Need Loan Mitigation from EMC

[Joel Fraser]

Hi forum members - I would like to save my home of 16 years which is located in Nassau County, Long Island, New York. When we moved in, I registered my daughter for Kindergarten. She is now 21. I am afraid that we are in really serious trouble made even worse by my husband's long term unemployment due to both the bad economy and probable age discrimination. He is 60 and I am 61. We are planning to go Chapter 7 because we maxed out all of our credit cards trying to pay the crazy mortgage amount and taxes. I know that Chapter 13 would help us save our home, but due to my husband's unemployment, this is not possible. He has had many interviews, but no offers. We are hoping his employment situation resolves soon, but this could be a few weeks or many long months. He has run out of unemployment benefits, and I only have a small part time income at present. Frankly, we will be homeless if my husband does not get a job and we lose our home, yet when we visited the Nassau County welfare office to see if they had any solutions about saving our home, my small part time income which is only enough to put food on the table and pay a few insurance bills was enough to disqualify us for any aid. (I hang on to my now expensive term insurance, because that is all we have left, frankly if one of us passes prematurely.) Here is our story. My husband has the exact figures. We purchased a mother/daughter home when we first moved in 16 years ago. At that time, I had an elderly mother who needed a place to live, so we purchased a 6 over 5 high ranch that needed some work. The mortgage was about $1,600 per month including taxes, and my mother paid us $800 a month rent for the bottom apartment. We right away had some problems with this house. Although the previous owners had both the top and bottom rented out, the people across the street did not like something about us and they reported us to the village. (We suspect that he didn't like the fact that my mother's piano students were racially mixed.) We had to spend about $2,000 and a lot of aggravation to legalize the mother daughter. Strangely, on the tax rolls, our house is listed as a 2 family house, yet we have been harassed by the village and this neighbor. Shortly after moving in, my husband suffered his first unemployment of about a year in duration but we were able to weather this. He then found a job where he stayed for about 10 years. After my mother passed away, the apartment downstairs was empty for a few months, but then my first cousin needed a place and we rented the apartment to him for $900 and then $1,000 per month. Since according to the village, it is a mother/daughter and not a legal 2, although the county papers have it listed as a 2, we can only rent to a family member. Unfortunately, my cousin passed away at age 70 from a mysterious ailment about 2 years ago. He left a mess of newspapers that had to be cleaned up. We cleaned up the mess, but there are still items and old furniture that have to be thrown out. We really needed the rental income again, but I never pushed my husband on this because of the possibility that we would have problems with the village again. We would have to rent to strangers, and with that bad neighbor, although he now rents his home out, still owning the home across the street, I anticipated some difficulties although there are many illegal rentals especially in this economy. (I am still puzzled by the 2 family house designation on the tax assessment records. I didn't know about this when we first dealt with the village.) We decided to refinance a few years ago. (Something I should have avoided like the plague, although hindsight is better than foresight.) My husband would have the exact date. The mortgage now was $2,300 not including taxes. This was a hefty amount on my husband's income and my part-time income (I was homeschooling my daughter at the time.) but with the rental income it was manageable. We took out over $100,000 in equity. Unfortunately, my cousin passed about 2 years ago, and shortly after this my husband once again suffered a long term unemployment. These unemployments have been devastating. We had done some fixing up, but basically we went through all of this equity paying the much larger mortgage, the taxes, as well as other expenses when he was unemployed. He finally got another job for less pay in August of 2006. Running out of money, we refinanced a second time. Again, my husband has the exact date. I had left the household bookkeeping up to him. We pulled out about $50,000 in equity, and again we had an even higher mortgage payment of about $2,700 sans taxes. When we sat down with the second refinancing company, I had requested information on a 40 or 50 year mortgage because I knew we could not keep up with this kind of crazy mortgage payment and I wanted to reduce it, but instead we received a 30 year fixed rate. The mortgage has since been sold to EMC which is the present mortgage holder. In October of 2007, my husband was fired from this job through no fault of his own. He has been getting job interviews, some of them for good paying jobs, but with so many others out of work and the bad economy, he hasn't been able to latch on to anything. He has now run out of unemployment benefits, so he has $0 income coming in. At first, my husband wasn't worried because he was sure that we could refinance a 3rd time. (I was a bit skeptical although I did not express this to him.) He said that back in November of 2007 he was constantly being deluged with offers from mortgage companies to refinance, but we did not go ahead because of the steep pre-payment penalties. When the year was up in March of 2008, we contacted a number of finance companies about refinancing, but we were not approved which has put us in our current hole, probably due to too much outstanding credit as well as the stricter guidelines that are now in place. There is a small amount of equity in the home if you go by the average values of similar homes in our neighborhood, although we would never get close to that in a sale because we never had the necessary money to waterproof our basement after several bad floods (we are not in a flood zone) and our house is in far from mint condition. In the meantime, we went through all of the money that we had taken out at the last refinancing between paying for the steep mortgage, taxes, and my husband's unemployment. In the meantime, we maxed out all of our credit cards trying to pay the mortgage and other expenses. I also had been spending some money on advertising trying to get a new business started to better our situation in the future. Obviously the solution to having enough money to pay the mortgage and our other expenses is for 1) my husband to get a decent job. 2) Since the job won't pay enough, we need to receive rental income from the apartment downstairs. This will be a big help, but the apartment won't be a legal rental, and it might take some time to find a tenant. 3) We need to reduce the mortgage payment amount to something more reasonable if possible. 4) Going bankrupt will at least clear up a lot of payments which will also free up some money towards the mortgage. 5) I need to increase my self employment income. I am working hard at this. I do expect to bring in some additional monthly income in January of 2009, but again this is months away. 6) My daughter has moved in downstairs with her boyfriend of 2 years. We were hoping that they would be able to find jobs and pay us a small rent which would help to keep the house, but to date neither one has been able to even land an entry level job in the past few months despite almost 2 years of college. (He may be able to get some rent help from his father who wants to encourage him to get back to college.) We are now in arrears for April and May. My husband keeps searching for a decent job. We won't even be able to work out a repayment plan or do a Chapter 13 bankruptcy until his employment situation is resolved. This could be a matter of just weeks or many more long months. *We have contacted the EMC loan mitigation department and have submitted the paperwork. We will be seeing someone from the Nassau County Mortgage Counseling service on Monday afternoon for some advice. * In addition, we have done the following: 1) We consulted with a bankruptcy lawyer who advised chapter 7. He wanted $2000 in legal fees plus the filing fee. We have paid him 1/3 to date and are looking to our tax refund and rebates for the rest. I know that a chapter 13 would be better in terms of saving our home, but we have no idea when my husband would be re-employed. We will be freeing up some very heavy payments with the chapter 7. 2) We spoke to someone in the Welfare office as I mentioned above, but my very small part time income seemed to disqualify us for any help. 3) We have filed papers with the EMC loss mitigation department but have not heard back from them. 4) We are seeing a mortgage counselor from one of the government lists on Monday afternoon. I don't even know what they can do for us with my husband's current employment status. I would prefer to keep our home, but even with a new job, due to our wiped out savings, the present mortgage would be extremely difficult although renting the downstairs will certainly help as long as my husband is employed. I do expect my income to grow but during the summer my piano teaching income slows down. I have started a small business, and it has been growing but slowly. I am expecting some additional income in the Winter of 2009, but again that is 8 or 9 months away. We just need to be able to hang on until them.