The following is an excerpt from a recent experience…

Dear Tim,

We need to speak with you about our situation.  My husband has lost his job after having his income decline over the past several years.  To stay afloat, we’ve had to draw on our home equity line of credit and or credit cards.  We are filing for bankruptcy but we want to stay in our home, is there anything we can do?

Sincerely,

Desperate and Struggling

Dear Desperate and Struggling,

Yes, I can try to help you to short sale your home (where the bank allows you to sell for less than you owe), but you might want to read my blog, TheRealEstateConversation.com because I published a 4 part article on how to successfully obtain a loan mod.  Let me know how it goes.

Tim

Dear Tim,

Will you handle it for us?

D & S

Dear D & S,

I’ll look into it.

Tim

After attempting to modify Desperate and Struggling’s loan for 6 months they were declined.  Their income was just too low even though the lender agreed to reduce the interest rate to 2%, extend the amortization period to 40 years and forbear part of the loan balance, which they were willing to do.  Forbearance is the postponement of a portion of the debt without a re-payment requirement until the remaining balance is paid off either via monthly payments, refinance or sale; and is also done without accrued interest.  To accomplish this however, and to comply with the Government’s HAMP (Home Affordable Modification Program) mandated 31% DTI (Debt To Income) ratio, the bank was going to have to forbear 65% of the loan – well above the mandated cap of 30%; this was something the lender was unwilling to do.  This meant the race was run and there was no way D & S could keep their home.  Now we have to short sell.

Dear Desperate and Struggling,

I heard at a recent short sale event for Realtors that Chase frequently sends out a “Solicitation” letter asking troubled homeowners to short sell their home instead of being foreclosed on and they will pay you as much as $30,000.  Unfortunately many homeowners either don’t open the letter, or just ignore it.  So, I contacted your lender and asked them if they ever sent you such a letter.  They said they did back in July.  However, they won’t send me a copy.  Did you ever receive such a letter?

Tim

Dear Tim,

We don’t recall it but when you come to list our home you can look through all out correspondence from Chase.

-D & S

When I went over to the seller’s home and they signed the listing agreement with me, we went through their pile of paperwork from the lender and guess what I found in the pile of bank mail?  That’s right, the “Solicitation” letter! 

At this point Desperate and Struggling’s story hasn’t got an ending; rather it’s a real story of real people fighting for real financial survival.  I will be listing their home soon and am hopeful that my next posting about this couple will end, not with their signature Desperate and Struggling, but rather, Happier Than We’ve Been In A Long Time.  Wish us luck.