Anthoy Hernandez Letter to GMAC - Ashland OR

3 Comments

Dear GMAC/MGIC,

As you know, the above-listed property is scheduled for foreclosure on April 12^th. I think we can all agree that going through with this is not in anyone’s best interests for obvious reasons. Everyone from the investor (Freddie Mac) to GMAC, MGIC, and ourselves stand to lose—and lose big—if the property is foreclosed on.

I informed GMAC about my ongoing financial hardships in January of 2009, before we defaulted on the loan. At the time, GMAC said that I did not qualify for assistance because my income was insufficient (which is why I asked for help in the first place!) GMAC then offered us an awful in-house modification followed by a “Making Home Affordable” modification that used an incorrect income calculation. A foreclosure attorney reviewed the case and told me that I could take action against GMAC for doing this, an option I reserve the right to pursue.

Having been given no other choice, I listed the home for short sale in early December with Chris Toogood of John L. Scott Realty in Ashlsand, Oregon. The initial listing price was $325,000 and the price has been reduced each month. The current price is $230,000 and there still have been no offers on the property despite the drastic reductions despite the property being in excellent condition. This can only mean that the auction price is going to be even lower, or that GMAC will have to carry a vacant property on its books.

I think we can all agree that this makes no financial sense for anyone.

I am writing today to offer you a solution that will:

• Stop the foreclosure.
• Allow GMAC to continue to legitimately carry the property on its books at full value.
• Prevent MGIC from having to pay out on the PMI policy listed above.
• Allow MGIC to keep collecting the insurance premium on the property.
• Allow the investor to continue making money on the original loan.
• Preserve neighboring property values.
• Preserve the local tax base.
• Let us keep the home we have invested so much of our time, energy, and money in over the last 9½ years.

In short, I am offering a win-win-win solution.

Here is what I propose:

1. The loan balance is currently about $400,000, including interest, late fees, etc., which is about $40,000 more than the principal balance of just under $362,000. The idea of paying interest on the back interest and fees smacks of loan sharking, but let’s move forward with the $400,000.
2. Accept an interest-only payment at a 2% annual rate, which is competitive with today’s jumbo CD rates that range from 1.10 to about 2.95%. This gives you a payment of $667 per month.
3. Adding taxes of about $285 and PMI of about $288 plus insurance of less than $50 per month provides a total monthly payment of $,1290 per month.
4. Payments fixed for 5 years. At the end of that time, the original loan resumes at its original terms for its remaining term.

This gives GMAC/Freddie Mac an additional $40,000 in interest payments over the original loan and gives everyone the benefits outlined above.

Alternatively, you could consider a 3% interest-only payment on the principal balance of $362,000, which gives you a monthly payment of $905, or $54,300 in interest over the same 5-year period. In other words, by not asking for interest on top of interest, you get more money.

This solution requires no principal forgiveness, entails no loss to the investor, and salvages an otherwise rotten situation for everyone.

As further incentive, a copy of this letter and your response will be provided to the Huffington Post, www.shitheadery.com, www.shamethebanks.org, the Ashland Daily Tidings, the Medford Mail Tribune, and other interested media. I will also see to it that the home’s new owner knows the story in detail.

In summary, you can accept a profitable offer and earn immeasurable goodwill in the process… or not.

Anthony Hernandez

| Spread this article...