How Can We Refinance Our Mortgage While I’m Unemployed? – Nicole

“Dear Steve,

Unfortunatly as I found out the HOPE program and all other programs will not modify your loan if you are currently on Unemployment benefits. What are options for people who are unemployed. I am working but my husband was laid off over 2 years ago. I have tried to modify my mortgage thru Citi Mortgage but they are just having me send in hardship packages. I have sent 6 so far and no one is ever assigned to my account the hardship “times out” for more information needed even thou no one has been assigned to account.

Is there anyone who will refinance someone who in on unemployment with an FHA loan? obviously my credit is shot now since we are behind in payments…… some time has passed since I posted they previous question on your site. I applied for the ELHP loan in August 2011 and did not get denied until January 2012 They denied because we owed to much money. well if they had reviewed my loan in august when I gave them all the pa perwork we would have not owed to much to be approved for the loan and now My husbands unemployment has now run out. We opended a small business in hopes to bring in enough money to be refinanced but that has not happend we are just making enough to survive. With my credit now ruined I don’t know what to do. I wont even be able to rent with bad credit.

I am consdering Filing Chapter 13 to try and save my home. I have applied for all the programs offered to me by citimortgage but have had no success. my mortgage is now higher than the value of the home I have received the letter stating that they are gong to foreclose. My income is not high enough to afford the mortgage so how can I negociate with them? Is a lawyer my best option at this point?

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Dear Nicole,

First off, no lender is required to modify any mortgage. If you want to discuss your options you can always talk to a HUD Housing Counselor for free.

There is no doubt that the modification process is long and arduous. But from what you’ve shared there are a couple of really problematic issues.

The first is your new debt levels and your current income. Both factors certainly seem to make you a very high risk or simply excluded for a modification or a refinance. For a modification your debt to income ratio can not exceed a certain standard.

Let’s say you did file a chapter 13 bankruptcy to save the home. What then? In a chapter 13 bankruptcy you’d have to make at least your regular mortgage payment to stay in the home. The chapter 13 would address your other unsecured debt and potentially give you a repayment plan you can afford on top of the regular mortgage payment.

But at the end of that process you will still owe more on your home than it is worth. The chapter 13 bankruptcy will no alter that fact.

Your fears of being able to rent with bad credit are not exactly true. While you might not be able to rent from a major apartment complex, there are many private landlords that will rent to you.

This might just be the time for you to evaluate your entire situation and see if this isn’t the time to reorganize your entire financial life. You may not be able to afford the mortgage. But the underlying primary issue here is the income situation. Until you can resolve finding a job and bringing more income in, much of your recovery is going to be difficult.

One option may be to focus on finding a job, stop paying your debts, including potentially your mortgage. You need to be aware that this approach will land you in collections and may lead to the eventual foreclosure of your home.

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However, once you find a job you could then consider handing the house back to the bank and a chapter 7 bankruptcy. This would give you a fresh start.

It’s an emotionally tough strategy and one you should discuss with a local bankruptcy attorney in detail before you embark on that path. You can click here to find a local bankruptcy attorney through the site.

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
Damon Day - Pro Debt Coach

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