Q: I purchased a home five years ago with an 80/20 home loan. (FYI -- I have a 10-year balloon on my $40,000 second loan, which has a 9 percent interest rate, and my first is at 7 percent.) The bank encouraged me to do two loans to avoid paying mortgage insurance. However, the market changed within six months of my purchase. Now I'm "underwater" and I can't refinance.
My house was on the market for seven months, to no avail -- some of the homes on my street have been foreclosures that sold for nearly half of the value! Now, I need to retire in a few months due to the poor health of both parents. My income will be reduced. Can you tell me if I qualify for a loan modification program? Do I have any other options? --Jacqueline, Memphis