Keeping Our Dream Home
January 30, 2012 in Finance
A little over eight years ago, we moved into our 4500 square foot dream house. We had built it right behind our double-wide mobile home on property we purchased in 1988. I had spent most of my lifetime in a trailer house of some type so it took some adjusting on my part to get used to it.
It also took some adjusting to get used to paying for it.
In an effort to create those resources, we became involved in two aggressive businesses. They produced lots of money but not much profit. They both failed and we took the equity out of the new house several times while establishing two new businesses that were profitable.
The final time we removed equity was at the height of the market. We ended up with an 8% loan.
When the mortgage crisis hit, we jumped on the opportunity to get a modification and, in the summer of 2009, we received one with a fixed rate of 5.75%. This was a government sponsored modification. During this process, the appraisal determined the loan was almost 200% of the new market value of the house.
I didn’t think we could get an additional modification so I didn’t consider another one until I received a call from an attorney’s office last August offering to help us get a modification. I told them I didn’t think we could get a second one. The caller told me we could if it had been a year since the last one.
I work as an accountant. Therefore, I understood the modification process. I have been through one for myself and helped several clients with their paperwork. So, last September, I decided to pursue a second modification with our mortgage servicing company.
When I called to ask them about it, they said we couldn’t get a second one as long as our first one was in good standing. I asked them how many payments we would have to miss to put it in “bad standing.”
They wouldn’t tell me so we decided to experiment.
We quit making payments, and agreed that, since our house was upside down, we would risk foreclosure. We understood the MSC would have difficulty selling this house. We were determined to reduce our cost of living, even if that meant moving to another house.
I communicated this to the MSC. We requested an interest rate of 2%, explained we would not make another payment until we received this, and reminded the MSC of the loan to value ratio.
We concluded that, if we could cut our payment in half, we would be willing to accept the loan to value ratio. The 2% interest rate would cut our payment by 47%.
Every time we received a collection call from the MSC, I repeated our stance.
Upon their request, we completed the modification paperwork twice: once in September and once in December. I included fully documented financial information to support the modification request and wrote an additional letter reminding them of the situation with the loan to value ratio. We had two long phone calls to discuss the modification. During each call, we were told we did not qualify for a modification. I always asked why and they never gave me a straight answer.
We received the 2% modification proposal about ten days after the second call.
There are several lessons here.
- Recognize your Desire and do everything within your power to fulfill it, even when everyone says it can’t be done. (Our Desire was to reduce our cost of living.)
- Do not become attached to how a specific Desire will be fulfilled. (We were willing to give up our dream house to fulfill our Desire.)
- Become informed about your situation and do everything you can to fulfill your Desire while understanding The Universe will move heaven and earth to make it happen. This includes learning what is in the best interest of all parties and finding a solution that works for everyone. (I continually explained to the MSC how our deal was the best deal they were going to get for this property.)
Feel free to contact me if you wish to know more about situation or would like to chat with me about how our team could help you with your situation.
If you think the cost for our service will be an issue, I suggest you read my next article when I start a series that I believe has the potential to usher in our new economic system.