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djrobsd
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| 08/27/2007 3:59 PM |
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Hi,
I have an ARM with GMAC that is adjusting next month. I tried to be proactive about 5 months ago and call them to find out what I could do, and they said "We'll transfer you to our refinance department", who in turn told me I didn't have enough equity in my home to refinance, and that there was nothing they could do.
Surely, they don't want me to go into foreclosure if I have the means to avoid it, right? I've never missed a mortgage payment in the 3 years I've had my loan with them, so I'm a "Good" customer by any company's standards, but when my loan adjusts, it's going to be pretty tough for me to pay, so I'm just wondering if anyone knows what the right approach for me to convince them they need to work with me on renegotiating my ARM so I don't loose my home?
Thanks!
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Mr_Brightside
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| 08/27/2007 4:27 PM |
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Is your mortgage held by GMAC or are they just servicing it? A lot of mortgages were sold to Wall Street and combined into bonds and other derivatives. This means that literally your mortgage could be owned by a Chinese Bank or a private hedge fund that in turn borrowed the money to buy your mortgage. It's a multi-dimensional situation. You would want to find out who owns the loan. It could be that GMAC still takes you checks but that they simple push majority of the principal and interest downstream to the bond holder.
Good luck on your situation. I would be persistent and also document all your activity. Remember that you are dealing with large organizations that have hundreds of thousands of employees most of which don't care too much and are just taking calls from customers. |
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Sound advice
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| 08/27/2007 4:32 PM |
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You have three very good options:
1. Renegotiate your loan. GMAC may be willing to do this, but it will cost you. The first question you should answer is can you afford a high fixed rate mortgage at today's rates? This is the minimum rate they will put you in because it sounds like you are subprime (can't afford your re-set).
2. If you can't afford a high fixed rate, then sell your home. You may want to eat the loss of equity to save your credit.
3. If you must sell and you have lost too much equity to make up for, your best option may be to walk away. You should decide this early in the game, because foreclosure is a long process. If you are inevitibly going to foreclose, stop making payments and milk it for as long as you can (sometimes 6 months!). Use the money you are saving (from not making payments) to pay down all other existing debt to shore up parts of your credit. |
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djrobsd
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| 08/28/2007 11:25 AM |
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What is the advantage to paying down the other debt if I'm going to have a foreclosure on my credit report? Isn't that going to drop the score down to 500 or less anyway, so what's the purpose of worrying about saving my credit at that point? Wouldn't bankruptcy be a better option?
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Sound advice
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| 08/28/2007 12:06 PM |
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No, bankruptcy is not the better option. A foreclosure is a bad blemish that will prevent you from purchasing a house for only 3 years (in CA). Bankruptcy will destroy all your credit and prevent you from purchasing anything on credit for years, not just homes.
Plus, there will be so many foreclosures in the next couple of years (there already are right now) that creditors may become de-sensitized to a foreclosure showing up on a report.
If you are able to pay off other debt and a foreclosure is the only thing showing up on your report, at least you will have access to other lines of credit (credit cards, car loans, etc). |
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Mr_Brightside
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| 08/28/2007 12:24 PM |
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I would suggest you stay current on credit cards and car loans/leases and save up as much cash as you can (by not paying the mortgage) so that you have a large security deposit to offer a landlord as a renter.
Also if you are trying to negotiate terms but can't find anyone to talk to at GMAC you'll get their attention if the loan is behind.
I also agree that a foreclosure now will not be that big a deal in a relative sense, also if it's three years that's not that much time to wait and amass at 20% downpayment to buy again in a few years. I'm sure that mortgage underwriting will go back to the 20% downpayment and realistic financial projections and unbiased appraisals on not that long ago. To some degree it's amazing how fast the market is reacting to the overindulgences and doing exactly that. The quicker people react to the new reality the sooner life can go back to normal. |
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Anonymous
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| 08/28/2007 12:47 PM |
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The hardest part of getting lenders to listen is proving hardship.
If it were easy then everyone would feign hardship and ask for relief. I want the same deal my neighbors got.
No way the lender will write off part of the loan or interest due. The best they can do is delay when payment is rendered. That will only add to the principal due. |
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