My husband was unemployed for 2.5 years due to medical issues. We exhausted our savings staying on top of the bills.
In aug, 2012 he did receive a job, but is underemployed and the combination of our two paychecks are barely getting us by.
We have an 80-20 loan on our house (from 2004) and our current 80% mortgage company is PennyMac.
I have tried numerous times to get a modification or reduction in payments, or even just a little forbearance until we could get back on our feet, but was denied all assistance.
In September of 2012, we fell behind on our payments, and have been 2 months behind since then.
We have received letters of Default from both companies (Ocwen is the second mortgage holder).
In Feb of 2013 I was able to get caught up on all principle payments due to our tax return, but we still have the late fees and extra charges they tacked on for being behind( valuation payments, certification letter charges, etc).
Now, however, we are finding ourselves behind again due to unexpected medical issue with my husband again. I can’t rely on constant paychecks.
We are wanting to do something to lower our monthly mortgage payments which are currently a total of 1,145 for both loans on a 170,000 home.
My husband looked online for some assistance and apparently filled out a small interest form. He was then contacted by someone at Consumer Attorneys Service out of Florida, with Brenda McCann as the head legal person.
After speaking with someone for almost an hour, they sent us a “contract” by email that I was to electronically sign right then, and provide our bank info so they could debit the $1700 retainer fee and set up a monthly legal fee of $700 a month after that until they resolved our issue.
They did say they could not guarantee any result which I do understand, but it scares me to think about using these people. They did provide, albeit over the phone (and there are a couple statements online) some of the positive outcomes they were able to do for others. But they also have a C- rating on BBB.
I have done a little searching online on PennyMac and it is very disheartening. Seems Pennymac doesn’t like to negotiate loans. The date for the initial attorney retainer debit has not happened yet (4-12-2013), so we have not paid them anything. Im still trying to figure out if using a lawyer to battle Pennymac is the way to go.
They seem to think from the preliminary info we gave them that they would indeed be able to help us, but again no guarantee. Even on the contract I signed (hastily I might add) they say you shouldn’t have to pay a third party to get a loan modification. Another thing that kind of scares me is there is a section that says we might be responsible for other fees that may incur.
My question is, do I try again to deal with Pennymac myself knowing that very very few if any have had any luck, or do I trust this firm to go to bat for me without any guarantee of any kind of loan reduction. Time is running out because I am again one month behind on paying the mortgage. I don’t want to foreclose. thanks.
You should first try working with your lender directly and contacting a free HUD Housing Counselor.
In fact this is what Pennymac says:
There are for-profit companies you can hire to represent you in this process, but often the same results can be achieved by contacting your lender yourself. And wouldn’t you rather put your money toward your home investment than spend potentially thousands of dollars in fees to an outside firm? In addition to saving money, working directly with your lender or through a free housing counselor can help avoid scams.
Remember, no lender is required to modify any mortgage they don’t want to.
Also, if you are getting back huge tax refunds it means you are having too much withheld from your paychecks. Adjust your withholding to break even and put the money back into your pockets each month where you need it to get by.
Be sure to first read How Not to Get Scammed by a Mortgage Loan Modification Company.
First you’ll need to determine your current debt-to-income ratio. The target debt-to-income ratio under the Home Affordable Modification program is 31%. Use this free online DTI calculator.
Mortgage Modification Calculator
The mortgage modification eligibility calculator will ask you several questions and then show you which programs you may be eligible for.
Free Mortgage Modification Help and Counseling
If you have questions about the process or eligibility you can call 888-995-4673 and get connected with an mortgage modification adviser for free. This help is provided by government subsidized HUD Housing Counselors and they can be a big help in navigating the modification process.
In order to assist you, the housing expert will need to gather some information from you. Have the following documents handy:
- Information about your first mortgage, such as your monthly mortgage statement.
- Information about any second mortgage or home equity line of credit on the house.
- Information about the monthly gross (before tax) income of all household members contributing to pay the mortgage, including recent pay stubs if you receive them or documentation of income you receive from other sources.
- Information about your savings and other assets.
- Account balances and minimum monthly payments due on all of your credit cards.
- Account balances and monthly payments on all your other debts such as student loans and car loans.
- Your most recent income tax return.
- It may also be helpful to have: A letter describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.), if applicable.
You can also get free help and housing counseling from a local HUD approved counselor. You can find your local free housing counselor, here.
Contact Your Mortgage Company
Not sure if your mortgage company offers modification programs? Not all do. You can contact your mortgage company to ask them about mortgage modification programs you might be eligible for. Click here to find your mortgage company.
Want to know the net present value (NPV) of your home for the mortgage modification process? No problem, use the free NPV calculator to find out. The NPV calculator is right here.
The calculator can be used by homeowners who have been denied a HAMP modification because of their NPV result or can also be used by homeowners prior to applying for a HAMP modification to help them better understand the NPV evaluation.
No Advance Fees
The Federal Trade Commission has a Mortgage Assistance Relief Services Rule which prohibits advance fees for mortgage rescue services or mortgage modification help.
From what you’ve shared it seems like the issue is bigger than just modifying the mortgage. It sounds like your larger financial situation is out of balance and needs addressing.
I’d suggest you first read How to Get Out of Debt. The Honest and Unvarnished Truth, How Do I Get Out of Debt Quickly? Change Your Mindset, and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.
Then use the free How to Get Out of Debt Calculator to review your options.
Once you’ve identified a company you want to work with, then follow my step-by-step guide on what you should look for and expect from a good debt relief company.
Please post your responses and follow-up messages to me on this in the comments section below.