Not behind on mortgage but need a mod.

[Joel Fraser]

Here is my story. Purchased our home in Maryland in '06 for 725K, 100 % financing. First mortgage is with Aurora Loan Services at 580K, interest only at 7.1% for 10 yrs with escrow.Second mortgage is with Saxon, interest rate 9.3% for 15 yrs. Since last November, my husband isn't working as much overtime and our income was reduced. We have been able to pay all the mortgage ontime every month but its a struggle. Our property taxes were increased to 11K a year causing our 1st mortgage payment to increased by $500 since December 07. I did an appeal and got the assessment reduced to 584K in April but it will not cause our escrow to get lower by the same amount of the increase. When we first purchased the house, we were under the impression that we could refi to get better terms. Well, the market started to crumple and now we are upside down. Some properties in have sold on a short sale for about 555K. My questions is, would ALS allow us to obtain a loan mod w/o being late and reduce our interest to allow us to pay principal. Our main goal is to start paying the principal. Would Saxon Mortgage allow us a loan mod as well to reduce the interest rate? I have the financial worksheets from both of them and have read about the 100-250 surplus which we have. We also have about 20K in emergency funds, will this hurt us? Thanks for all your help. I am grateful I found this site. :D