Life After Mortgage Modification

I don't write about this stuff, since I'm actually working with my lender (I'll update on New Year's Day). But this story at LAT is interesting, and no doubt resonates with a lot of folks. "Her House Was Saved But Now What?"

In the midst of a divorce and unable to afford her Torrance home, Nicole Rasmussen phoned her lender to ask for a mortgage modification.

She phoned every week for more than a year.

She also called her congressman and a senator to seek their help. Then, in desperation, she and her ex-husband — who still jointly owned the home — stopped making the payments on their $475,000 mortgage.

It was the only way, she felt, that the bank would seriously consider her pleas for a modification.

"I didn't know what was going to happen," said Rasmussen, who was frightened that she and her 7-year-old daughter would be forced out of the home. "We were living in limbo."

The risk paid off. Several weeks ago Rasmussen finalized the loan modification on the three-bedroom, 1950s ranch-style house.

Grateful to be at home for the holidays, she now looks forward to trimming the three artificial Christmas trees in the house and baking snickerdoodle cookies with her daughter.

But the mortgage mess and divorce have rocked her finances.

Like millions of other Americans, Rasmussen, 38, is facing an uncertain financial future, even with the loan modification. The only thing that's certain this holiday season is that she will have to change her financial life.

She has already started. To make the mortgage payments more manageable Rasmussen took in a roommate. She also succeeded in getting the property reassessed, resulting in a lower tax bill.

And there were smaller steps — raising the deductible on her auto insurance and canceling her Costco membership.

But there are often reminders that, though she makes a very good salary, her financial picture has changed. For example, not only was she refused when she applied for a new credit card, but a card she already had was frozen.

On her own for the first time in more than a decade, Rasmussen has to navi-

gate her finances while balancing a tenuous mixture of income, debt and assets that could all too easily unravel.

"I have a general idea of what to do, but I don't know for sure what to do," Rasmussen said.

She wants to save for emergencies and retirement and pay down her debt, but she also wants to have enough money to splurge occasionally on theater tickets and attend out-of-town artist workshops to indulge her passion for mixed-media collages.

And she wants to be able to pay a portion of college costs for her daughter, who is so academically minded that she does multiplication problems at home for fun.

Certified financial planner Dirk Huybrechts reviewed Rasmussen's financial details and drew up a plan for her ...

More at the link.