First then Second...You're OUT!

I must say, it is a bit hard for me to keep hearing over and over how people with a first and a second mortgage are losing their homes.
You see, the process is fairly simple in the mortgage business--you go in to get the loan for that dream home, but you don't have the 20% down payment...well you're in luck...or so you think. The lender is willing to allow you to put down--say 3%--and get you a first mortgage for 80% of the loan value from one lender, and a second loan for the remainder from a different lender. That sure saved the day, now you can forge ahead and get into that new home you have always wanted. As they say in the movies "And we all lived happily ever after"...problem is, this is not the movies.
The very first question I ask at the stage where the home is in jeopardy is, have you tried a mortgage modification? The response is usually the same--yes, but we were turned down. WHAT? How can that be! These people have lost a job, and their payments are through the roof--they should qualify. To explain that denied request for a modification, we must go back to the fact that two lenders are involved here. When you go to the first lender to ask for the modification they want to know how much of your income is being consumed by--now listen--THEIR payment...not considering the second mortgage. Did you get that? If their part is only taking, let's say, 29% (instead of the required 30% in most cases) of your income, well you're out of luck. If you want to get a modification on the second, well then you need to go to the second lender and do this process all over again.
You may say, "Skip come on, the buyer bit off more than they can chew. It's not the lenders fault." Yes, but at what point do we stop trying to play the blame game and solve the problem. Listen, the lenders might begin with making the modification process and short sale process "less complicated". Heaven's sake! We can put a man on the moon! We should be able to streamline this process in order to help more people keep their home.
One snippet of advice...Wait to purchase until you have the 20% down payment first, be sure to stay within your budget, and definitely stay away from Adjustable Rate Mortgages(ARM) no matter how good you think they sound.
Just a side note, Dave Ramsey (www.DaveRamsey.com) has a great plan for getting out of debt and getting your life back together. Or you may be saying, "I am doing just fine." Check him out anyway, so you can try to avoid the pain of having your financial life fall apart...it's painful! I see it almost every day!

Grace and Peace