Monday November 19, Dreams In Distress focused on a Chesterfield family that is facing foreclosure because of their subprime mortgage adjusting.
"They are among the estimated 14,000 Virginia households facing foreclosure this year."
Their payment adjusted from $1,250 to $1,650, making the house no longer affordable. They are hoping for a loan modification, but there is no guarantee of success.
The only way out is to refinance, but options – as the Lovings discovered – are few.
. . . . . . . .
The Lovings tried repeatedly to get in touch with their lender. "Send more money, send more money," they said they were told.
They got the subprime loan because their credit was damaged years ago when they went on a debt-management plan to pay off $30,000 in credit-card debt.
They were locked into their original mortgage because it carried a hefty prepayment penalty.
As soon as the penalty phase passed, they looked into refinancing. "At least a dozen lenders turned us down," Scott said.
They found one taker. The payoff on the old loan — a combo ARM and fixed-rate mortgage – was $137,000.
They walked away with another ARM. This one was for $161,000, which increased their debt. It included $4,000 in cash. Fees and closing costs totaled $20,000.
"We didn’t feel we had any choice," Scott said.
The new payment is $1,623, not much better than the $1,650 payment on the old loan. "But we had a fresh start," he said.
The initial interest rate on the new loan is 9.8 percent, 0.1 percent better than the old loan. It, too, has a prepayment penalty — 5 percent of the loan amount. It resets next June.
The Lovings kept up with their new payments for a few months. Then one payment was put into escrow and the Lovings were one month behind.
Repeated calls to the lender solved nothing. When the couple received notice of a foreclosure sale, they turned to Housing Opportunities Made Equal.
"You can breathe," they said their HOME counselor told them. She had been able to do what they couldn’t – open a line of communication with the lender.
"We’re in limbo," Scott said, as they wait to find out if their lender will work with them. "We should find out right before Christmas if we can keep our house."
A 60-day extension was secured on the foreclosure so the Lovings could ask the lender to modify the terms of the loan.
"Banks are really stepping up, but for many, it’s a day late and a dollar short," said Ann Estes, vice president for ClearPoint Financial Solutions, a nonprofit consumer credit-counseling agency based in Richmond.
The Lovings hang on to the hope that it isn’t too late – that they can keep their house and make payments they can afford.
For others looking at a loan reset, get into a fixed-rate loan and do it today, Estes said. "Don’t put it off."
Virginia’s foreclosure process is brutally fast. This is another reason the number appears to be so low. They are processed much quicker here than in other states.
If your house is falling behind in payments, we can help you sell your house quickly to avoid foreclosure.
Give us a call at 804/915-9475, or get your offers from us in 24 hours.
