I’m unemployed and living off savings, should I not stop paying mortgage to WAMU and see a loan modification?

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I’m 50 years old and a professional looking for work and my wife is going through breast cancer treatments. My loan is a 5.7% interest only and I owe a little more than the house is worth. Should I seek a loan modification from WAMU? I have enough savings for 6 months.

  1. Reply
    January 21, 2011 at 11:23 am

    Seek a modification but don’t stop paying.

  2. Reply
    Diane A
    January 21, 2011 at 12:15 pm

    You can try, although your rate is pretty good. DOn’t stop payments, as the modifications are only for people in good standing, not delinquents. Sorry about everything.

  3. Reply
    January 21, 2011 at 12:46 pm

    I was up to date and I tried to get a loan modification from my bank but was told I had to be behind on my payments before they would consider me for it. You can try but be ready for an answer you might not like. When is your loan due to adjust? Do you have time to get another job?

  4. Reply
    Bill T
    January 21, 2011 at 1:01 pm

    I would not just stop making payments. A better avenue would include one of 2 approaches.

    1. Talk to a loan officer at WAMU to see if you can negotiate a lower rate or even a refinance. With the economy the way it is right now they are more willing to do this rather than the alternative of not receiving any payments or start any proceedings of foreclosure – especially when you tell them your unfortunate circumstances.

    2. A free service called Consumer Credit Counseling Services can negotiate on your behalf to possibly reduce the interest rate, and thus your monthly payment you are making to WAMU. They also offer other services of reorganization of your debt / what you owe creditors that may better help you as well. Some of their additional services (should you opt into it) may cost a small nominal amount, but save you in the long run.

    Just not paying is not the answer – remember, the initial actions on a person defaulting on a loan without speaking to a person results in actions first taken by their computer system.

    Lastly, I wish you and your wife well and heartfelt positive wishes on her ordeal with her breast cancer treatments. Medical technological breakthroughs are high nowadays so keep positive as you maintain your loving support towards her.

  5. Reply
    January 21, 2011 at 1:15 pm

    Go to http://www.HUD.gov and find a certified housing counseling agency in your area. Call for free counseling. The new government programs may provide you with refinancing or modification options that would help.

    That being said, if you’re upside down and paying interest only on a 5.7% loan, it isn’t likely that you will save a lot on any change, especially with no income. You probably will lose the house at some point and going a few months without making a payment will conserve some cash. It sometimes takes lenders six months or more to evict. Keep in mind though, at some point you will still have to find a place to live and you may be looking with poor credit and no income. You should develop a plan right now.

  6. Reply
    David M
    January 21, 2011 at 2:10 pm

    If you owe more than your place is worth, you’re not going to be able to refinance or modify your loan. Sounds like you did not put enough down on the home to prevent yourself from being upside down. Keep looking for a job. Hopefully you find one before your savings are used up. Good luck.

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