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TAMPA - Rafael and Tina Castillo thought their mortgage lender must have made a mistake when it sent them their loan modification paperwork this month. The monthly payment of $1,700 had been reduced to $737.41 for the next six months. Wow, they thought. That was much better than they'd expected. But then came the kicker. September's payment: $10,303.11. "I honestly don't know what we're going to do," Tina Castillo said. "We're actually going to be homeless." Indeed, if the Castillos had that kind of money in the bank, they probably wouldn't need the modification at all. Early Warning The Castillos say they called their mortgage lender, Wells Fargo, nearly two years ago to warn that financial trouble was on they way. After family illness and the loss of a job, they were having a tough time making ends meet. But because they hadn't yet missed a payment, they weren't eligible for help. They say they were told to call back when they were at least three months behind. They staved off foreclosure by taking out a home equity loan. When the money ran out, they put the Ruskin house on the market but found the value had dropped to $225,000 - far below the $334,000 they paid at the height of the real estate boom. The Castillos have two children with severe disabilities and say they feel stuck. They're now three months behind on their mortgage payments, and the foreclosure process is about to begin. When President Barack Obama recently announced his $75 billion plan to keep struggling homeowners in their homes, they thought help had finally come. Obama urged lenders to offer affordable payments. It's doubtful the modification offered to the Castillos is what the president had in mind. Probably not, said Wells Fargo spokesman Debora Blume, but the modification process isn't as straightforward as many homeowners think. Blume said she couldn't comment on the Castillos' case but said the lender is not to blame. Most of Wells Fargo's loans are owned by investors, and those investors control the modification terms. She wouldn't say whether the $10,000 lump sum was unusual. "We are required to work within the confines of investor requirements to develop an individualized solution that helps the customer get through a difficult time so they can stay in their home," Blume said in a statement. Free Advice So what recourse do homeowners have? Larry Gilmore, director of the government-sponsored Hope Now Alliance, offers suggestions and thoughts. •Homeowners should seek advice from a third-party housing counselor, such as a HUD-certified counselor who offers help for free. (A list of Florida counselors is available at www.hud.gov. Enter "HUD Approved Housing Counseling Agencies Florida" in the search box.) They can also check a new government Web site, MakingHomeAffordable.gov. It provides homeowners with a general idea of whether they'll qualify for a loan modification or refinancing by answering four or five questions. •Homeowners' situations are unique, Gilmore said, and there's no one-size-fits-all solution. The president's plan, however, offers more options than ever, and may help keep families in their homes. The options include extending the term of the loan, reducing the interest rate and forgiving part of the principal. Those options are only available on loans owned by Fannie Mae or Freddie Mac. •Homeowners should ask the lender whether their loan qualifies for the government program. Because it is so new, many servicers have yet to implement the program's terms. •If you can't afford the modification offered, tell the lender right away. It may be possible to tweak the plan to work. As for the Castillos, they have a big decision ahead. If they accept the modification offered, it will mean at least six more months in their home. But they know they can't pay the lump sum in September. They've asked to have the $10,000 payment tacked on to the end of the loan, and they're waiting on a reply. They hope the answer comes before the opportunity to modify their loan is gone.
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