HomEq Loan Modification in SoCal and overwhlemed

[Joel Fraser]

Hi,I know we've made a huge mess of things and we would love some advice. We purchased our home in July 2006 in Murrieta for $410,000. I took money out of my IRA to pay for the moving expense from HI to CA, pay off all our bills(including our car), $2000 down on the house, and I put $5000 on the side for our property taxes. Everything was fine the first year, until we had to file federal taxes. Since we didn't use all of the IRA money as a down payment we got hit hard with federal taxes and owed about $9,000, which we did not have. We didn't realize how much taxes we would owe and was hoping to actually get back federal taxes to use for our next years property taxes. That didn't happen and we owe $6000 in 2007 property taxes AND federal taxes. We also thought we would be able to refi the year after we bought our house to bring down our payments, but nobody wanted to work with us unless we had been in the house for 2yrs. Well, 2yrs later we are in the midst of falling house prices and a loan industry meltdown. Our house is maybe worth $220,000 now and even FHA can't help us. Well, needless to say we are over our monthly budget and don't have any extra money. We are currently working with HomEq to try to do a loan modification, but I don't see many success stories about this company. We owe so much money and I could take out more money from my IRA, but we'll just end up having to pay the taxes again next year. I don't know if it's just better to walk away or to try to do the loan modification. Also, is it normal for them to ask for 3mos of bank statements with nothing blacked out? She said it's to verify that there is money being deposited into the account.