Denied twice by ASC...what do I do now?

[Joel Fraser]

Thank you for this opportunity to tell our story. We have a 3 year interest only ARM that reset April 1, 2008. It is going to reset again on October 1. We originally had a rate of 4.75% and are currently at 5.25%. The maximum each reset can go up or down is 1% until the loan reaches a cap of 10.75%. Last August, ASC sent us a letter stating that our loan is going to reset soon, so that I should call them so that they can help us "develop a plan for our particular situation". When I called them, a rep told me to apply for a modification in February 2008. I applied for the modification (with a $200 surplus) and was denied in April. I had called the HOPE NOW line since February and reapplied for the loan modification with their assistance (with a $14.50 deficit). That request was denied in early June. Both denial letters stated that the invester has determined this request is not in their best interest. My understanding from ASC is that we were denied because the investors determined that we could afford our increase. Currently, we are keeping up with our payments and should be able to keep up with them in October. We can not refinance because our home (like so many others) is worth at least 85% less than what we owe. To further complicate things, we have a piggyback (fixed at 7% and opened to avoid PMI) and the first loan is Interest Only. I have heard from someone at ASC that the investors may deny us because they will look at our finances and determine that we can not afford to add principle into a fixed rate loan modification. I have also heard that modifications sometimes don't go through because the lender for the second mortgage doesn't want to subordinate to the new modified loan. For some reason, ASC has put our file back up for another review for a loan modification. I wasn't planning on applying a third time. Monday I am to fax a new financial worksheet, hardship letter and paystubs. I know I will get denied again. I don't know what else to do. I have called mortgage brokers, lawyers, numerous representatives at the mortgage company, non profit counseling agencies, HOPE NOW, FHA and I do not think there are any options left for us. Several people I have talked to have suggested waiting out the storm to see where the market is in the next year or so. They also said that most people do not go through with the FHA Secure plan because there is a good chance you may not get approved and you have to pay a fee and for the appraisal up front. Is there any hope for us? My husband currently works two jobs and has said he will work a third to keep up with the rates resetting. While that is what may need to happen, it doesn't offer any quality of life for our family. If anyone could offer me any advice I would greatly appreciate it. We are current right now, but as we wait, I fear for the future. Should we continue trying for a loan modification? Does it hurt our case to keep applying? Do we wait this out and see where we are next year (I really don't like this option)? Do I try for the FHA Secure plan? Do we short sale? Is there anyone else I can consult about our particular situation? Thank you for listening. Thank you to all who share their stories and offer advice.