We negotiated a good deal for Dennis and his wife. They went from a 9.5% rate to 2.0% for five years, then 3.0% for a year, and 3.875% for the balance of the loan. They also got a $24,000 principal reduction. Read the details here:

http://www.mortgage-modification-attorney.com/wp-content/uploads/2012/08/midland-modification-DeK-3-4-12-final.pdf

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Donna bought her home in 2006. She owed $296,000 on her first mortgage and $71,000 on her second. She bought the home zero down. Her first mortgage was an ARM loan with a fixed 7.0% rate for the first five years. The index was the 6-month LIBOR and the margin was 2.25. Because the LIBOR is low right now, the interest rate is how. However, the maximum rate possible is 13.0%.

The loan started adjusting this year, and her rate and payment actually declined. However, she wanted a fixed rate loan. She also wondered what to do about her second mortgage and her $30,000 in credit cards.

She was approved for her loan on a stated income basis. Her first loan was with Midland Mortgage, and her second was with Citi.

The house is a cuplex. Donna was going to move her mother into the basement. However, there was mold in lower unit. The agents and sellers were all in on the cover-up. The selling agent even forged Donna’s name on the form 17 disclosure.

The estimated value of the property is $240, 000.  The investor is Freddie Mac.

Donna says in her hardship letter:

I bought this home with the expectation that I would have rental income out of it. It is an up-down duplex. There is a unit downstairs which we expected to rent out. As it turned out, the real estate agents, mortgage people, and the renters were in cahoots. They conspired not to tell me that the downstairs had water and mold problems. My signature was forged on documents. So I bought a home with a mold problem.  I spent a small fortune repairing the downstairs, however, it is still not rentable. It is probably mold free, but who knows?  However, it needs a lot more money to convert it from unfinished to rentable.  I have been struggling to make these payments. The interest rate will adjust, and I am afraid that it will go up after it goes down temporarily.  My income dropped off in 2009 and 2010. I cut my expenses as best I could. What I need now is a modification.  Also, the property needs a lot of repairs. I figure it is going to cost another $10,000 or more.  I have looked at home values in the neighborhood. Right now I am sorry to say that this house would sell for $240,000 and probably less.

Donna was married at the time she bought the property, however, she is the only one on the loan. This turned out to be a big help in obtaining her modification. If her husband’s income had been included, she would have had too much income.

Donna’s payment went from $2,011 per month to $1,187, including taxes and insurance.

Donna has stopped paying her second mortgage and her credit cards. I may be able to negotiate reduced payoffs on them. If creditors will not cooperate, then Donna and her husband will file Chapter 13 bankruptcy. Because there is no equity left to secure the second mortage, it can be stripped in Chapter 13.

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