another used one. What a mess. This should be told up front. It's as if the home mods were put into place with no real idea how credit works. So yeah it feels like a scam.

[springbabes]

I'm glad I'm reading this as I just applied for a loan mod last week. Maybe I should stop the process. I'd really like to hear other people's experiences as well.

My DH was out of work for 3 years, and while we've been able to keep the house so far, he's not making as much at his new job as he used to. Plus now we now have credit card debt left over from the unemployment period. It's been a struggle lately to make all the payments. We're getting ready to list the house, but in the meantime, we're drowning.

[MaryLang]

If your planning on listing the house to sell and ever want another loan, I'd think again.
Here in Michigan listing the house to sell out right was not an option, we owe 75% more than the house is worth because of the area we're in.

[chaoticzenmom]

We're working on a Mod and I"m thinking of cancelling. I called to cancel it because it looks like we may not need it and the bank person said that if I paid the original amount, it wouldn't go on our credit as delinquint. She suggested we send in our original payment and see what happens. The modified amount is much less than we pay. But, it looks like they'll either bump our loan up to 40years and/or cut the interest down to 2%. We're not going to pay on this place for 40 years and while lowering the interest would help, our interest keeps our taxes low, so I'm not sure it's worth the bother. It seems like it'll even out to be the same amount either way. Plus, they will probably want us to do credit counseling and I"m not sure what that entails, but I'm doing Dave Ramsey and not willing to hand my bills/control over to someone else. I'm glad I found this thread. It's sad that we'd probably be approved after the trial just on the basis that we barely need it. I'm trying to make a decision this week. We needed it and then we found out that we qualify for financial aid on our medical bills and I"m not so sure we need it anymore.

Anyone do the HUD credit counseling? What did it entail. I know that regular CCounseling is not for me (where they take your money and make payments.)

[chaoticzenmom]

Originally Posted by MaryLang

Maybe it worked out in your best interest not to qualify.
This is a nightmare, and I think a short sale would have been a little easier to handle. I know short sale still damages credit, but in our situation we were hoping to rent this house out and rent a bigger house for us. Sell when the market picks up *hopefully* in a few years. We are 6 living in 900 sqft. Now those dreams are dashed and we can barely survive financially anyways.
Hopefully a short sale is an option for us.

Not to mention my old minivan is on its last leg, and as things stand I won't be able to secure even a small loan for another used one. What a mess. This should be told up front. It's as if the home mods were put into place with no real idea how credit works. So yeah it feels like a scam.

I think they destroy your credit on purpose. That way, you're stuck with them and you can't rack up anymore debt.

[MaryLang]

We did the HUD credit counseling. My DH was just recently unemployed when we went to HUD, and they basically told us to fork over every extra penny we could into our bills, which would leave us with nothing left to take care of our kids. Worthless and we listened. We are now out so much money I don't even want to thing about it. And we are after everything headed to foreclosure.
I basically would never take free counseling again. You get what you paid for. As far as the CC part of the counseling.
I'll give you the info here and you won't have to meet with someone:
"Call your CC's and ask for a lower rate. If you don't feel comfortable calling we can, but the outcome is the same.".

An added note: I just got off the phone with our mortgage company again, and my mortgage guy flat out said " That Home Loan Modification is a scam, you should never have taken it!" . Wish I had known more before hand.

Our loan mod expert also told us they will not mark it delinquent, and in a way they are telling the truth, but the way your loan is deferred for that trial period makes the credit bureaus automatically mark it late. The loan officers know this, but will tell you otherwise to get you trapped in.

I have never felt so taken advantage of and betrayed. And I can't believe that our own government would be doing this to they're own people right now. In our time of need. Just shameful!

I hope at least that this story can keep others from the same fate, because this is a nightmare no one should ever walk into again.

[chaoticzenmom]

So, did the credit counseling people want to take your money and disperse it for your bills? Did they just tell you what you should do, or did they want to take it over and do it?

I'm thinking I'm going to send the cancellation letter. It does seem like a scam. They don't even tell you how your loan is going to be modified and you're not even sure you will be approved after months and months of this. Plus, if they do mess up and ruin our credit, we won't be able to refinance anywhere else if that's the road we decide to take later.

I'm sorry you're headed to foreclosure I'm glad you talked about it here though because lots of us need that information and it's hard to find.

[MaryLang]

No the credit counseling people did not want to take our money. But it was more of a session of "duh", well thats common sense, why did I need to meet with you for that?

They should not be telling people it won't affect credit, they know how it works. After the fact they'll tell you "Of course the credit bureaus mark it late!" "WE don't mark it late, the bureaus mark it late." and my personal favorite "We can't go back and change things like that!".

I have 1 60day late marked for the month the mod wrapped up...DEC.
Nov. is ok, Jan is ok. But DEC is 60 day late? This is because they have you pay up all the interest from the trial in one lump sum at the end and this causes the bureaus to see that huge chunk of money transferred, assumed a back/late payment and automatically you get a late.
How is this legal?


I'm in the process of figuring out if I can repair this, if not then the bank gets the house, because I can't afford this.
I'm finding it might have been better for us to start the foreclosure process back in March when DH was laid off. Hindsight is 20/20.

* And to be clear, yes, they extend your mortgage to a 37yr fixed 2% interest. Which did lower our payment. But has rendered us useless. And up to our eye balls in high interest CC debt, where as before we were very careful about our score and paying down CC and keeping lots of open credit. Its all gone

[chaoticzenmom]

If you have record of having made payments to the bank, you can send those records to the credit bureaus. That will show that you paid some. Go to Loansafe.org and see if there's some advice there that can help.

With the credit cards, are you late? If so, then maybe, since your credit is damaged anyway, stop paying until they want to settle with you. In the meantime, start a "settlement" account so you can pay them when they're ready to settle.

Send your email address to me and I'll send you my 0 balance budget monthly worksheet. It's an excel file, but having done it for the past 6 months, it's great at telling me exactly where our money goes. You have to fill it out before your first paycheck of the month. You put income at the top and the outgoing is all listed out. YOu can put in different things. If you mess up the formula (you won't if you know any excel) I'll help you figure out how to fix it. This way, you can see exactly when you can pay a bill (or can't) and deal with that.

Also, check this thing out to help you figure out how to get out of debt.
http://www.vertex42.com/Calculators/...alculator.html

You're going to be ok. If I were you, I'd try to hold onto the house if you can manage paying it. Is what you're paying comparable to rent in your area? Keeping your mortgage may help your credit in the long-run.
Lisa

[chaoticzenmom]

Also, so many people are in your shoes right now or worse. If you watch Dave Ramsey (hulu.com) then you may find that you're not as upset about your credit and you can take some control. I have had horrible credit before and it didn't last very long. Even though, I'm not willing to let my credit go bad right now, I know it's not the worst thing to happen. The banks will be fighting for your business as soon as this recession is over, no matter your credit.

If you're forced to decide to pay your mortgage or credit cards, choose the mortgage. There are worse things than not having open credit. Put pride aside for the time being and just stick to the basics. Mortgage, food, utilities. Take all that credit card money and start saving for a car repair.

[MaryLang]

Wow thanks! I can here to see if anyone has been through this and to warn others. I didn't think I'd find such support.
We have never been late on a CC.
It is only the damage to the mortgage caused by this loan that tanked us.
The mortgage is comparable to rent, and really don't want to let the house go. I just can't get over the implications this loan has had.
I have always wanted to do Dave Ramsey, but have been putting it off.
DH made our own xcel sheet, but maybe this will be easier to use.
Off to check HULU, I need a pick me up
And I'll PM you

Also, we're not the only ones, I know.
Just google it. There's a lot of people going through this.

[AnnaNova]

we are going through the loan modification right now, and i am soooo scared.
ive read a few articles about how it has already ruined people's lives, and im terrified.
but my husband insisted we do, because we are really not making it anymore.
my understanding is that the modification is designed to help people that are for now keeping up with the bills, but soon won't be able to. it's more of a precaution i guess than a way to fix things for someone who is already going to foreclosure... so im keeping my fingers crossed that it will work out somehow some way. i posted a couple of threads here about it, and it seemed like it did work for some people.
since we started the process, our mortgage has been sold twice which is disgusting. every time it was sold, we had to start over again. finally, we signed papers for the trial period a few days ago.
our mortgage company warned us right away, our credit score will be hurt. they have to report our decreased payments as delinquent... i didnt quite understand to be honest, something about that its us and the govt, and they are a mediator... didnt make much sense, but they did warn us.
we were suggested by a friend of ours that a way to prevent this is to send copy of agreement and your first check and the credit bureaus and they will have to file it as dispute and it cant affect your credit.
the scariest part is that there is no definite answer to any questions that come up. your bank tells you one, the people that work for 'making home affordable' tell you another... you know, the first time we called our mortgage company to inquire about this, they said they do not participate in the program.
it was not until we called the program itself, the people there got on a conference call with us and the mortgage company and all of a sudden they were like 'we are sending you the paperwork'... and proceeded to sell our mortgage 2 weeks thereafter... so sad