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Obama, Making Homes Affordable

I have touched on this once before some time ago. Many of you know my husband was a displaced Ford worker of many years and myself a displaced Merrill Lynch underwriter. We took an enormous pay decrease, near 100k. We have continued to make every payment for every bill on time always.

I started working with my lender for a mortgage loan modification 16 months ago. Wow under the Obama Making Homes Affordable they say it takes 60 days from start to finish. We fit all of the criteria for the loan payment modification. Our house is like everyone else's, is no longer worth what we owe. I currently owe about $80,000 more than it is worth. I can not sell nor can I refinance. So after 16 months of sending and resending paperwork to them I received my answer.

Thank you for your submission. We will now add your husband to the home loan and your payment will be a lower fixed rate but it is going to cost you 277.00 more per month. This is only $1000.00 more per month than were were told the payment would be. HUH?

They alloted us 34% of our GROSS income to be hosing payment. I do not think this is rocket science but when I do the math, every penny my husband takes home for the month goes to pay the mortgage. Then I am left to contribute to 401k, groceries for 5, gas in cars, all utilities, real estate tax, insurance premiums for employer, housing, vehicles and health. No to mention all the necessities we use over the days. When I have completed a budget analysis we need 80% of our gross income. Maybe we could cut corners a little more and stop turning the lights on on in the house or washing our clothes.

Now my question to the lenders and the Obama administration would be this? Why would a consumer take a higher mortgage payment if they were struggling with the previous one? Secondly how is this helping our economy when you are forcing people to hand over their houses, therefor bringing the values down even more.

My house is in my name only. I refuse to scrape to pay an unaffordable mortgage they will not refinance or work with us on. I can not be married to my home. We have drained our savings account by almost 50k paying extra expenses since the job losses, so where do you cut your losses and move on? Is is wrong of me to say "you can have the house"?

So many people are bailing on there houses for this very reason. I do know some who have had a successful modification but I also know five friends from Merrill Lynch (in an office of 48) who have walked from their homes.

I am left with a couple of weeks to make a huge decision. Do I trash my credit and cut my losses, or do I drain my account to nothing in hopes the market comes back and in the meantime stay at home doing nothing but watching the sun go up and down because we are married to the mortgage.
 
I am sorry about your situation. Something obviously got screwed up here.

On the other hand, I know six people who are in very similar situations as yours and have gone through the Making Homes Affordable program and have had their interest rates and terms significantly reduced and have been able to stay in their homes.

It's very tough for most working people in America right now. Except for the greedy fatcats in the companies that caused this mess, including your former employer (who is also my former employer).

Jeff in Boston
 
That's alright. Before too much longer we'll all get government issued shovels, too. How's that for "hope and change"? Oh, wait! All those shovels are going to Greece now, aren't they? What are we to do?
 
Amazing how people get all riled up against big government and want it made way smaller but when it comes to them they expect Govt to be there for them with the services they need.

Nothing personal against you, sorry for your situation.
 
Although I don't have a mortgage, I know many people who do. The word is that the only way to get a lender to talk seriously about modifying a loan is to go into default. Simply stop paying the mortgage and wait a few months and the lender will start to work with you. If you keep paying, they will keep cashing the checks. I know that this advice goes against any decent person's principles but it seems to be how the system works.
 
as long as the foreign bankers (a.k.a. federal reserve) are in charge of americans currency and economics we will continue to suffer....I would let the house go,cut your losses,it is better to keep survival cash in your pocket if possible....half the country is in foreclosure (except failing banks),and if you ever get a chance,watch the dvd "why we fight",and listen to the words of president eisenhower
 
This is a problem that I feel is going to be happening for a long while.

Too many people in our society bought homes that they could barely afford when the economy was good. Now that the economy is in the shape that it is in, it has become very tough to hang on to their homes. People are losing jobs and can't meet their obligations.

When my wife bought our current house, we were approved for a loan amount of around $400,000. Technically we could afford a house that expensive but the mortgage scared us too much. We ended up buying a house for around $265,000. It has more than enough room and a mortgage that my wife and I can afford.
 
This is a problem that I feel is going to be happening for a long while.

Too many people in our society bought homes that they could barely afford when the economy was good. Now that the economy is in the shape that it is in, it has become very tough to hang on to their homes. People are losing jobs and can't meet their obligations.

When my wife bought our current house, we were approved for a loan amount of around $400,000. Technically we could afford a house that expensive but the mortgage scared us too much. We ended up buying a house for around $265,000. It has more than enough room and a mortgage that my wife and I can afford.

Word.
 
The government never intended to help people keep their homes. They were too busy bailing rich bankers out so that no banker got left behind. When you count the secret "loans" by the Federal reserve, and include the TARP, we spent about 2 Trillion dollars, essentially to help Wall Street. The promise was that the money would "trickle down"...sound familiar?

Excuses by the Federal Government abound, but the truth is, these so-called loan modifications will not work unless they cut the principal of these loans. Drastically.

A lot of people are making the smart decision to just walk. I know it can be very hard on a family, especially with school age kids. However, the kids are also impacted if the parents are stuggling trying to pay the mortgage. It was just a crazy, very screwed up thing that was allowed to happen.

Good luck with your situation.
 
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Just be careful if you do "walk away" you are still responsible for the mortgage difference if the lender sells it at auction for less than your current mortgage value. So if you are 80k in the red as far as valuation.

You may want to check state laws as I know some states have tougher laws for banks right now and have even heard in one instance the bank had to refinance the house for the current market value and take a loss on the original mortgage.
 
Just be careful if you do "walk away" you are still responsible for the mortgage difference if the lender sells it at auction for less than your current mortgage value. So if you are 80k in the red as far as valuation.

You may want to check state laws as I know some states have tougher laws for banks right now and have even heard in one instance the bank had to refinance the house for the current market value and take a loss on the original mortgage.

In reality, you will probably not be held responsible for the difference. The lender usually "forgives" the loan balance, and whatever is forgiven is treated as income. Usually, the homeowner is better off to take a walk if they are too far under water.

Depends on state law. Whatever you do, don't get advice from fly by night services that are popping up. Talk with a bankruptcy lawyer (even if you have to pay a consultation fee), NOT because you are considering filing bankruptcy, but because such a lawyer is very aware of what's going on with people in trouble in your state.

There are also legitimate non-profits (not many, but some) that can give good advice. Finally, your professional tax advisor has probably seen a ton of this, and can help advise you.
 
FWIW, see a lawyer. As a real estate agent in Arizona, I don't know what your future market will be, but here we anticipate a return to 2005 prices in 2025.

I wrote a news article about Making Homes affordable the day the pres announced it, declaring it either a tragic mistake or a huge fraud.

The latest, Home Affordable Foreclosure Alternative is for sure fraud. Excepted from the program are VA, FHA Fannie Mae and Freddie Mac loans. Who's left?

Best of luck
 
The root issue here is that home values ARE too high. The market, via massive foreclosure rate, is screaming this fact. Trying to keep prices elevated via low interest rates and gov. backed re-financing only prolongs the inevitable adjustment and puts more people out of homes (both by foreclosure/eviction and by the inability to pay the elevated price of a new home) in the meantime.

Let the values drop. Banks will loose money and many families will have to rent - but in a matter of months many more people will be able to afford homes and the currently unused inventory will be bought up. A regular and reliable path of information to banks, builders and buyers will be restored and we'll all hang out until the next bubble sucks money into some other unproductive venture.
 
Unless you in the privileged 1% the system rarely works for the other 99% I have been unemployed since September. I am thankful that my SS Disability was approved for my arththis. There are no jobs to be found if are over 50. I hope things improve for you.
 
This is a problem that I feel is going to be happening for a long while.

Too many people in our society bought homes that they could barely afford when the economy was good. Now that the economy is in the shape that it is in, it has become very tough to hang on to their homes. People are losing jobs and can't meet their obligations.

When my wife bought our current house, we were approved for a loan amount of around $400,000. Technically we could afford a house that expensive but the mortgage scared us too much. We ended up buying a house for around $265,000. It has more than enough room and a mortgage that my wife and I can afford.

We also went conservative considering I am the only one on the loan. Life would be easier if you could see the future. : )
 
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