Hi!

For those of you that do loan mods (I do CA's and haven't touched a loan mod.), I'd like advice on helping out a good friend:

He's a self-employed realtor that ... almost lost his house to foreclosure. But he's been negotiating his credit card debt and has managed so far to save his house. He's now current on his mortgage. Here's the problem: He owes $460,000 (A first of $280k, a second of $180k ... both loans are with the same bank) on a house (personal residence) that's dropped in value down to $320k. His monthly payment on the first is $1700. His monthly payment on the second is about $700 ... for a total of $2500 a month. Both are interest only ARM loans (yuck), though the interest rates are not that high. He'd like to stay in the house.

What, if any, are his options assuming that he wants to stay in the house (I'm concerned that because of damaged credit and being self-employed, perhaps he can't do anything but try to bring in enough revenue to slowly pay down the debt)???

I'd especially appreciate responses from those that have current experience doing loan modifications.

Thanks!

Ronnie, I'm not involved in loan modifications, but I have to think the first thing he should do is to contact the lender and see how open they are to renegotiating those loans. The bank loses either way, but it seems to me their losses are alot less if they renegotiate rather than take back the house from a homeowner who can no longer carry the burden of those notes.

Thanks Michael,

It would make sense for the bank to renegotiate. But then again, even in these times, I often don't see the banks doing what makes sense. I think my friend has 2 strikes - damaged credit and being self-employed with income varying monthly. But he has nothing to lose by asking.

I don't think that credit and self-employment are looked upon as poorly for a loan mod. Bad credit is usually a given by the time a person is requesting a loan mod. The bank would want to see hardship and even though he's self employed he can show bank statements or a P/L statement.

I don't mess with loan mods myself.
However, I pass them on for about $12/lead.

I'd try and get in touch with our residential loan modification expert, Jonathan Rexford.

Good luck!

If this is still a situation your friend needs to make a plan of attack. I think I would approach this two ways. 1st see if he can get someone come in and buy the 2nd at a short and then modify the 1st.

If its Indymac or Homecomings or even GMAC this may work. Washington mutual just did a deal where there was 2 mortgages. One for 100K 1st and 2nd was 140K. We were able to give 16K for the 2nd to walk away. We got the 1st reinstated and the guy kept the home. This may work with your deal since there is negative equity. But he has to prove income.

Realtor is going to be tough. Maybe rent a few rooms and such with verifiable leases.

I have stopped doing loan mods as a business model. But I do work on them as investment or as a real estate agent.