Hi 5in1arm,
Welcome to the forum and thank you for joining...............
There is a uniform set of guidelines and steps that the participating servicers and investors are following to modify loans on a principle, owner occupied residences, to a target mortgage payment on a first lien alone, of 31% of gross income..............a principal reduction isn't what they are using to get there.............the very last step if they can not get to the 31% by lowering the rate and extending the terms, is a principal forbearance which takes the principal from the front end of the loan and places it on the back end in a balloon payment that will not be due untill you sell the home or refi the home..........
Try contacting the executive team instead to see what the options are for modification on your loan type........
1-800-853-8516
To be eligible for a Home Affordable Modification, a borrower must:
• be an owner-occupant in a one to four unit property, and have
• an unpaid principal balance that is equal to or less than $729,750 (for one unit properties and higher for two to four unit properties, consult the Guidance for limits),
• a loan that was originated before January 1, 2009,
• a mortgage payment (including taxes, insurance, and homeowners association dues) that is more than 31% of the borrowers' gross monthly income, and
• have experienced a significant change in income or expenses, to the point that the current mortgage payment is no longer affordable.
Home Affordable Modifications are designed to prevent foreclosures by making mortgage payments affordable for working homeowners struggling to retain homeownership. The plan is not intended to replace equity lost by home price depreciation.
Here are the steps being taken and links to the program information............
In summary, participating servicers will (in order):
• Determine that a loan meets the minimum eligibility criteria (owner occupied, originated before January 1, 2009, UPB equal to or less than $729,750). If yes:
• Obtain sufficient income information to determine if the borrower has a front-end debt-to-income (DTI) ratio of 31% or greater (verbal income may be accepted for initial evaluation subject to verification prior to final approval). If yes:
• Capitalize (add to the loan amount) accrued interest, past due taxes and insurance, delinquency charges paid to third parties (e.g., for inspecting the property), and escrow advances by the servicer – but not late fees or other default fees charged by the servicer;
• Determine how much of an interest rate reduction is required to get the borrower's mortgage payment to 31% DTI, and if the DTI still exceeds 31% at the rate floor of 2%, modify the loan in other respects specified in the Guidelines;
• Apply a Net Present Value (NPV) test to determine if modification (including the incentive payments) provides the investor with a better financial outcome than foreclosure. If yes:
• Put the borrower on a trial modification at the new interest rate and payment for three months.
• If the borrower is current at the end of the trial modification period, the servicer will execute a modification agreement that includes escrows for taxes and insurance even if the prior loan was not escrowed.
Making Home Affordable - Payment Reduction Estimator