Ameriquest to Citi - Underwater ARM

[Joel Fraser]

Hi,Nice forum, I've lurked around over the last year or so, and I have decided to finally get my story out there and see if anyone has any feedback or helpful tips.We refinanced in October of 2005 with Argent.One of their telemarketers had phoned and I mentioned to him that I was thinking of putting an addition on my house, one thing led to another and my wife and I agreed to a cash out refinance to finance an addition to the home.At the time, the loan and title were both in my name, but due to my poor credit rating our agent informed us that this loan would have to use my wife's scores. Since she wasn't employed, our only option was a stated income loan.We never received any paperwork until a man showed up at our door and sat down at our table and told us to sign them.A few things that strike me as odd. 1) Home appraisal of $305k when all the other houses in my area were valued at about $240k2) The appraisal lists my home as a 3 Bed, 2 bath. My house is only 2 Bed and 1 bath.3) $11,500 in closing costs, seems a bit excessive.4) We never received any signed copies of the closing docs. They sent us a bound package of loan documents, but none of them are signed. According to CITI, the documents they have are all signed.I am not sure if it matters, but we did receive a settlement check as part of the Ameriquest multi-state settlement, because our terms were considered deceptive.So now here we are, almost 3 years later...Ok course we heard the line from the loan guy about how we will be "swimming in equity when your rate resets". The funny thing is that we've added a whole new room (10x14) and we are still underwater by about 30%.We tried to refinance with CITI, but were told that they value of our home (based on the prices of my neighbors homes) is about $220,000, and since we owe $305k, refinancing was not an option.Our ARM has reset twice now, it resets every 6 months.We cannot continue to afford a $2,800 mortgage payment. I have contacted Citi Residential multiple times to try to work something out, put I have never been able to get anywhere.The first time I spoke with citi regarding a modification, I was told that our income (MY Income, not my wife's, even though I am not on the loan?!?) is too much to qualify for a modification.The rep said, "Well you still have money left at the end of the month".I asked her how I was supposed to plan for home maintenance if ALL my money was going towards the mortgage? I need a new roof, how am I going to pay for that? How will I afford gas in 3 months when it is up to $5 per gallon, etc...She answered me with silence and basically said I can still send the paperwork in if it will make me feel better, but that I wouldn't be accepted for a modification.All I am asking for is a rate freeze, if they don't freeze my rate, I will soon be unable to make payments. If they can't freeze the payments then we will either have to walk-away or be forced into foreclosure.I have been trying to be proactive for over a year, but no one will work with us. I Called back last week because my ARM has reset again, and I hoped that perhaps someone over there might yield to logic. I was told that even if I did qualify for a modification, that Citi probably wouldn't give me a modification anyway, because I was a former Ameriquest customer and for some reason, CITI isn't motivated to modify those loans.She informed me that the ONLY way I was going to get CITI to modify my terms was to obtain a "Paulson Letter", which apparently would force CITI to freeze my rate for 5 years.So, everyone agrees that my loan was deceptive, that's why we received the check for the Ameiquest settlement. But really, was a $900 check supposed to fix the problem?Now we need help and are unable to find any.Does anyone have any ideas?I wrote a letter to my congressman outlining my situation, and asking how I get one of these "Paulson Letters", but of course I haven't heard anything from him.Really, if I could simply get a rate freeze back to the original terms I would be in ok shape. 6.85% is still a rate that is favorable for lenders now, and they will still make a ton, so why would they rather foreclose on the home and LOSE money than to modify the terms to a fixed rate that still lets them make a bunch of money off the interest? Do they really expect people to sit here with an ARM maxed out at 12.6% for 30 years?It makes no sense to me.Is there anything I can realistically do to get out of this mess and negotiate a lower rate?Anything feedback is appreciatted.