Hi,

I'm 30 years old and I became a Widow this past May, I do not have any children. I received $45,000 in life insurance money which I used to pay off my car loan, credit card balances, misc. living experiences, and end of the year property tax. I also used it every month to pay my 2 mortgage payments. Both of my mortgages are with HSBC. My first mortgage principal balance is $192,119 and my second is $29,771. My total monthly payment comes out to $1,878.51. 

I have less then $5,000 left of the life insurance money. It is the only savings I have. I have no other loans then my mortgages. I put my house up for sale in January and have not received any offers. My husband and I originally bought the house 5 years ago for $190,000 (my husband's credit card debt was put into the second mortgage about two years ago accounting for the difference). The house was first listed at $170,000, then it was dropped to $160,000 with still no offers. 

This month I received a 7% cut in pay b/c the company I work for is doing poorly. Since 2008, my personal income has dropped 60% not including the loss of my husband's income. I'll be lucky if I make $25,000 this year if I do not find a better job. 

I sent HSBC all of the requested information: hardship letter, bank statements, expenses, etc... I received a letter from them on Saturday saying they received my information and they are looking into it. That they will get back to me. I have not made my mortgage payment on the larger loan this month so I've been current until March. 

To top all this off, I'm going to lose my homeowners insurance in May b/c I have an in-ground pool that needs to be filled in. I cannot afford to do it so the insurance company is saying they are not going to renew my policy. Can you live in a house w/o insurance? 

I have tried to refinance the loans and I was told I couldn't b/c my debt ratio was 55%. 

I currently have a credit rating of 700. 

What should be my next logical step? Everyone I know is telling me to walk away. How soon does walking away show up on your credit report? I'm worried about being approved for an apartment if a foreclosure trashes my credit. 

I live in Waukesha, Wisconsin (suburb of Milwaukee). Everyone is telling me to get a lawyer, but as you can see I don't have much money to pay one. Any advice anyone can give me would be greatly appricated. 

Thanks,

Shanna

First,  I am sorry to hear of your loss.  Having lost my wife 17 years ago, I can tell you that what everyone tells you about time healing is not actually true.  Time doesn't heal, it just makes the pain further away from today.  Life does get better but it takes forevers.  Hang in there, and try not to go crazy and do crazy things.  Been there, done that.

Now, saving your credit score may not be possible.  You have to save yourself first.  So, the steps you're taking with HSBC seem like the right thing to do Now.  It may take them a long time, but IF your credit were damaged, and you had to move out,  you aren't the first person this has happened to.  And landlords are cognizant of that.  Plus, they have large vacancy numbers they need to work with.  So, at least here in Az, we're seeing the landlords are actually happy to get a tenant who lost a home,  they tend to be longer-term tenants.

Isn't there an excavating company that can come fill that pool petty cheap? 

And lastly, our local NBC news channel has a consumer help program.  Perhaps they can help you expedite the process with HSBC.  Above all, Don't pay some "Modifiction" company to do wht you've already started.

Wish you well.

 OH, and yes,  spending money with a Good attorney would be a wise investment too.

Gosh, I am so sorry to hear about your loss Shanna. 

You have taken the first necessary steps to either sell your home or restructure the debt.  You must have insurance on the property when you have a mortgage - and I know for a fact - the bank will place forced insurance on the property - at a very high cost to you.  If you cover the pool this summer will that satisfy the insurance company - I would contact the insurance company  for some solutions they would consider so you can keep your current policy - including filling in the pool if necessary -

hang in there - it is true you must help yourself first - work with the bank - and having some legal advice is a very good idea - is there a legal aid society around you? 

Sorry to hear about the loss.  All parting of life is sad.

One of the first things that I would do is, examine the coverage and try to lower the coverage amount and get a higher deductible.  This way the premiums can be reduced.

You have to maintain the insurance coverage at all costs.  Check with another insurance company if they would cover the property without filling the pool.  Use your credit card to fill the pool if yo are planning to stay in the house

Try to get the loan modification approved.  Get a lawyer who is ready to get paid based solely on results not on anticipated results.

Unless you are saving a lot on monthly mortgage amount, refinancing should be last priority.  However if you get a zero cost zero point refinancing and still save on the mortgage payment then go for it.