Mortgage payment increase on Escrow only but cannot afford new payment… ok to do loan modification still?

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I bought my first house 5 months ago… 30 year fixed 6.5% FHA loan. Required down payment of $ 8200 provided by the state (California) and must be paid back upon refinancing/selling or in 30 years. I bought the house for $ 275,000. House next door, same model floor plan and everything is currently going for $ 205,000, should have waited! Gross income has been reduced from $ 6500 to $ 4500 monthly but that’s because I now choose not to work overtime but I still have no problem paying my current mortgage. My current mortgage is $ 2164. But, starting in March, my lender wants $ 2578! Due to some increase in my property tax which is a complete joke because property values are declining not rising. So my mortgage is going up $ 414 because of Escrow reasons and I want to know because of this, can I can claim a hardship and justify a loan modification? Thanks for your insights.

  1. Reply
    April 30, 2011 at 12:52 am

    you can try but I doubt they will do anything because the interest rate you have is good and all you will be doing is spending more money in the long run if you do it this way

  2. Reply
    April 30, 2011 at 1:02 am

    Have you thought about protesting the increase in property taxes? You should call the county tax assessor’s office and find out why they increased your tax base. Find out how to protest this increase since property values have lowered, not increased. You have an absolute example of this with the published selling price of the house next door.

    If you get the taxes reduced, you can still make the payments. I doubt that the mortgage company will reduce your debt since you signed for it just 5 months ago. Also, you cannot predict what the value of the house will be next year – it may be $ 300,000; the mortgage company knows this so they are slow to make these type of adjustments.

    Also, why not work a little overtime?

  3. Reply
    April 30, 2011 at 1:27 am

    Did your lender underestimate property taxes due to new contruction (previous tax for empty lot) or because property taxes of previous owner were lower due to Proposition 13, and they came up short and now trying to catch up? Or do they expect that rate to continue?

    While I have a somewhat less expensive home in an IL county with high property taxes, my total property taxes are less than $ 400/mo. Fortunately I got out of escrow when I refi’d in 2005 because my lender got totally confused with escrow and tax payments for a double lot when I bought my home in 2002.

  4. Reply
    Real Estate Guy
    April 30, 2011 at 1:47 am

    WTF. People like you are the reason this econ is in the mess.

    You can work, but will not

    You agreed to the mortgage and the terms and now want to change them because YOU are lazy

    The problem is not with the lender, it’s with you and the taxes. YES, taxes go up – even when values go down. Read the newspapers.

    The joke is not the mortgage or the taxes, but you.

  5. Reply
    Kathleen Davis - Loan Officer
    April 30, 2011 at 1:54 am

    You would not be a good candidate for a loan modification.

    It sounds like that property taxes are still at the higher rate prior to the decline in value. You will need to appeal with the tax assessor to get the value in line so that your property taxes will go back down. Each county has an appeal process. You can call or go online to find out the process. It will require a recent appraisal.

  6. Reply
    April 30, 2011 at 2:53 am

    Better idea is to get your taxes lowered based on the present worth of your home. In the long run will save you allot more money

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