Help! Urgent Question!!!!!

[dmcook1]

Quick background-

Broke ground on dream home 2006 as an owner-builder

Self-employed and economy tanked and construction halted as we kicked in to survival mode

Survived immediate threat of bankruptcy, managed to finish basement of home and occupy basement in August 2009, still living in finished basement

Down to flooring and kitchen to finish home construction

OK, if the above makes sense this is what has recently transpired. Construction loan up for renewal this past May, a 60 extension was filed because we had yet to receive our tax returns. Didn't receive our tax returns until middle of August, but have continued to make interest payments on loan and even doubled up the interest payment in July! Loan officer finally made contact this week and said he had to come out and inspect the home and review a YTD profit and loss statement for our business. I contacted a VA loan officer yesterday regarding the possibility of getting a VA loan. When she check our credit reports, she told me that our bank had reported us delinquent and was showing that the entire loan amount was due. It looked as if it was in foreclosure to her but she didn't see any notation stating that the loan was in foreclosure. My husband immediately contacted our construction loan officer (local bank and has been great to work with so far) and we received a very terse email stating that the loan was delinquent by 78 days and that they were having a hard time justifying renewing the loan at this point!!!!! Does that mean they are moving towards foreclosure and what does that mean to us??? We don't have an actually mortgage, just the construction loan. We have been 30 days late twice in the last four years and have continued to good faith interest payments since the extension loan expired (to the tune of $8000!!!!) Can they still foreclose even though we have been making payments? Do we have any options??? Are there any programs available? What should we do?? My father told me to get all of our ducks in a row, but I don't even know where to find the ducks!!!! Help!! Freakin' out just a tad!!!!

Thanks in advance for any advice!

[2ndTimeAround]

,

.......Help with a Construction loan .....

I understand your position - recently helped lady in Louisiana with almost the identical problem with her home.

You didn't receive your tax returns, your were not able to file an updated P&L is a weak excuse on your part.

Because in a new loan - banks can use the proceeding two years before the one you don't have. In a loan modification -just a current 6 month P&L with the last years can show as income.

Being self employed is good, because you can state your income shown through a self generated P&L. Your have to back that up with bank statements, showing monthly income to match the P&L.

I think the real problem is trying to refinance with another lender (or into a VA loan). You can't because of your "Cost to Cure" problem.

A new lender is going to require an appraisal, they are going to see all the unfinished work. Then deduct that amount from the value. I have seen lenders doubling up on that amount, until the work is completed before they give full value.

As for your credit report - if the terms of the loan stated the full amount was due on a certain date and you defaulted on that. They have the right to report to the credit bureaus anything in default. Your C/C problem and lates on credit report - is reducing your chances of getting a new loan.

You mentioning the Loan officer wanting to come out confuses me? A new P&L can be faxed. Having someone come out to inspect and possibly take pictures. This is not normal if they are looking to work with you.

You have been making interest only payments - now loan that has ballooned, the full amount is due.

Many loans once a person defaults and goes late on payments - a suspense account is normally set up to recover any penalty's or late charges. By you sending in $8000 after the fact, chances are that money did not get applied to your loan.

A few months ago the case I mentioned. We negotiated a loan modification reinstatement with her investor. Because her bank didn't want the home, they agreed to a 5 year extension of her regular payments. Basically we gave her a fresh start.

What you need to do is two affordability tests - what income do you need to show for your loan size? Then what payment is considered excessive for your income? That is what you have to negotiate.

Every time here the word bankruptcy - my hair stands up. You have other options. Since every loan modification is different and not knowing the terms of your loan. You need to review your loan paperwork for answers the indicate what is your best course of action.

Good Luck...

.

Edited September 23, 2010 by 2ndTimeAround