Decision time approaches

[Radiance]

My July payment was due July 6th with a grace period until July 16th.
Coming July 16th I was still waiting on an answer from the bank regarding extending my hardship reduced payments.
So I made the reduced payment of 1550.

I received a letter yesterday July 22th dated July 17th saying that they declined the hardship extension and that I was due for a payment of 2,194.

I called today and they tell me they changed the salary requirements for hardship so I was no longer elegible and that unless In paid the difference of $645 before Aug 6th I would be showing a late payment on my credit.

In addition, while I talked to two different representatives, they are both totally unflexible to even talk about options. They were unwilling to even listen to what I was saying and became frustrated and rude. I stay put and asked to talk to a manager. I was transfered to a voicemail with nothing more than a humph. (What happened with "thank you for calling HSBC I am transferring you call now, please hold"?)

I understand they are very busy, but I dont get why they have to take it personal. As intructed I faxed them an appeal letter.

In any case, I don't have $645 and I am facing a very real posibility of being late on payments for the first time on my life.

I can get over that, but what I am really concerned about is (and I know I have said it before)
1) How will I be able to rent in a decent place with decent schools if my credit goes down the drain.
2) How willI ever be able to pay back the defficiency which is now at approx 100 grand!! At the very least if the house goes in auction.

I really hope things turn around and they approve hardship again. If they take it down at least to 1700 I should be able to manage.

I am just 10 business days away from July payment being 30 days late. No matter that I sent them 1550 (I hope I didn't since it is not helping me at all).

Words of wisdom and compassion are welcome.
I am conflicted. But this too shall pass.

[creditcardfree]

I'm sorry to hear that they didn't approve your hardship. I'm sure that is very disappointing.

You are right. This too shall pass. In 5 years or so, you may be glad this happened! One never knows what future will bring.

Although you may wish you didn't send in the $1550, I think it was the right step in considering your hardship case. You would owe it at one point or another anyway.

I wish you well.

[zetta]

Sorry to hear the bank is not extending your hardship. If you end up in foreclosure, maybe some new options will open up.

Since your child is only 18 months, I wouldn't worry so much about renting in a good school district -- you can rent someplace less expensive now and move to the better district when kindergarten approaches. You'll have time to do a lot of repair to your credit history and will be able to point to a few years of on-time rent payments.

[sandrark]

I can get over that, but what I am really concerned about is (and I know I have said it before)
1) How will I be able to rent in a decent place with decent schools if my credit goes down the drain.

Look for a place now - your credit isn't a problem yet, and you could lock in a new place. By the time your rental renewal came up in a year, you'd have a personal relationship and history with the landlord..

2) How willI ever be able to pay back the defficiency which is now at approx 100 grand!! At the very least if the house goes in auction.

You don't have to, most probably. It's part of the housing assistance package passed last year - lenders cannot pursue deficiencies as 1099 income on personal houses. The details are probably complicated, but keep in mind you may not HAVE to pay this back.

I'm sorry they're being so short-sighted.

One final piece of advice - you might contact the loan dept. and ask if they're willing to "recast" the loan. It takes the current balance, and recast it back to the original loan term - if you're 5 years into a 30 year mortgage, it takes the current balance, and re-amortizes over 30 years again. The net result is a lower payment right now, but you pay more in interest in the long run.

Good luck!

Sandi

[maat55]

Remember, the economy as a whole is bad and you are not nearly the only person struggling. This means that landloards are likely to loosen their requirements.

On the other hand, rentals may be filling fast depending on your location. Many homeowners may be looking for rentals. Find the cheapest you can so that you can rebuild much faster. Good luck.

[Joan.of.the.Arch]

You don't have to, most probably. It's part of the housing assistance package passed last year - lenders cannot pursue deficiencies as 1099 income on personal houses. The details are probably complicated, but keep in mind you may not HAVE to pay this back.

This sounds a little "off" to me, so maybe I'm not understanding what you are saying. It may be true that the IRS is not going to pursue the value of defaulted, forgiven, or reduced loans to collect tax as if that were income. But I don't think that Congress can legislate away debt owed by contract with a lender. This is why Radiance had also asked the bank to accept a short-sale.

[Radiance]

Yeah, in Florida I can only get deficiency free if it was the mortgage to buy the house or if it was for home improvements. Unfortunatelly I used it to cash out the equity I had at the moment.

Since I used that money for other "dumb" purposes, I have to pay it back.

[Radiance]

Got with the lawyer.
I should try again to go for a shortsale again, this time I'll have the "leverage" of being late that I didn't have last time around.
When I have 60 days late it is a good time to retain a lawyer, I liked the guy so it would be him.
He would assist me with my short sale attempt, deed in lieu and, if all else fails a foreclosure. All is a flat fee of $2000.
At the same time I interviewed a realtor with experience in my area and experience with shortsales.

Sandi, you were right, I should not be liable for tax on the deficiency because it is my primary home of residence (Florida laws)
As per the deficiency itself, it looks around 100k. If negotiations to get it forgiven or to buy them out fail, I might need to go bankrupcy chapter 13.
In which case I would be put on a 60 month payment plan, amount setup by the judge.

Both the realtor I contacted and the lawyer seem to agree on all accounts but not on how the deficiency should be negotiated. I need to iron that out.

Both gave me tons of homework to do and docs to read. Here we go.
9 days left before I am officially late.

[Radiance]

As per what to do with the monies 'saved' while all is settled, the reccomendation is to save a little (maybe 4000) and use the rest for retirement and pre paid college. That protects that money and should be priority over pre-paying debt. Staying current in all other obligations is critical, of course. This includes Home owners insurance, regular yearly real state taxes, home owners association, etc. Paying off debt leaves those funds available for the taken.

Also, yes, as I posted under frugal, landlords are 'ignoring' lates on mortgages from the credit report. At least in my area.

I am nervous over the aug 6th deadline, but I don't have a money tree on my backyard, nor will I use my credit cards and, unless I buy some tickets, I doubt I will win the lottery to make the payment.

[creditcardfree]

I'm glad you were able to receive good, clear advice. Everything you wrote makes sense. Good luck with all the reading.

Just doing some mental math on the deficiency...$100K, paid over 60 months with out any interest tack on is $1,667/month. Can you even afford that? Is it possible it would be over a longer term?

[Radiance]

Actually it is the other way around.
First the judge determines how much I can afford, let's say 500 after all my expenses. Then the payment plan is setup for that amount for a MAXIMUM of 60 months and that is all the bank gets.

In this math, I would pay 500 x 60 = 30000, instead of 100,000.

The amount will the depend on the timeframe. Let's say by then my son is already on Elementary School, that would mean I am not spending on preschool and then I would be able to afford more per month. In this scenario the judge may say I can afford 800 and not 500.

So I would be paying 800 for 60 months.

Drawback for me is to get the bankrupcy chapter 13 on my credit report.
So I am hoping we do not get there and the lawyer and realtor can negotiate a short sale for me. Or a Loan modification (hey, who knows)

[creditcardfree]

That's good news. Best wishes for a good outcome. Think positive!!

[Alex_Adviser]

That is exactly what happened to us just today! As soon as they found out how much (or should I say how "little") we are making now, they wouldn't even discuss a hardship program.

I guess your bankers either deal with you eventually on a hardship program, settlement, or court. Either way, you have to be ready. But before that try to discuss the things with the Manager to sort out the things.

[arthurb999]

How did you guys get in this position to begin with? Was it a job loss or did you buy a house you couldn't afford? or did you refi with cash out to buy an expensive car, 2nd home, etc?


Keep in mind the banks are going to play hardball because they don't want a house worth less than what the loan is on the books for...

[Radiance]

How did you guys get in this position to begin with?

Sigh, It is not "us guys" It is just me, well, and my baby. My husband left thus reducing the "household income" to my salary alone. His contribution after separation settlement is $100/month for our son school.

Florida laws, he does not have to pay child support because he spends 40% or more of the week with the child. I am not elegible for alimony because I make the bigger salary. He could altually come after me for alimony.

But before that try to discuss the things with the Manager to sort out the things.

Every time I ask for a manager (and after I hear what really sounds like an insult) I am transferred to a voicemail. I leave a message, they never call back. I keep on trying, every single week....Sigh