GROSS VS. NET income.....

[BudgetCutsinOC]

I dont know why Chase uses your GROSS income. Everything should be based off your NET income, because that is the money you have in YOUR pocket every 2 weeks! I used to make 3000-3600(NET) every 2 weeks with OT. Now I take home (NET) 2,200. My mortgage is 2400 with everything included. Plus my wife doesnt work and I have 2 kids.

Example: My last paycheck
Gross: 3,800
Net: 2,200

There is a big differance between the two. Seems like NET is more important than GROSS. Any opinions??

[Believe]

I happen to agree with you, Budget, but many of the mod programs, including HAMP, use gross income now. Therefore, it does not matter if you have a 2nd mortgage, health care costs, car payment, or any other payments. The first test to determine whether or not you qualify is what percentage of your GROSS income your primary mortgage payment is, and if it's less than 31%, you're out of luck.

[aubie37]

Budget,

I work in the mortgage industry and it is often used to determine one's debts and ability to pay by their front and back end ratios. I used to average gross income on slow months from $4400 to $4800 monthly with one job. Today, from working two jobs, I am grossing about $3300-$3400 per month on good ones. For gross income purposes I qualified for the mortgage I do have with making more money. However, for review purposes I keep being told I need to make more money when I am making 5 + times more than when I initially requested assistance last year. If I was making what I used too I would not have a problem. This really boils down to the banks willingness or lack thereof to work with consumers.

[sadness]

Budget-

Chase actually denied my loan mod request using both gross and net income.

My mortgage, taxes, HOA equaled to over 50% of my gross income. Although they said it was only 36% and i needed to be over 40% (36% only took into account my mortgage)

But then they said that even if i met that first requirement, based on my net income, i made over 120% of my PITI therefore I was denied because my net income was more than enough.

Go figure. I think they like coming up with random reasons just to drive you nuts.

[NohelpfromEMC]

I think its probably because a borrower has more control over their net pay rather than gross. A borrower could suddenly max out their 401k contributions, have more taxes taken out etc to lower their net.

Just my opinion.

[aubie37]

This is so timely as I am trying to deal with someone in the executive response unit at CitiMortgage but did not realize my income was being challenged yet again today. The guy left me a message yesterday afternoon and I called three times today to just now get him. Yet again, CitiMortgage was taking my last paycheck and doubling it for my income. I quickly pulled up my year-to-date income, took away all deductions, and divided that by 9 as that paid me through 9/30/09. This last gross amount was the amount CitiMortgage was now claiming I am in excess as they used that by two. It is awfully funny how each and every party, regardless of department, screws up calculations. I advised this guy I am actually on a draw tomorrow and my year-to-date will be even less.

[art4ari]

Gross to determine the famous 31%
Net to determine our ability (or not)to pay a modified mortgage plus expenses with a small surplus.

so I have been told by my monitor....

[litehouse01]

Do they count overtime? Or just your basic 40 hr per week pay? I know we are not having hardly any taxes taken our and will face that come tax time to have some extra money now to make ends meet.........

[BudgetCutsinOC]

Oh yes! they include OT !!!

[mintdeer]

I too wish they would just base it off of our net income. I've told them that maybe if we get rid of our health insurance we would have more money! ( funny in a sick way) The bankruptcy attorney I spoke with seemed more interested in our net income why can't the banks?

[Smuel123]

On the other end of the spectrum, I was denied a HAMP modification because my gross income was 35% of my monthly mortgage payment, Chase told me their cutoff is 37% - when according to published guidelines I know it's anything greater than 31%...go figure...these folks don't know what they're doing...

[chasepmt2hot-firefighter]

ohhhhh, they know exactly what their doing...

[patrick0]

They are not supposed to include OT in the "gross."

[summerbreeze]

Talked to Freedie Mac representative yesterday, banks are supposed to go with your net income and not gross. Banks are setting us back to failure to get their third time share bailouts from the government.

[Middx]

Ok, can someone help...we are self employed...on a neg am loan...1st modification was denied because the P&L showed insufficient net income to qualify for a loan modification..need to re-submit new paperwork...

what is the key percentage to show on your P&L to qualify for the loan modification....

[litehouse01]

Budgetcutinoc .........has is your inhouse mod they offered you coming along any news on your progress?????/I am wondering how inhouse mods view backend dti

[nativelasvegan]

Originally Posted by summerbreeze

Talked to Freedie Mac representative yesterday, banks are supposed to go with your net income and not gross. Banks are setting us back to failure to get their third time share bailouts from the government.

I could sure use the specific location of the language that indicates "bank are to use NET income". I am surprised that a Freddie Mac rep would say the banks are to use net figures. All the directives I have read, state "gross".

This example of gross vs. net is just one of the reasons we need to petition congress to change the terms or have a supplement issued instructing servicers MUST use a borrowers net income for calculations.


If you have not already done so, please take a look at the petition created here and sign it if you want to play a part in getting this legislation changed. PETITION TO THE U.S. GOVERNMENT FROM AMERICAN HOMEOWNERS | Petition2Congress |

[litehouse01]

Everything I have ever seen written says gross.........I have never ever seen where net is used

[OH-WAMU]

We are screwed if they use Gross. With single income families, ALL family benefits come out of that one medium income. Family insurance coverage is EXPENSIVE even if you have a generous health benefit program.

[OH-WAMU]

I am hoping for some sort of in-house Chase mod.

[nativelasvegan]

OHWAMU, tell me about it. There's this guy called Federal Withholding, Social Security and Medicare who eat a HUGE portion of my gross income. The same people take money out of my husband's check? WTF? I stopped the COBRA plan we had from the husband's last employer because the $1,000+ a month was not doable. Legislation needs to be changed to the borrower's NET income, not gross. Until that happens, I am going to have a difficult time qualify for this wonder Presidential program. If I had to bet, a lot of people are in the same boat!

[fredk]

Originally Posted by nativelasvegan

OHWAMU, tell me about it. There's this guy called Federal Withholding, Social Security and Medicare who eat a HUGE portion of my gross income. The same people take money out of my husband's check? WTF? I stopped the COBRA plan we had from the husband's last employer because the $1,000+ a month was not doable. Legislation needs to be changed to the borrower's NET income, not gross. Until that happens, I am going to have a difficult time qualify for this wonder Presidential program. If I had to bet, a lot of people are in the same boat!

Be very carefiu what you ask for. Don't think for 1 minute that if they used NET that the % would stay at 31. If you believe that you aren't being realistic.

[Marie T]

Originally Posted by fredk

Be very carefiu what you ask for. Don't think for 1 minute that if they used NET that the % would stay at 31. If you believe that you aren't being realistic.

I have been told that Chase always uses gross and they use overtime. If they did not, we would probably be denied again for insuffucient income. I agree...if they were using net income, it would not be 31% of net income.

[Sunbeam]

The bank will only use net income to determine eligibility of you don't qualify for HAMP and have some other hardship. They "can" use net if they do in-house modification. There is no rule or legislation regarding inhouse mods that I am aware of. For me, getting an in-house modification was like a gift....I get to keep my house and someone somewhere looked at my entire situation and not just the 31% dti. But, if you qualify for HAMP, 31% would still be a homesaver.

[exhausted girlfriend]

it does seem as if the in house used "net" because our payments are a lot lower than our 31% of gross. worked out for us because we were saving 11% of our paychecks.