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Saxon Modification...


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Okay so I completed my Saxon 3 month trial mod on January 1st (denied HAMP, this is an in house mod). Yesterday I received a Fed Ex package (wow within 2 weeks)with paperwork saying "Congratulations! You are eligible for a Loan Modification, which will permanently change the Terms of your mortgage!" These are the terms:

Previous mortgage payment:1810.07 (not including escrow), 7.85% interest. 30yr fixed. Mortgage balance 240,538.07, $31,666.89 in arrears. I calculate 13 months times 1810.07 (P&I) to be $23,530.91 in arrears. BTW where are my modification payments which totaled $5619.00?

New terms: Interest rate 4.6250%

P&I= $1236.74

Escrow and Insurance=$584.59


Lender claims that they are out $42,039.12(arrears, taxes for 2010 and 2011, insurance premiums and other expenses). New mortgage note= $282,577.19 of which $12,327.18 (interest free) will be deferred until loan is paid or sold. Interest bearing note amt will be $270,250.01 Extended maturity date from 2036 to 2052 (wow I will be 92 yrs old or dead by then..LOL). So I originally borrowed $250,000 and now owe $282,577.19 on a house that is underwater. I must also say that I was sold a crappy 80/20 loan by a lender on credit boards telling me at the time (2006)"don't worry I can always refinance you in a year...yeah we all know the market began to tank and I could not refinance as I quickly lost value here in NY. 2nd mortgage $62,500 at 12.25% interest. Currently in arrears on this mortgage. Total original mortgage $312,500. House recently appraised at $210,800. Yikes!!!!

Anyway I was current on both mortgages until Sept. 2010 when I lost income due to 2 back surgeries in a year and reduced income while recovering through the 2011 year.

I called my Saxon "Advocate"to review these documents. I was told that I should sign and return them. When I do this they will stamp them and return them to me and it will then be an official and completed loan modification. There is a page that says if not signed properly than the County recorders office will reject them. So I do believe I am not being given a "false hope" modification and this is the real deal.The paper work also indicates that if "I comply with the terms of the trial period plan, we will modify your loan and may waive all prior late charges that remain unpaid". It seems to me that that statement assumes I am still on the trial mod. I asked my "advocate" if the current proposed $42,039.12 the company is out includes these late charges or have they been removed since I have completed my trial plan? I received no answer. I asked for an itemization of charges, no answer again, but given a fax number to request this info. I also indicated that I have already paid my home insurance and if they are are back charging me for home owners insurance in their "fees". Again no answer, but advised to request that info when I fax in my homeowners insurance info to get that straightened out.

Anyway, I am not sure what to do. My thinking was to get the permanent mod on my 1st loan and them file chap 13 in 2 months to strip down 2nd mortgage since I am underwater by $102,000 and there is nothing securing the 2nd at this point. Now that I have this paperwork and want to sign to finalize that part of my mortgage problem and move onto the next, I am beginning to think that Saxon's numbers are an issue for me. I do not mind paying what I owe, but geez the fees attached to the back end seem outrageous! I don't want to lose this mod and have 7 days to return the signed and notarized papers.I was wondering if I sign the papers, could I contest the fees later??? Any advice would be appreciated. Thanks a bunch...

P.S. My Advocate indicated that I needed to make a payment on Feb.1st for $2096.36. I then added the numbers and came up with a payment of $1821.33. I questioned this and he said to mail that payment amt(money order or bank check) in with my signed documents. I asked why when payment is not due till the Feb. 1st according to documents. I will send the payment on the 1st via Western Union.

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The goal of a loan modification is to allow you to continue living in your home, with a payment of 31% of your monthly income ($5875).

Your 1st - the $31,666.89 in arrears. You calculate 13 months times 1810.07 (P&I) to be $23,530.91 in arrears. The difference is possibly the monthly amortization interest the bank lost.

Old Piti payment $2394.66

New Piti payment $1821.33

Month difference $573.33 x 24 years = $165,119 less interest

Old Balance = $240,538.07

New Balance = $282,577.19 = $42039 addition to note

Savings in interest - $123,080.00

Looks like a good deal, be sure to check if you do not have a balloon payment at the end of the mortgage.

As for your 2nd - your best option is to work at a settlement of around $15,000.


Edited by 2ndTimeAround
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Okay, I see what you are saying and understand. There is a balloon payment at the end as $12,327.18 is being deferred interest free until I either sell or the note matures. They have also extended maturity date from 2036 to 2052 adding 16yrs to mortgage. So I now have a "new" 40yr mortgage, saving about $23,000 in interest. I guess it is still a good deal as I get to keep my house and can afford new payment easily.

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Okay, I see what you are saying and understand. There is a balloon payment at the end as $12,327.18 is being deferred interest free until I either sell or the note matures. They have also extended maturity date from 2036 to 2052 adding 16yrs to mortgage. So I now have a "new" 40yr mortgage, saving about $23,000 in interest. I guess it is still a good deal as I get to keep my house and can afford new payment easily.

I am seeing a trend on completed modifications, with the final payment being a balloon.

Just had a similar situation, my client in Levittown, NY at first he wasn't happy with the resolution after 12 months of no payments. I had to explain no one gets a free loan.

A BOA mortgage, 12 years remaining. His old payment was $1925 (tax&Ins $1081 / P/I $821 ) @ 6.24%. New modified payment is $1742 (Tax/Ins $1081 / P/I $661) New balance $242541 @ 2% for 5yrs, year 6 @ 3%, years 7-13 4%. The final payment date remained the same, payments were calculated over a 40 year period, with a final payment a balloon payment. The 12 months of arrears included $13939 for interest $13094 for taxes and insurance, and deferred principle of $24172 = $51205 balloon payment at the end of loan. They will defer of and not collect interest on this amount.

My advice to him - for the next five years only being charge 2%, was to pay towards the principle. This is something you should consider.

Your second is extremely high @ 12.25% interest. You owing $62,500, you are right on the line for me to agree or not to agree to file bankruptcy.

Me personally 10 years ago owed $80,000 on credit card debt when I closed my business. I Did Not File Bankruptcy, if I would of my father want of turned over in his grave. My father used to scream at me about the importance of having good credit. I now have an 800+ credit score, which I would of not had if I filed bankruptcy. I have spent the most part of the last ten years telling how people can change their files around, at least financially not doing a bankruptcy.

I feel your interest rate can be brought down, if not the balance settled for settled for less. If your on time with your payments with your first mortgage, and behind on the second. The second could not do anything because there are in 2nd lien holders position. They would have to foreclose on the 1st mortgage, because the 1st is a larger amount, and paying on time, they will not let the 2nd mortgage subordinate.

You taking the easy way out to "strip down", you will 100% destroy your credit score. Which over the next 5 to 7 years will be paying more. Then it will take many more years to bring your score high to qualify for low payments. One thing for sure is your getting older, the older you are the harder it becomes to to repair your credit report. In my opinion, is to strategically fight it out with your 2nd mortgage for minimal damage to your credit.



Edited by 2ndTimeAround
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  • 2 weeks later...

I wanted to thank you 2ndTimeAround for taking the time to respond to me. I decided to take your advice . After speaking with a bankruptcy attorney who said the permanent mod was a good deal, I signed the Modification Loan Agreement and returned it to Saxon. I am doing what I have to do to keep my house as I have no intentions of moving for at least 15yrs and the new payment plus escrow is very affordable. I only hope Saxon is not stalling or jerking me around. As well I do not want to file bankruptcy and have the court govern my paycheck for the next 5 yrs, but I will if Saxon screws me at this final leg. Until I have the official stamped document and it is recorded with my county clerk I sit on baited breathe.

Anyway, wanting to remain optimistic maybe you can help with this question? The HARP refinance program expires Dec. 31, 2013. Although I signed the modification I am still not happy having an extended loan maturity date, a house underwater and an increase in principal and over time more interest paid, so I thought I could refinance into a shorter maturity term and save money on interest over the long haul. I am wondering if I remain current on my payments for the next year as per HARP guidelines (taking me to January or February, 2013) would I still be able to take advantage of the HARP program since I have completed an in-house modification? I think I remember reading that modifications loans have to be taken out of the investors or Fannie Mae's portfolio. So I guess my question here is when my modification is finalized is it still backed by Fannie Mae? Oh btw, Saxon who is owned by Morgan Stanley was sold to Ocwen if this has any bearing on my question.

I am also aware that interest rates may climb by then and would not refinance into a higher rate than the new %4.625, but if I could get the same rate or lower and change the maturity date I think that would benefit me in the long run. At that time I would have received a salary increase (I am a teacher) and be able to afford a little more.

Thank you...

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My wife's a H.S. Teacher here on the Island, she's glad that she doesn't work in the City, because of the Mayor looking to cut teachers. It's all over the News on TV. She is worried if the Governor starts thinking the same way. She teaches 11th and 12th grade Cacl and Trig, translating teaching to Spanish speaking students. She says the Principle is a jerk, multiple times he has said she's a bad teacher, this week had 78% pass ratio of the SAT tests, where the average for the school is 55%.... I told her with her credentials she could get a job anywhere. He's the Jerk, I'm sure you can relate to this...:mrgreen:

Getting to your message - if I could look into the future a tell what is going to happen, I'd be richer than Warren Buffet......:mrgreen:

There is no reason why you can't refinance in the future, especial if you have a (balloon) balance at the end. Right now you have "Major" work to do, because you are going to be in a recovery mode for some time (after missing 13 months not paying your mortgage payments). Your credit is totally destroyed.

It's going to by a minimum of three years of on time payments before you even qualify for conventional interest rates again. Your credit report mostly has "Pre-Foreclosure", that will be listed for many years.

You will be asked about what happen in the future, so do not throw any of the paper work away. Finally after seven years - your credit report will cycle off the late payments.

As mentioned above - I strongly suggest you send extra into your mortgage payments, making a payment directly to your principle. Your reported as more responsible and your credit shoots up. My background of "MAJOR" financial screw-ups ten years ago, I paid attention not to do the same things again, plus living on a minimum budget. Now have good credit, with bills, and investing for the future.

As for your value - your value is determined by your neighborhood. When people start buying, you will see the value return in the future.

Anything about HAMP guidelines - that's it all they are are guidelines, It is up to the individual Lender to set the rules of the modification. In most cases you need to wait at least 12 months on on time payments before a Lender will consider another modification.

I have a client in Flatbush, Queens who recently received her 2nd mod. Three years ago she was 12 months behind when starting working with AHMSI. 8 months later she received 2% for 1st year, 3% for 2nd year, 4% for 3rd year, the 4.5% fixed for life of loan. She made twelve months of on time payments, but when the loan adjusted her payment shot up + $700 per month. I think her loan amount was around $645k.

This time around her balance has grown to now $725k. She received 2% for 5yrs, 3%, 4%, and 4.5% for the life on the loan. At first she refused to accept her modification, thinking she can get a better interest rate after listening to O'Bama's presidential address last night. (This morning had to set her straight by explaining her reality to her).

My client I just mentioned - because they missed so many payments, even though she got a good interest rate. The loan has grown to the point where it unaffordable.

I don't feel it is going to happen to you...xangelx


Edited by 2ndTimeAround
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Hello again 2ndTimeAround,

Well It is done! My modification with Saxon has been modified. New P& I is 1236.33 (original 1810.07). Additionally, I am now being escrowed for 584.00 a month but I am okay with that as I can afford this new payment easily and do not have to worry anymore about taxes being paid (worked many summer school stints...ughhhh to pay the tax bill in Sept.) One worry gone. In a years time I hope to refinance through the gov't. program HARP which is not credit based. I just want to say that the reason I fell behind was do to having 2 back surgeries, on last Sept and the other last March. I was forced to take a sabbatical from work at a 40% reduction in wages. Returned to work this past September. My proven hardship was a lifesaver even if I did suffer the pain of surgery.

Yes, working for Bloomberg bites big time. He is so very arrogant!!! I teach HS history and thank god for seniority. I doubt he will get his wish to fire teachers before he leave office in December. Many teachers a re willing to pack up his office and hold the exit door open for him....HAHAH. Regarding Cuomo, I think he is playing politics right now by jumping on the anti-teacher bandwagon, but I hope and pray it will fall the wayside. NY's biggest mistake was applying for " Race to Top" funds. Costing school districts more to implement policy under that program than what they receive in grant money. I feel that many districts will bow out of the program and with teacher unions at a standstill on how to proceed with teacher evaluations may lose the money anyway and I say good riddance to the grants.

Anyway, back to my mortgage. I now have to work on the second mortgage. House is upside down by $100,000. I understand that there is nothing securing the second lien. My second mortgage is at %12.25 on a balance of $61,000 which is outrageous. In addition it is not a Fannie or Freddie backed loan so I am researching my options. A while back I was offered a mod that would lower interest to 5% but it would have climbed back up to the 12.25% in 18months. I turned it down because it was not beneficial to me. BTW the payment is $654 and is with Resurgent Capital (a subsidiary of Sherman). I am hoping to settle with them for a much smaller amount, if not off to court we go. However, before I get there I want to have my guns loaded with as much research and info as possible. Bankruptcy is my last resort but will take advantage of the "strip down" route many have taken if need be. Any advice on how to proceed???

Well, off to grade some homework and have a great evening!


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Went home for my lunch (dinner for normal people), my wife finally got her home laptop networked to her computer in her classroom. She was showing all her programs, how it was going to make it easier...... (We'll See..:mrgreen:.)

Bloomberg - I am surprised he's not running for his fourth term....(in a two term state)..:mrgreen:....lol..

Congrats on getting your modification through Saxon. Now the your first mortgage is completed, it should be very easy to get your second modified right now. Do not wait around....!!!

It would also be just as easy to settle for less. (estimate - $15k to 18K).

Keep us informed...


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