Hopeless in Arizona

gmoney64 · Joined: 12 Oct 2007 Posts: 3

This is something that I am sure that you pros have all heard and given advice on before, but I am simply out of options and don't know where to turn. I need some honest sincere advice and help.

Here is my situation:

-In an ARM that adjusts in December, from 7.25 to 9.155

-No prepayment penalty

-Recent score check has my mid FICO at 538

-I have a checkered credit history of mainly late pay's, and yes some recent including (1) 30 day on my mortgage.

-No foreclosures or repos

-A few old *PAID* collections and a *PAID* charge offs( longer than 2 years ago)

-My home was recently appraised at 284,000

-My loan balance is 213,000

-Verifiable six figure income

I NEED CASH. I am desperately trying to consolidate debt so that I can help my family breathe easier each month.

I have wasted away the last 2.5 months getting the complete run around from Countrywide and then First Horizon.

I am sure that you mortgage folks will love this. Here goes.

Countrywide basically led me on a complete good chase and then vaporized right before my very eyes. They stopped calling, didn't return calls and messages. All of this AFTER I jumped through every damn hoop, had my credit run, filled out apps and docs etc. Oh wait, it get's better.

After 4 weeks, I finally found an actual 'live' person at Countrywide, and after nearly two hours on the phone, they finally tell me that "oh, it looks like your loan was cancelled, and we can't help you anyway."

I am so desperate at this point, I fill out an on-line application with Lending Tree and really got nowhere, until about a week later I decided to call them and figure out what was going on. I reach a fairly nice guy and he in turn confirms my information and says, "let's submit everything again." So he does, and I get a call back from First Horizon. Tony Saccomen at First Horizon appears to be a really nice guy, assuring me that he can help, and that he has gotten much worse situations than mine done. He said that he could get an FHA deal no problem.

I again submit all forms, docs, paperwork etc. Well, a few days go by, and then a few more, and finally I am once again leaving messages trying to figure out what is going on. I finally reach Tony only to be told that my deal is hung up in underwriting.

Well, it is now three weeks later and I have once again been led on another damn goose chase and don't know what to do. No more calls back from good ol' Tony. Guess he's afraid to break the bad news?

Onto other options? Subprime? Hard Money? I simply cannot afford jack my house payment up really high because of a HUGE interest rate on a bad subprime or hard deal. After all, I am trying make things easier each month, not harder.

I do realize that my payment is going up regardless because of the ARM, but are there any decent people left out there who can actually help me?

Thanks for reading. Any advice?

Hopeless in Arizona.

jrhartman · Joined: 01 Apr 2007 Posts: 107 Location: Michigan

sorry to hear about the horrible experiences that you have had the past couple of months, it's situations like these that will give eveyone in our industry a bad name.

But, back to your situation. Do you have any idea what your debt to income ratio is? Also, with your credit score, I would concentrate on getting into a fixed rate because securing a cash out loan with that score is going to be pretty difficult in today's mortgage world.

Best of luck to you, and if you have any further questions please let me know.

gmoney64 · Joined: 12 Oct 2007 Posts: 3

Debt to income ratio is in good shape. I am obviously looking to re-fi, with some cash out.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Don't take this the wrong way, but lets call a spade a spade. You're asking for a prime rate and deal, with an extremely high risk profile. You want to take cash out, when you have late payments including on your mortgage.

It's not a question of 'good people' vs 'bad people' in this instance. It's a question of what's out there for your situation. You're asking for a lender to bail you out of a situation that you've dug a hole into. 538 is pretty deep, and while you have a good ratio and presumably a decent debt to income (based on your estimation, not ours) you've been having difficulties making your payments.

FHA *might* be an acceptable way to go, IF your late payments are explainable, and IF by doing the loan it can be demonstrated that your derogatory history will come to an end. I consider myself to be somewhat of an FHA mini-expert and this kind of situation would have some heavy selling to do. If you have all the proper documentation and explanations, then it has a chance. If your explanation is "I decided to go buy a new truck and found that I couldn't make the payment on it, which caused me to rotate late payments around" then it's probably not got a great chance.

I think that JRhartman's point is that right now you're looking at a payment increase that's going to be fairly drastic in a couple of months. You're looking for the fix to all your problems, but on the lending side of things, it may simply be too risky to cash out and pay everything off. If you can do a rate/term refinance to at least lock in a fixed rate (probably lower than what you are at now) you may be ok.

Countrywide was pretty much a waste of time. If you're not a green-light borrower, you're too much risk for them at this point. That's the case for *many* lenders these days. Sub Prime and Hard money are going to be costly in interest rate, but may even still lower your overall outgoing payments (depending on how high those interest payments are.)

I'm guessing that originally you had a sub-prime ARM, and now are trying to get out of it. The problem is, on the prime side, when someone is coming from sub-prime to prime we're looking for a demonstration that they're improving their situation. With a verifiable 6 figure income, and assumably low debt, the question of the day would be "Why?"

biggdaddy · Joined: 11 Oct 2007 Posts: 17

Haplo is right. 538 is not going to work at any lender. You'd have to go FHA with this and that would only work if you went full doc. "Full Doc" to the layperson, means you need to have about 50% or better DTI (debt to income ratio).

If you can't prove 50% DTI or better (meaning you have 50% of your income left over after you pay your bills) then FHA is not going to happen either.

Can you prove that you make more than 50% of what your bills are? (mortgage payment, credit card payment, auto loans)

biggdaddy · Joined: 11 Oct 2007 Posts: 17

Oh, I see that you said you have good DTI. Might work if it's REALLY good

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

50% is going to be too high for FHA if you have that low of a credit score. You'd have to be under the guideline of 41%. Don't even think about the exception areas, they won't work out.

gmoney64 · Joined: 12 Oct 2007 Posts: 3

Thank you all for the feedback. DTI is 38% and FHA came in at a Level 4, which from what I understand is a no go.

Haplo, the "why" is that while DTI may look okay, I simply have to many bills coming in that I really need to make go away. I am the bread winner of a family of four, and money isn't stretching like it used to. By eliminating some frivelous debt, I can ease the strain of too many damn bills and get back on track, so to speak.

My plan is to eliminate about $27,000 in debt, and be left with autos and house payment.

biggdaddy · Joined: 11 Oct 2007 Posts: 17

With a DTI at 38% then FHA should not be a problem. You can even take cash out to help clear up some of that debt

If you would like, feel free to PM me and I can help you out. This is exactly what I do.

chow · Posted: Sun Oct 14, 2007 9:50 am Post subject:

Here are some of the rules on Cash out FHA refinances. No late payments in last 12 months is an issue if you want to go 95%.

{non working link removed}

At 85% cash out, (handbook 4155. 1-11B)

B. "Cash-Out" Refinances. "Cash-out" refinances are only
permitted on owner-occupied principal residences and are limited to a
combined LTV (FHA-insured first and any subordinate liens) of 85
percent of the appraised value, provided the property has been owned
by the borrower for at least one year. If the property was purchased
less than one year preceding the loan application, the mortgage
amount must be calculated using the lesser of the appraised value or
the original sales price of the property multiplied by 85 percent.
Properties owned free and clear may be refinanced as cash-out
transactions.

"Cash-out" refinances for debt consolidation represent considerable
risk, especially if the borrowers have not had an attendant increase
in income. Such transactions must be carefully evaluated.

Many underwriters don't like late payments. With a credit score below 600 you have had some late payments besides the mortgage? This cash out has to make sense to the UW.