Home Loan Modification

[johnGorski]

Hi everyone, I am actually asking this question on behalf of my brother Charles. Charles is not very good at understanding banking principles this is why I wished he came to me when he bought his home for 174k. In 2003 he and wife bought a home they had lack luster credit. They opened there loan with countrywide home loan, this is what they got for a apr 9.5% ouch! they had to put all of this money down too like 20k. there Loan was 166k. there payment with taxes is 1560. There both made fair income so there payment did not bother them. In Oct. 2008 his wife’s position was downgraded so she took a 30% pay cut, Then April of this year he lost his construction job. Two months ago they came to me and told me about there loan and how they someday in the near future will not be able to pay for it. Well I told them to call there lender and tell them this, they had to fax in all sorts of documents. Two weeks ago they came over to our house very confused with a Fed ex package from Bank of America offering them a trial payment under the HAMP program of 1020 starting Dec 1st.
This is there situation
Income including his unemployment 3300 a month
All expenses 3600 a month
Checking account balance 5500
Dried of there savings
Retirement account 22k
home value 140k they owe 160k
They are current on there mortgage
they also have about 30k in car loans and cc debt

They asked me since I work with a bank, I am not too familiar with this as I work with the investment side of the bank. Just curious if any of you have been thought this or have any good info.

 

[hipchickie]

I am confused - what is the question? What are the terms they are offering?

if they bought for $174k, and paid $20k down (which is not a lot, they are pretty assuredly paying PMI too) how do they owe $160k? Who gave the $140k assesment?

 

[johnGorski]

I am confused - what is the question? What are the terms they are offering?

if they bought for $174k, and paid $20k down (which is not a lot, they are pretty assuredly paying PMI too) how do they owe $160k? Who gave the $140k assesment?

Thanks for the response.

I know that it is a little confusing as I am too lol, but my question are banks actually doing this? I wondering if it is a scam or something that will trash his credit. No they are not paying PMI they got put into a sub prime loan with fixed rate of 9.5% They got the assement from a realator there townhome neighbor hood is plagued with forclousers. The realator knows that 3 of the townhomes in his neighborhood sold for 120k.
Anyways Bank of America sent him a packet via fed ex on Oct 23rd stating there new trail payment of 1044 almost 500 dollars off of his orginal is due on Dec 1. They called BoA about this and they did a payment over the phone so it would draft on Dec 1. He asked about Nov payment, they told him dont make Nov payment as your account is blocked from making payments. He did ask if this would hurt his credit they rest assured it would not, he has to send in a bunch of document too.

 

[hipchickie]

Yes, banks are doing this http://www.makinghomeaffordable.gov/modification_yes.html

IIRC, BoA bought out countrywide, so that is why he is dealing with them now. I am not aware about all the details , but I would guess they closed out the old loan for this new program, so that is why he didn't have to make a Nov. payment (if you refinance this happens too)

Good luck to them, I hope this helps

 

[johnGorski]

Yes, banks are doing this http://www.makinghomeaffordable.gov/modification_yes.html

IIRC, BoA bought out countrywide, so that is why he is dealing with them now. I am not aware about all the details , but I would guess they closed out the old loan for this new program, so that is why he didn't have to make a Nov. payment (if you refinance this happens too)

Good luck to them, I hope this helps

Thank you much I will frwd. this off to him, sounds like a nice deal for him!

 

[RitaE]

There is no way of knowing if this is a good deal for him without knowing the terms of the new loan.

New Interest Rate (fixed or variable?)
New Length of Loan (have they refinanced him out to 30 more years or even longer?)

What kinds of fees and other add ins have to put into his existing balance? What does his payment schedule look like? Does his payment remain at this level for the life of the loan or is he merely covering interest at the moment and it is going to jump drastically in a couple of years?

etc

So in answer, yes banks are offering mortgage relief plans. This is most likely not a scam but it might also not be his best option. That's about all anybody can tell you.