alkemyst
No Lifer
So after 4 years of not paying due to my mortgage company never applying the first three years of my payments to my mortgage, I am coming out of it decently. Despite my house only being worth about 50% of the loan now (it was as low as only 25% of the loan), my intention was always to keep the house. I knew from the start Freddie Mac and Fannie Mae do not do principal reductions (which is funny how these are government backed more or less yet our government is forcing private banks to do principal reductions).
They are basically removing all past due fees, all late fees and taking my principal balance and applying all 3 years of payments to the loan as if it started today. They are only tacking on the insurance and tax payments they have made for me over the last four years.
They are also dropping my rate from the 6.875 (Base Rate) it was (which was a good rate at the time) to 4.375 (APR) at 40 years with no pre-payment penalty. They are also giving me the option to forbear 30% of my principal at zero percent interest to the end of the loan. It's a straight up conventional loan, not a HAMP/HARP deal where after 5 years you start adjusting until you hit the current rate at the time nor is there an insane 50%+ balloon payment at the end of a 40 year term.
Previous offers were tacking on $110k in late/past due fees at 7%+ interest with a $150k balloon. Payments at 40-50% of my GROSS income with a huge balloon at the end and a high APR.
Now things that they cannot fix is the credit hit I took. My lawyer (and a few others I spoke to) say basically there is not much that can be done anymore due to the way the laws and specifically how judges are handling these cases. It becomes just a clerical error.
I had one 5% and one 6% card that both were fixed interest, this held most of the $60k+ of debt I had in the form of my education costs because I couldn't qualify for school loans at the time due to my income. I had a 7% personal line of credit for $20k as well. These kinds of credit are not even offered anymore except the personal line of credit and I don't believe that would have that kind of rate.
Once my creditors were updated with my credit reports, they began raising my rates dramatically and lowering my balances...some immediately closed accounts.
The first two cards above went to 12.99% adjustable then 15.99/18.99% and then both to 26.99%. I was able to move chunks of it to 0% balance transfer cards, and was going to put the rest on my line of credit only to find out they closed it due to my 'delinquencies'. Everyone was always paid properly, for my school debts I was paying 4-5x the minimums. I started moving the balances to my other cards which were still a 'decent' rate.
Soon after this the train wreck started happening. Those 'decent' 8-10% cards which were my day to day cards which I paid off monthly and offered points both began lowering my limits making transferring my higher balances impossible, but also began raising rates.
In about three months I went to 26.99-27.24% across the board. My interest per month went from $300 to $1500 (which was more than my mortgage P&I at that point). My minimum payments became what I was paying already, but almost half was interest. I was spending thousands of dollars in interest per year.
My house got burglarized to the tune of a $30,000 loss. I thought I was doing the right thing and stroked that whole check to my creditors minus a replacement laptop for my ex-wife which she needed for her work. Everything else we went without.
I also liquidated my 401K that I could touch...which left me with a $9000 tax bill.
It wasn't enough to pay everyone off and the balances climbed back to around $40k (I had them down to around $12k, but we had three surgeries needed and a couple other emergencies that all hit during this). My current 'settlement' offer is around $20k. Most of these creditors have made my principal back a few times over just in interest.
The sad thing is I did nothing wrong. I made my payments to everyone like I was supposed to and even better than expected.
There are more people that have similar stories, you don't hear much about them...it's only newsworthy when the people don't pay, destroy the house and flee.
Anyways, just an update
Å
They are basically removing all past due fees, all late fees and taking my principal balance and applying all 3 years of payments to the loan as if it started today. They are only tacking on the insurance and tax payments they have made for me over the last four years.
They are also dropping my rate from the 6.875 (Base Rate) it was (which was a good rate at the time) to 4.375 (APR) at 40 years with no pre-payment penalty. They are also giving me the option to forbear 30% of my principal at zero percent interest to the end of the loan. It's a straight up conventional loan, not a HAMP/HARP deal where after 5 years you start adjusting until you hit the current rate at the time nor is there an insane 50%+ balloon payment at the end of a 40 year term.
Previous offers were tacking on $110k in late/past due fees at 7%+ interest with a $150k balloon. Payments at 40-50% of my GROSS income with a huge balloon at the end and a high APR.
Now things that they cannot fix is the credit hit I took. My lawyer (and a few others I spoke to) say basically there is not much that can be done anymore due to the way the laws and specifically how judges are handling these cases. It becomes just a clerical error.
I had one 5% and one 6% card that both were fixed interest, this held most of the $60k+ of debt I had in the form of my education costs because I couldn't qualify for school loans at the time due to my income. I had a 7% personal line of credit for $20k as well. These kinds of credit are not even offered anymore except the personal line of credit and I don't believe that would have that kind of rate.
Once my creditors were updated with my credit reports, they began raising my rates dramatically and lowering my balances...some immediately closed accounts.
The first two cards above went to 12.99% adjustable then 15.99/18.99% and then both to 26.99%. I was able to move chunks of it to 0% balance transfer cards, and was going to put the rest on my line of credit only to find out they closed it due to my 'delinquencies'. Everyone was always paid properly, for my school debts I was paying 4-5x the minimums. I started moving the balances to my other cards which were still a 'decent' rate.
Soon after this the train wreck started happening. Those 'decent' 8-10% cards which were my day to day cards which I paid off monthly and offered points both began lowering my limits making transferring my higher balances impossible, but also began raising rates.
In about three months I went to 26.99-27.24% across the board. My interest per month went from $300 to $1500 (which was more than my mortgage P&I at that point). My minimum payments became what I was paying already, but almost half was interest. I was spending thousands of dollars in interest per year.
My house got burglarized to the tune of a $30,000 loss. I thought I was doing the right thing and stroked that whole check to my creditors minus a replacement laptop for my ex-wife which she needed for her work. Everything else we went without.
I also liquidated my 401K that I could touch...which left me with a $9000 tax bill.
It wasn't enough to pay everyone off and the balances climbed back to around $40k (I had them down to around $12k, but we had three surgeries needed and a couple other emergencies that all hit during this). My current 'settlement' offer is around $20k. Most of these creditors have made my principal back a few times over just in interest.
The sad thing is I did nothing wrong. I made my payments to everyone like I was supposed to and even better than expected.
There are more people that have similar stories, you don't hear much about them...it's only newsworthy when the people don't pay, destroy the house and flee.
Anyways, just an update
Å
