My Do-It-Yourself Loan Modification – Yeah, They Work!
August 4, 2009 by Kristin LaVanway · 1 Comment
A few months ago, with my reserve funds depleted and a tough real estate market ahead, my financial situation was becoming dire. With tough times ahead, I took a hard look at my financial situation and started to prioritize. Sounds logical doesn’t it? Actually, there have been a lot of tears and much lost sleep as I waded through my options. But I eventually decided that my first step was to trim my budget as far as it would go, and the biggest ticket item is the house.
I bought my house when I got divorced. It is less than a mile from where we used to live so the boys have all the same friends and go to the same schools. It is about half the size of my old house – modest by any standard. But this house was – and still is – an anchor for us when the marriage ended and nobody really knew what was going to happen. My highest priority is to keep the house if at all possible. But the only way that could happen is if I lowered the monthly payment.
First stop – the Making Home Affordable website to see if I qualified for a loan modification. Like many others who bought homes in the last 3-4 years, I am upside down, so a refi is out of the question. I was lucky in that I have a Freddie Mac loan, and I meet the criteria for a good loan mod candidate. In order to qualify for a loan mod, you need to be able to pay the mortgage payment each month and demonstrate a hardship…check and check. I meet the criteria, so, next I visited my lender’s (Citibank) website.
I was amazed to find easy access and great support in applying with Citibank for the loan mod. I used an online easy tool to enter my financial information and set up an appointment with a counselor. It did take a few follow-up calls to make the appointment happen, but after about 45 minutes on the phone with a counselor, I was approved! My payment would be reduced by $500 – starting with the very next payment. I cannot tell you what a relief this is. It looks like my family will still have an anchor to get us through some rough days ahead.
For the next three months, I would be on a trial payment plan. Meanwhile, the paperwork would be processed to make the change permanent – really a five year reduction. But, it’s critical that I make those trial payments on time. A couple of things I did not expect. While on the trial period, because I am making a reduced payment, my account is considered delinquent. This fact was reported to the credit bureaus, but if I make the trial payments on time and complete the approval process, it will not be considered as a derogatory comment. On the flip side, if I mess up, I am setting my self up for pre-foreclosure action. But given my dire circumstances, it is worth the risk.
I am one payment away from the completion of the trial period. I checked in with the “Mortgage Outreach Services” this week to check on my status and they assured me that as long as I make all the trial payments, my loan will be modified according to plan. This is a first good step.
Save My House is a series of blog postings that follow my journey to survive my personal economic crisis. As a single mom of 4, supporting my family as a real estate agent, I have plenty of challenges. I hope by sharing my experiences I can help others out there if they are facing similar challenges.
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I am a Realtor in Gilbert, AZ, working with clients throughout the Phoenix Metro area. I am lucky to love what I do and appreciate the difference I can make in people's lives.
In a previous life, I was a rocket scientist - really! - but decided to step away from corporate America to be a Mom to my four boys. Found it hard to do bake sales, so I ran a small independent programming business instead.
Flash forward...I am now a single mom and I face many, many challenges everyday. I am living through the hardships that many are facing in this economy. These experiences have motivated me to help other people in my shoes.
I have recently been certified as a distressed property expert (CDPE) to allow me to better serve those who may be struggling with their finances and may be looking at a possible foreclosure. My goal is to help these folks evaluate all their options and choose the best course of action.
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