Upside down value on a house is not news these day – mine went from 680,000 to about 400K. Loan is 500K at 6.9%. Wrote to IndyMac for reduced interest rate and they ignored me -tried several times – then withheld one months payment and all hell broke loose – yes they responded but not in a positive manner – they are not willing to renegotiate – now the pymt went from 3200 to 4000 since they added the property tax. My credit score has dropped because of this and since the house is upside down, can’t refi. They give a lot of BS about the Obama making housing afordable but that is as meaningless as he is – does not amount to anything as far as bank efforts to make a reasonable adjustment in the interest rate to lower the payment and get back on a positive tract.
So what do you suggest I do relative to IndyMac – forget the effort to renegotiate the loan ? Hold back more payments until they pay attention, or walk away or what? I like my house but they are unreasonable.
Indy Mac is a difficult lender to work with when trying to modify a loan. They nit-pick documents worse than just about any lender out there. If you sign a quarter-inch away from where you’re supposed to or you forget to check a box, your modification review will go nowhere and you can never count on them to let you know. Loan modification is possible with Indy Mac, but they sure don’t make it easy. Not in my experience anyway.
Your income will be a huge factor for you in determining whether or not to continue trying to get a modification. If you know for a fact that you should qualify, than it may be worth continuing with that route. Just be prepared to stay on top of Indy Mac and get them every last document they ask for. Also be prepared to call at least once or twice a week until it is approved.
As for the property tax increase. If that is because they just recently added an escrow to your loan because you paid the taxes on your own, than there won’t be much you can do to reduce that. It is what it is. If they added the $800/mo to your payment to account for unpaid past taxes, than you may be able to speak with the escrow department and get that worked into a longer plan. When a negative escrow (unpaid taxes) is added to a loan the lender will typically stretch it out to a 12 month plan automatically, even when they have the ability to stretch it out over 60 months. Sometimes it’s just as easy as asking the lender to put you on a 60 month plan for the back taxes, and they do it.
As for holding back payments. If you plan to keep the house and you’re already behind, there is no reason whatsoever to miss any more payments. You don’t gain any leverage by falling further behind and it can only dig you into a deeper hole if all other options fail. Many lenders will tell you that you don’t need to be delinquent in order to modify a loan. I’ve never found this to be the case. Every modification attempt that I have ever seen when someone remains current, has failed. But there’s no difference in whether you’re one month behind or six, so keep the delinquency as low as possible if losing the home is not an option.
In the end if all else fails or you’ve had enough, than let the house go. You’re $100k underwater at this point and it’s anybody’s guess when the value will ever get back to a break even for you. It could only be 3-5 years, but it’s more likely to take a lot longer than that. If you don’t feel confident in your ability to float this loan the entire time you’re waiting on the real estate values to come back, than you should speak with a local real estate broker about short sale right away. A short sale can potentially get you out of that home by selling it at market value, with Indy Mac forgiving most, if not all of the deficiency.
If you still have questions or would like to keep us posted on your progress please post them in the comment section below this post. I am subscribed to this post and will do my best to respond promptly. Good Luck.
Andy is a licensed real estate broker in Massachusetts and is the founder of Northeast Properties in Norton, Massachusetts. His brokerage is designed to help homeowners in today’s difficult real estate market, specializing in short sales. Andy speaks with Massachusetts homeowners every day, helping them to address their questions or issues with short sale or loan modification. He enjoys helping consumers arrive at the correct solution to their problem, and believes that the only way to correctly do that is by presenting them with all of their options in an un-biased manner.