Question re: Loan Modification Offer

[Just_Frustrated]

After getting the run around with Wells Fargo for months, I e-mailed some WF executives (per this site's suggestion) and finally got a call back this pass Monday (8/17/09). The lady on the phone told me that the executives received my complaint, she apologized for the poor customer service and then said that my Loan Modification was approved on a 3-month trial basis. My current payment of $2211.68 was being reduced to $1957.56. I should receive paperwork from WF in a few days and I will have 14 days to return the paperwork. Right now I'm waiting for the paperwork, but

here's my question: If I currently bring home $5825.60 a month, shouldn't my payment be reduced to $1805.93 (which is 31% of my income)?

[Evan Bedard]

Hi just frustrated,

Is that your gross or net income?

[Just_Frustrated]

This is my gross income..

[Paul Molinaro Esq.]

NO LEGAL ADVICE HERE - JUST GENERAL INFORMATION - ANY SIMILARITIES TO ANYONE'S ACTUAL SITUATION IS JUST ONE HECK OF A COINCIDENCE.

The government releases its numbers as if these are law - and people get this idea that the percentages and payments are mandated. This is not true. There is no "the lender must" with a loan modification. This is so important to keep in mind.

Borrowers have unrealistic expectations, and this is getting worse. My firm has to undo a lot of misinformation when accepting a client. We need to have expectations set realistically, so that our clients expect what might really be offered.

The government is to blame by making it seem like congress and the like are forcing lenders to modify loans.

The media is to blame for just repeating the lenders tales of how many people are getting balance reductions (read as Lotto winners) and super low low low payments (read as once in a blue moon).

The loan mod scammers are even more to blame as they advertise guaranteed principal reductions and 1% fixed rates for 50 years and other such nonsense.

A loan modification is successful and this a good deal if the payment is affordable for that particular borrower's comfort level. It's really that simple. Some people love their house so much they'll give up new cars and vacations for it. Others like dining out, water sport toys and cruises in the Caribbean more than a theater room and two extra bathrooms. It's a matter of personal choice.

- Paul

[Just_Frustrated]

Attorney Molinaro - thanks for responding to my post . It's really frustrating when the government is advertising loan mods at no more than 31% of your gross on sites like: Making Home Affordable - Home and you learn another. I've learned a lot from this forum and I appreciate your feedback.

[Paul Molinaro Esq.]

NO LEGAL ADVICE HERE - JUST GENERAL INFORMATION - ANY SIMILARITIES TO ANYONE'S ACTUAL SITUATION IS JUST ONE HECK OF A COINCIDENCE.

"Paul" is fine, as we're all informal here... I'm posting while I sit in my smoking jacket and bunny slippers.

The 31-38% stuff are "guidelines" set by the government... they wanted the banks to agree to consider thinking about maybe using the guidelines as a starting point when taking loan modification terms under consideration... before the government would hand over BILLIONS of tax dollars... that's about as strong as the requirement was.

But all is not bad... lenders still do not want homes... they do want payments every month... and with that basic understanding, one can work toward keeping a home.

- Paul