"Hi David:
"Latest update. While researching our options I came across law stating, basically, a servicer cannot foreclose "If a borrower submits a complete loss mitigation application [..] more than 37 days before a foreclosure sale ..." See paragraph (g) here:
https://www.law.cornell.edu/cfr/text/12/1024.41
"So we hustled to submit a complete "loss mitigation application." These are also called "loan mods." Lo and behold we were just approved for HAMP Tier 1 at 2% (whatever that means). See attached.
"Considering the mortgage hasn't been paid in over 4 years (saving about $70k), a Ch 13 bankruptcy filing by attorney to stave off foreclosure would cost about $5k and restructure debt into a similar monthly payment, this doesn't appear too bad of an option to continue living in the family home (worth $390k according to the servicer) and ride out the financial collapse. Factor in the wife & kids too.
"Interesting thing came up while getting everything together for the application. They wanted tax returns, if I was "self-employed",etc. Told them I was making lawful money but not "self-employed" as defined by statute. They thought the Joint tax return was incomplete, no Schedule C (for business) & wanted it. Told them there was no Sched C; not required, and return was complete. Put together profit/loss statements at their request. The rep responded with something like "if it's not on the tax return the loan company cannot count it." Told them that was their decision, not mine."