Like millions of homeowners in the US, I am seriously underwater on my mortgage. I will fully admit that my wife and I made some financial blunders to get us there. My wife and I both work(ed) for a large computer company... our combined income was pretty close to obscene. We really didn't look too much into the future, except for putting a good amount of $$ into our respective 401k's. Then the dot-com boom died, which didn't help the computer industry at all. Then the bottom dropped out of the economy, after the attacks on 9/11. My wife was laid off a month later. We were able to keep going, at a reduced rate until 6/05, when I was also laid off. In the meantime, she had started a business (still going, paying it's bills/payroll, but not much else) and we had been drawing down on our 401k's. I know, not the best of ideas on many levels, but when you are a 2 income family, and 1 goes away, you do whatever you need to do to survive.
I found another position at another high tech firm 9 months later. This just made our situation worse, as now we had 2 incomes to try and cover however we could between 6/05 and 2/06. My new position pays very well, but does not cover the 2 incomes that we used to have. I know that we are better off than many folks on this site, but...
Bank of America offered a restatement of our mortgage. After getting a new payment amount for our mortgage, which would have been about 80% of my net pay, I called Bank of America (which had just taken over the servicing of the loan from Countrywide). They offered me a modification which cut a bit off the payment, and bundled the stuff that we already owed onto the back of the loan. This was still way high, and I called them and told them so. About 2 days later, I got the paperwork application for the government's Making Home More Affordable plan. I filled all this stuff out, and sent it in with the first of 3 (I thought) trial payments.
Right around the holidays, BofA wanted more information. We were at my parent's for Christmas, and my wife's financial info (which is what they wanted) was in Oak Park. We got the updated information off to BofA, and continued to send off the trial payments, month after month, after month. I sent off the first payment the end of October, 2009, with the paperwork. Amazingly, I seem to be one of the few who'se paperwork BofA didn't lose!
Come June 2010, and BofA sends me a form letter saying, sorry, the underwriters couldn't modify your loan, so you've been denied. After 9 months. They helpfully suggested some alternate 'solutions', deed in lieu of foreclosure, a short sale, and that was about it. Screw it. I'm not going to give them the easy way to take my house. Illinois is a judicial foreclosure state, so anything they do is going to take some time, giving my wife and I some breathing room. There are some that may try to classify this as a 'strategic default'. I don't know. I'm not making enough to pay for the mortgage and our expenses, and from what I've read, that's one of the things that classify a strategic default, being able to pay mortgage and expenses, but making a financial decision to cut your losses. I've read the paper from the University of Arizona that talks about the reasons to strategically default, and this did influence my decision. The HAMP process is extremely deflating. We've faithfully sent in our trial payments for 8 months, only for BofA to deny us.they only asked for updated paperwork twice -once because I missed some stuff on my wife's business, which in 2008 was a sole ownership. They did want the full year 2008 financial numbers for 2008 early in 2009. No problem. I was amazed, like I said before, after reading the horror stories here and other places, that BofA didn't lose our paperwork multiple times. I have seen that BofA has one of the worst records of any bank in restating mortgages under the HAMP program, and I am not surprised.
I am now talking to my lawyer to see what we will do going on. With what I am making now, I cannot pay both the mortgage, and my monthly expenses. We've cut many of our expenses, and what's left is pretty basic. We deferred service on our car, and that is coming back to bite us in the butt, among other things we've deferred. I have one daughter who just graduated from university, and thanks to our financial situation these last years, I had been unable to offer much financial support over her college life. I have another daughter going into her senior year in HS, and really, we need to be in the town we're living in only until she graduates. The suburb just to our west has a much more affordable rental market, and we may be there next year. We just don't know. Our loan is owned by Fannie Mae, so they may try to come after us, as they've just threatened to sink even further folks who have had their properties foreclosed on, and go after the difference between the loan and the foreclosure sale amount. We may have problems with the IRS, too. But, some of that stuff is what attorneys are for. So, we'll see what happens now.
We will fight this the best we can. Wish us luck.