ARM + Lost Wages + Bank Of America Modification = $1,100 Mortgage Increase By End Of 2010 - Is It Time To Walk Away?
In 2005 we paid 30K down on a 257K home which has depreciated to 107K (according to 2009 tax assessment). Because of lost income in 2008 we had a Countrywide modification
that added the missed payments (approx 15K) back to the original ARM loan increasing it to 237K, which is 10K more than the original 2005 loan. Our current ARM modification is 7.95% for 5 years at $2038.00/mo (up from $1,400/mo in 2005).
To make matters worse, as part of the modification, Bank of America set up an escrow account to pay county taxes and homeowners insurance for the past 2 years which, in turn, produced a -$2,600.00 escrow account.
I'm told my mortgage will now increase by $80.00 a month in July and it has also been projected that payment of my property taxes - estimated at $2,300 - will generate another negative escrow amount and increase my mortgage payments to approx. $2,500.00/mo in November.
We've applied for HAMP program in April 2010 but have not heard from Bank of America. Weekly phone calls are an exercise in frustration. Monthly take home income is $5,000.00 but may increase by 3K if a job opportunity opens up for my wife.
We simply don't no what to do. We're upside down, have witnessed our home decrease in value almost 60%, have invested $75-80K in down payment and monthly payments.
We love our dream home and hate to lose it, but.....
Bank of America Mortgage Loan Modification Answer:
by B of A Mortgage Loan Modification Expert - Dan North
If you can afford your monthly payment there is no problem.
Who cares what a piece of paper says your dream home is worth?
If it is your dream home stay there and continue to pay the mortgage, one day that piece of paper will say that it is worth more money and will even be yours. That is, unless you think you can rent a dreamier home for $2500/month and don't care if someone else owns the home.
You May Qualify for HAMP Modification
While you will not qualify for HAMP if your wife brings in another $3k a month you may still qualify for a slight reduction of mortgage based on just your income but you are close to the cut off point. If your wife is not on the mortgage then you would just not include her income and you could qualify for the Making Home Affordable Modification Program.
Even if it is not much of a reduction in payment your interest rate would come down to a fixed rate well bellow 7.95% (which is not a good modification) and your increased escrow payments would be included in the 31% of your gross monthly income. Including the increased escrow payment is what will bring the interest down closer to 4 or 5%.
It sounds like Bank of America under paid your escrow on purpose, especially if the county just lowered the appraisal on your property by $150k, so they could keep more money and raise your payment later. This is actually an underhanded method to get more money out of you while appearing to be helping you. Technically this is Bank of America's problem and they should be responsible for the underpayment.
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