Loan modification denied; now what?

Today I received a letter from my bank denying my request for a loan modification. The reason given:

"This request would be outside of your investor guidelines."

When I called to ask who actually owns my loan, who is this investor with guidelines I didn't meet, they couldn't tell me but gave me an address to write to and inquire. I was also connected to the Loss Mitigation department, and they said they could look at my information to see if there was anything they can do. I have to resubmit the exact same information that I already sent to the loan modification people.

I am a good risk, I guess. Although my house is deeply underwater ($150,000 or so) I am making the payments, including extra principal payments, and I have steady income and no other debt (40% of my gross income for shelter is all the debt I can handle!). Maybe they figure that they shouldn't lower my rate since I'll keep making payments at the current rate. The conversion date of my mortgage from interest only to principal and interest is too far away for their short term thinking.

What do I do? Wait for my home value to stop sinking and return to its original value plus the 6% realtor's fee (don't forget, you don't break even on selling a house if you don't sell it for it's purchase price plus realtor fees)? Do I send my mortgage servicer jingle mail? I'm not sure what I want to do. I need to learn more about the system so I can figure out how to work it. Mortgage companies are in business to take care of themselves, not me, and I need to figure out how to get them to believe that taking care of me is taking care of themselves.

In the meantime, I am planning to send the requested information to Loss Mitigation. When I make phone calls to the bank, I write down the date of every contact and what the call covered. I stopped the automatic payments for my mortgage. This means I will have to remember to make the payments every month but I think I can handle that. I also decided to stop making extra principal payments for now. I'll set the money aside so I can continue if I change my mind. I'm glad I decided to hold on to my income tax refund instead of using it to pay principal!

Glacial progress on my loan modification

I mailed the loan modification application in late May, in late June I received a notice saying my application was received. Today I called to find out the status. According to the bank, they received the appraisal on my home last Friday and that was the last piece of information they needed to work on my application. I should be hearing from them in one to three months. When I asked why such a long time, the operator said that they have applications from December that they are still working on and that one to three months is pretty fast. Frustrating!!

My plan is to call again in another two or three weeks.

I am starting to fantasize again about just walking away from this mortgage, especially if I can't get a modification. Mr. K-M's name isn't on the loan so we could buy a place in his name instead. At current prices he'd qualify for a loan on his lower salary. I doubt I'd actually do that, most likely I am just expressing my frustration with my current situation.

Once I binged, now I purge

Several years ago I had a shopping problem which led to the accumulation of a large debt and a large pile of stuff. The debt is long gone but I still have a lot of the stuff. Unfortunately (although at the time I thought it was fortunate) when I was shopping I lived overseas where there was lots of great stuff for dirt cheap. The money I spent got me a much larger pile of stuff than a similar amount of money would have purchased in the States.

Every so often I comb through the stuff and find more to toss. This time was especially productive and I filled my car for Goodwill. It is hard to think of all the use I could get out of that stuff but more important is the truth that I have too much to ever use and it doesn't offset the burden of having all that stuff lying around. Yes, I could have sold a lot of it because it was nice stuff in new condition, but it would have taken so much energy to do that, energy better used to move me forward.

I feel so much better, I have less clutter, and I can better organize what I want to keep because I can actually find it. Hurrah!

Loan modification

I received a letter from my lender that my application for loan modification was received and is in the process of being reviewed. I am annoyed, because I know that I am a good credit risk (sheesh, I'm a better risk than most people I know. dammit!). If I wasn't underwater on my mortgage I wouldn't have any trouble with a refi, instead I have to do this humiliating loan modification thing. However, if a little humiliation saves me a couple hundred a month in interest, I'm willing to do it.

Just a reminder...

When was the last time you checked your credit report? You can get a free report every 12 months from each of the big three companies. Go to www.annualcreditreport.com to get your report. If you get one report at a time you can check your report three times a year for free.

Checking your credit report is one of those things everyone should do periodically, like checking the air in their tires (you check the air in your tires, right?).

Contemplating a Fixed Income

I am on vacation this week (but staying home and relaxing) so my paycheck will be just for straight hours. Usually my paychecks are bolstered by shift differential and taking call and such so there is some flexibility in how much I make. I was thinking about what life would be like if my income was fixed, as it will be when I retire. It was a scary thought. The result of this contemplation is that I feel more committed to making sure I have a really good retirement savings.

Blowing the budget

I am totally blowing my budget this month, and I came at the damage from both directions.

On the income side, I decreased my income by not taking any call in the last pay period - an accidental oversight. I wasn't going to have any this pay period either, luckily someone was willing to give a shift away. Next, I went home several hours early one day when things were slow and elected to take the time off without pay because I have a vacation coming up and didn't want to burn any extra PTO.

On the expenditure side, I neglected to realize that because the bank changed one of my accounts due to a data compromise, that my cell phone bill stopped getting paid automatically. I don't open those statements in a timely manner since they are automatic and I ended up having to pay for three months at once. Then I signed up for a class in cartoneria (Mexican paper mache) which I wasn't planning on because I didn't know it existed. This year's Halloween theme (we go all out with Halloween decorating) is Dia De Los Muertos and I was going to try to figure out how to do the paper mache on my own but now I don't have to and this is (for me) a justified expense that I am willing to pay for (and if you knew how excited I get about Halloween you would agree).

Ultimately, there has to be some flexibility in any budget for inevitable ups and downs. I keep some slush money for budget overruns and fortunately have the ability to increase my income by picking up extra call shifts on occasion. I have a system and I know it works for me. If I couldn't make extra money I'd have to come up with a different system.

This has also been a lesson in diligence. I shouldn't be waiting over three months to check on bill payment.