Much of my compensation is commission based and my clients are in the retail industry. My salary has reduced 25% so I tried to refinance my home, but it is only 2 years old and the value has declined 30% in the past year.
My secondary mortgage lender was willing to offer a principle reduction if the primary holder would, but they declined. I then tried to go through their modification program but since my expenses outweigh my salary by so much, they are not willing to modify the loan as I would still be struggling. We are current on everything and have excellent credit, but we are staying current only through using college funds for our kids, all savings, and even took a loan against my 401k. The money is running out but nobody will help until we can’t pay the mortgage. So, once we get to that point our credit will be shot and we will no money in the bank.
Do we have any options or are there any companies out there that will work with us? Again, we have excellent credit and want to retain the home.
You are the prime candidate to be scammed by a mortgage modification or foreclosure rescue company that will charge you a high fee and not be able to deliver a solution.
The underlying issue here is that your income does not support the argument that a modified mortgage is sustainable for you. If you could increase your income, that would change things.
With the loss of value in your home and your reduction in income it is doubtful that you would be able to qualify for a new mortgage, so that option is probably out as well.
I am very concerned that you have drained your very important assets to sustain this situation. The reality is that you may simply be unable to afford the house you are living in. By propping up the mortgage by draining the college fund and borrowing against the 401(k) you are simply surrendering other goals for more time in the house. But at the end, the sand in that hour glass will run out and you will be without a house, without a college fund and without a 401(k).
I know this is of little comfort, but this is a classic situation and one I hate to see. By the time you’ve drained all the assets you are typically left with no good options.
If the goal was to stay in the house then a Chapter 13 bankruptcy would be a consideration to examine. It might even be able to reduce part of the second mortgage. But for specific legal advice you need to find a local bankruptcy attorney in the area. Contact a local bankruptcy attorney and go in and discuss your situation for free. You don’t need to go to file bankruptcy, go to learn.
Outside of that, the best practical advice I can offer you is to stop paying your mortgage, start saving those mortgage payments for moving and wait to be foreclosed on. With the cash you will be able to save before losing the home you’ll be able to find a rental home in the area you can afford and move into it.
Dave, I know this is a really difficult situation to face but denial does not make it change. It is what it is and if you want this to end better that it will otherwise, you are going to have to take proactive action and not just stay the course.