Daily diary

In October of 2008, I was sitting in front of Quicken about to make my mortgage payment. I looked online at Countrywide’s website and I realized I had added a ton of negatively amortized equity back into my loan over the past few years. This never mattered up until then as the house continued to grow in value way ahead of the neg-am. But times were changing and my adjustable rate mortgage was increasing every year and the neg-am payment was just becoming harder and harder to justify. My full payment with principle and interest was HUGE  (I only had to pay 2/3 of the total payment (negative amortization), kicking the difference back to the principle each month.)

The first question is…how did I get this loan in the first place? Why did Countrywide do the deal? The answer is simple and now a part of history…Countrywide was doing bad deals.  Thanks to them, I was able to get the house! No hard feelings here!! I had two choices on that day in October 08.  I could continue paying my mortgage and watch the principle grow above the value of the home or I could try to negotiate a loan modification. I chose the latter.

The next day I called Countrywide to discuss the loan mod process.  They said I fit all the requirements: negam, adjustable rate mortgage, etc., except, I was current on my payments!  I made the toughest decision in my career that week…I skipped my payment. I’ve never missed a payment on anything in my life prior to that day, so it was a scary decision. After the due date, I called them again and wouldn’t you believe that they told me I now fully qualify for the loan mod. Unreal!

Over the next 11 months I waited and waited and waited and waited and waited…you get the drift. I didn’t make a mortgage payment for 11 months. Yes, it did affect my credit rating, but it just seemed worth it to keep the house and the gain in value over the period. I have a great company that I hope to sell some day and cash out, so I had to take the chance. I figured I could explain the situation to a creditor down the road; they’d remember the worst recession in 40 years. I also figure I can get Bank of America to reverse the reporting to the credit agencies once I get back on track (working on that now). I’m an entrepreneur, I’m used to living on the edge.

On Sept 2nd 2009, 11 months later  (the day before my birthday), I got a Fedex from Bank of America (who acquired Countrywide). I opened it nervously thinking they were about to foreclose and to my surprise, they offered me a reduced interest rate from 8.25% to 2.375% for the next 5 years, effectively reducing my payment by over $10,000/month and eliminating the neg-am!  Long story short, I took the deal. Whew!!

Would I recommend that you follow in my footsteps? I wouldn’t wish the frustration or restlessness I experienced over that 11 months on my worst enemy. But it sure feels pretty good now!  We still have our home and we can easily afford our payments now. Sometimes things do work out…thanks Bank of America!

To the moon!

-Eric Greenspan