Here is my story;

 

We moved into our house approximately 8 years ago in 2000. We were leasing with an option to buy. After two years our landlord told us we would need to purchase the house or move. We have put a lot of sweat equity into the house as it was in great disrepair, bathrooms not working, roof leaking, appliances not working, etc. We agreed to purchase the house and in April of 2002 we purchased the house for $127,206.00 with closing cost the loan amount came to $133,000.00 and WMC Mortgage was our mortgage company. WMC sold our mortgage to Litton Loan Service and through a series of events where they (Litton) claimed they did not receive a payment or our payment was late and we did not have homeowners insurance (when we proved to them we did) they put us into Forbearance. Litton added a substantial amount to our payment which made it difficult to make the payment and we were afraid they would try to foreclose on our mortgage. We continued to make the payments while ignoring all our other bills, as a result our credit report and credit score began to suffer .A broker from Dana Capital Group contacted us and they got us a mortgage with Chase Bank USA closing in April of 2005. We paid over $13,000.00 in closing costs and we agreed to what we were told was our only mortgage option and that was a 2 year 6 month Libor ARM at an initial rate of 6.975%. At our first rate change date our mortgage went to the maximum of 9.975% and this was on June 1^st of 2007. Our payment went from $1015.35 to $1300.80 a month. We just received a letter from Chase that states that the Libor index changed from 5.374% to 5. 133% when I read this I became excited that our payment would go down. Then I read farther! It seems that even though the Libor index goes down our interest rate continues to rise, this time from 9.975% to 11.125%. As a result our payment would go from $1300.80 to $1418.25 per month beginning with our January 1^st 2008 payment. Our rate is calculated by adding 6 percentage points to the current index. Our documents state that our rate cannot increase or decrease by more that 1 and1/2 percentage points at any rate change date with a cap of 7% over our initial interest rate. We questioned this when we got the mortgage but we were told that if we made our payments on time we could refinance at the end of the two year period. We have never been a day late in 2 and ½ years, but when we tried to refinance with Chase they said we did not qualify. I also tried to get them to restructure our loan but they said we could not qualify for that either. My credit score has dropped to the 540’s and after numerous attempts we have not been able to refinance with another lender. We were also told by the broker that there was no prepayment penalty on this loan but there is and it is in the amount of $6,000.00 until May of 2008, this is also hampering our refinancing efforts. We have done many repairs to the house including putting on a new roof, new central heat and air, a complete bedroom/nursery and bathroom remodel all the way down to the studs and joists, new entry door, replacing joists and sub floor in the living room and new living room carpet. I am in the process of putting on a new deck to replace the one that was falling down and painted the outside trim last week. I also plan to replace the siding and remodel two additional rooms over the winter. With the exception of the central heat and air I have performed all the work myself. So as you can see I have a very personal stake in this house I have put my spare time and lots of sweat into improving the house. My Mother is 84 and in failing health. I plan on moving her in with us in March so we can take care of her but I wonder now if we will have a house for her to move to. I know I can’t afford the new payments! Our family consists of myself, my wife Judy, 15 year old daughter Kandice  and 2 year old Isaiah.I realize we should have been more careful and now I know what to watch out for but we don’t deserve this. I have a good job with a great company and make a good living but with our medical bills and the mortgage increase I don’t think we will make it, but I will somehow continue to pursue the American dream of home ownership and will continue to take care of my family because that’s my obligation and what I love to do.

Gary..I strongly suggest you consider selling that house and puchasing something else from a better source (sweat or no sweat)  I know it will be a hard decision  but you need to be able to survive without the stress of worrying about that payment every month for  years to come...