My story...any solution?

[Joel Fraser]

I purchased my house as part of a urban redevelopment program. It was sold at a below market price with some commitment agreements written into the contract. I agreed to purchase the property in mid-2006 with a closing date of late 2006 after the property was rehabbed.I originally applied for a loan to purchase the house in September of 2006 with Bank of NY. Unfortunately, the house took longer than expected to be finished and the closing date was pushed back to early 2007. During that time my company went out of business and I was out of work at the time I had to close. Bank of NY was able to secure a no-doc loan (no easy task at that time) with Option One instead by putting additional money down. It is a 2/28 ARM at just over 8%. I wasn't thrilled but had no choice so I went through with it with the thought that I would refinance. I was also told (and confirmed many times myself) that I could lock in the rate for an additional year for a $450 fee. When the mortgage adjusts in February 2009, it will jump to almost 12% as it is tied to LIBOR. The property has both substantial equity and rental income through two rental units - enough to more than cover my current mortgage but not enough when it jumps.. I decided to use some time to take classes to make myself more marketable. I then had some health issues to deal with which is preventing me from looking for employment at this time and unlikely to be resolved by the the time my mortgage comes to term.Since my mortgage was attractive (high LTV), instead of being sold off with Option One, it was transferred to H & R Block Bank. H & R Block tell me that the "lock-in" fee was just an Option One offering. I am unable to refinance because I am unemployed and can not use the rental income only. Banks now want to see that you earn enough to support the house even without the rental income - something that I am currently unable to do. The only way I qualify for help is if I get behind in my payments - something I do not want to do.I have spoken to loan officers at H&R Block about modifying my current mortgage but have not been able to get anywhere. They say they do not have a dept. for that and do not offer it.Thanks for you advice in advance.