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QUESTION: My husband and I own two residential properties. In 2004, we took the first mortgage with Countrywide for our own use. Our principal is now about $420,000; however, the market value of our house went down to $300,000. In June, 2007, we got a second loan on the house for $120,000, as an equity line of credit to improve our house. I work as a Licensed Vocational Nurse (LVN) and my husband works in the military. We have two children who are still in school. We can still continue to pay our mortgage but I think that it is unfair for us to continue doing so because there is no equity in our house. In 2006, we got a second house as an investment. The principal loan for this property is $300,000; and, the second mortgage is about $110,000. The fair market value of this second property is only $250,000. We have recently received a notice of default from the bank. We want to keep both properties if we can. Please advise me on what steps to take to keep both properties.
Answer: You are certainly eligible to apply under Obama’s Making Home Affordable Program. Recently the California Corporations Commissioner adopted the California Foreclosure Prevention Act to conform to the Department of Treasury Home Affordable Modification Program Guidelines. The program aims to reach homeowners who are suffering serious hardships, decreases in income, increases in expenses, and those who are paying combine mortgage loans higher than the current market value of their house.
The homeowner or applicant must meet the following criteria to qualify under the comprehensive loan modification program:
The residential mortgage loan must be recorded during January 1, 2003 to January 1, 2008;
The borrower/applicant occupies the property as his or her principal residence, and occupied the property as his or her principal residence at the time the loan became delinquent;
The residential mortgage loan is the first lien on the property, and either the property is not subject to a subordinate lien, the subordinate lien has agreed to subordinate to the modified first lien, or an agreement from the subordinate lien holder is not necessary for the first lien to remain in first position upon the modification of the loan;
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