Final mod approved w/ balloon payment

[IRAKENJI]

Hi everyone! I'm finally able to post on this thread. Our final modification came in Oct 9 after over a year of negotiations with Chase. Our original loan amount was $611K with an int rate of 7.335% (5/1 ARM, 40 years) not due to adjust till 2011 but did not want to wait that far for a loan mod. My wife is not on the loan, just me. To make a long story short, here are the final loan mod terms:

1-5 years = 4.33% (PITI = $3712.04)
6-27 years = 5% (PITI =$3910)
28-40 years = no rate given (40 year loan term)

Here is the catch: a balloon payment in the amount of $297,000 due and payable when the loan matures in July 2036.

I called Chase because I was not sure about the balloon payment. Chase said it's basically the difference of the old payment to the new modified payment which is a difference of about $1100 compounded with interest tacked in to the loan.

It is a no-win situation. Yes, they kinda made the payments somewhat affordable but will "collect" the difference when the loan matures. So, if I refi 10-15 years down the road and still has a loan balance of let say $400K, then the balloon payment of $297K will be added along with the closing costs with the refi loan amount ($400K + $297K = $697K!!!). I'm no math genius but that puts me back to square one again. I will be receiving my social security payment then and still owe that much? Wow!!!

So, my wife and I decided not take the final loan mod and will short sale our house instead. We bought the house back in 2006 for $688K put 10% down payment. The house now is worth about $400-$420K. It just does not make sense for us to pay for a mortgage balance of $600K and the house is only worth about $400K. We love our house but we are just being practical.

We put the house on the market last week and have an offer for $400K that my realtor will present to the lender.

This site is awesome. I was able to get alot of information and knowledge

So, there you go.. that is our situation. What do you guys think about not taking the final load mod?

Thanks.

[Do not want to lose it]

Thanks for the info
What state are you in?
At least now you can make plans and get on with your lives.
Good Luck!
Keep us posted on the short sale.

[smit5454]

I say tell them to go "F" themselves. That is the most ridiculous thing I have ever heard. Is that even within guidelines? This article talks about balloon payment, but using it as an option if interest rate deduction is not enough. I would wonder why other people are getting 2-2.3% years 1 to 5, but you are getting 4+% and having to also pay $297k down the road? I say hand it over to them, let them eat $300+K, then go rent a palace from somebody.

Email your story to support@hmpadmin.com

http://www.acorn.org/fileadmin/Fair_...hitePaper3.pdf

[smit5454]

How are loans modified pursuant to the HAMP?
1. Interest rate reduction. First, a servicer must attempt to reduce the interest rate for the mortgage in increments of 0.125% (subject to a floor of 2%) until a mortgage debt-to-income ratio (Front-End DTI Ratio) of 31% is reached. For purposes of calculating Front-End DTI Ratio, mortgage debt includes principal, interest, taxes, insurance, homeowners association and/or condominium fees and certain arrearages. Mortgage insurance premiums and debt service on subordinate liens are not included. If the interest rate required to reach a Front-End DTI Ratio of 31% is above an interest rate cap (set at the lesser of: (a) the original contractual rate, or, (b) the current Freddie Mac Primary Mortgage
Market Survey rate) the modified rate will become the interest rate for the remainder of the term of the mortgage. If the modified interest rate is below the cap set forth above, the modified rate will remain in effect for the first five years and then increase by 1% per year until it reaches the level of the cap, at which time it will be fixed.
2. Extension of term or amortization. If a Front-End DTI Ratio of 31% cannot be reached by lowering the interest rate to 2%, servicers may extend the term of the mortgage to up to 40 years. If loan terms prohibit extending the term, the amortization period can be increased to up to 40 years, which will result in a balloon payment that will be due upon the maturity or other termination of the
loan.
3. Forbearance of principal. If the above steps still do not result in a Front-End DTI Ratio of less than 31%, servicers may forbear principal, which would then become due upon the maturity or other dermination of the loan. The guidelines mandate that interest cannot accrue on the forbearance amount.
4. Trial period. After the modified interest rate is determined, the borrower engages in a trial period lasting 90 days, or 3 payment periods, during which the borrower must make payments at the modified terms. If the borrower is current at the end of the trial period, the modification is then effective.

[smit5454]

This is another person's post. Notice the much lower interest rate, so the balloon payment is not that substantial.

2% 1-5 year
3% 6 year
4% 7 year
4.87% 8-40 year

Ballon payment of 30,200 due at time of sale, refi or on the maturity date.

Just have to sign and and get noterized and back in by the 3rd of November.

Still trying to find out if I can skip my 6th trail payment. I really hope I can but I dont think so.

Its weird...I just called loss mit today about the "we don't have all your docs" thing again (2 in 4 days) and they said to ignore it and that they had every thing they needed.......why didn;t she mention that I was approved?

[IRAKENJI]

Thank you Smit5454 for the input. It's a crazy modification, isn't it? The balloon payment is a killer. Is there any way of getting around that? They put us on a trial payment of $3,435.46 for 3 months but it ended up to 5 months. Then, the final mod amount is about $280 more than the trial payment. In any case, with the "suggested" mod terms with a balloon payment, it is not feasable for us to keep the property. We've become house slave it's not even funny.

[smit5454]

I would email that address I posted. You will get a call from the executive team. Then tell them to fix it or they can eat $300k.

[exhausted girlfriend]

smit, i have learned that the reps don't even look at your file unless you ask for something specific. I am about to pay trial payment #7. When i call to get status of my file, I get the cursory, "just make all 3 of your payments and at the end of the 3 months, they will review your file for the modification", then I routinely have to tell them that I know this and are about to make payment # 7, so will you please look at my file and see if there are any notes, or things I should know? Then, they finally take a look and give me some real information. They are something else. You really have to be on top of people.

[smit5454]

Have you used this?

support@hmpadmin.com

I now have someone I can "wear out" to get this done. I am going to be such a big pain in the A they'll approve it to shut me up. I sent another email and copied my Chase analyst indicating their lack of compliance (I printed and pasted the payment history showing they have been taking some of my trial payments and putting it towards my mortgage, which is a no-no as far as I can tell).

10 minutes later I got an email from her saying she would reach out to my analyst again.

[jakelabry]

Originally Posted by IRAKENJI

Thank you Smit5454 for the input. It's a crazy modification, isn't it? The balloon payment is a killer. Is there any way of getting around that? They put us on a trial payment of $3,435.46 for 3 months but it ended up to 5 months. Then, the final mod amount is about $280 more than the trial payment. In any case, with the "suggested" mod terms with a balloon payment, it is not feasable for us to keep the property. We've become house slave it's not even funny.

Currently there appears to be no way to get around the balloon payment. It's all in the HAMP guidelines - that is the last step they can take to get your payment down to 31% of gross. Apparently your income cannot support fully amortized payments on 611K so this what HAMP permits them to do. Is it worth it? Entirely up to you - pay rent to a landlord or pay rent to the bank. I know which one I would choose!

[fla borrower]

I rec'd a preliminary final mod after a year and 1/2/ Here's the catch!Apparently Chase is pushing the Treasury Dept. to approve interest only mods again!!! Didn't his already ruin the housing market once before????

Here is the article I found about regarding this lovely new tactic of Chase

Real Estate Blog - OMG! Interest Only Loan Modifications? Have we learned nothing?!-

I will later let you know of my exact terms when I receive them. I know it is around 2.43% for 10 years and then P&I agter year 11 is inlcuded. The underwriter said it was a negative amortization becuase that is what I have currently on my mortgage. They can go scratch, I am not agreeing to this s***!

I called the hamp admin and filed another complaint.

[IRAKENJI]

Thank you jakelabry for your input. Well, I know that banks are out to make money and they will surely make LOTS of money if we accept their terms which we don't plan on doing.

My credit is already shut (prior to being delinquent, my credit was 785, now my FICO is 620) so I don't plan making anymore payments while we're in the short sale process. During our trial payments, we were also being reported to the credit bureau as delinquent though we're on time making the trial payment.

I talked to a loan officer, and she said if the short sale is successful and we end up walking away from the property with no more ties from the loan, then we'll be able to buy again in 12-18 months. For meantime, my wife and I will plan saving money (difference of mortgage vs rent is about $2400) so we plan on saving at least $2500-$2800 per month if we rent. Do the math and that is a good chunk of $ in 2-3 years

[c150000]

smit5454
is that email address for servicers only???

[ama125]

Originally Posted by cheryl150000

smit5454
is that email address for servicers only???

Technically it is for servicers, but I have emailed it myself. I never identified myself as a homeowner though. I was asking questions about the NPV test and whether or not it could be disclosed if the borrower requested it. Which, by the way, I got a very stern DO NOT DISCLOSE warning in response.

[cliffdweller]

Originally Posted by fla borrower

I rec'd a preliminary final mod after a year and 1/2/ Here's the catch!Apparently Chase is pushing the Treasury Dept. to approve interest only mods again!!! Didn't his already ruin the housing market once before????

Here is the article I found about regarding this lovely new tactic of Chase

Real Estate Blog - OMG! Interest Only Loan Modifications? Have we learned nothing?!-

I will later let you know of my exact terms when I receive them. I know it is around 2.43% for 10 years and then P&I agter year 11 is inlcuded. The underwriter said it was a negative amortization becuase that is what I have currently on my mortgage. They can go scratch, I am not agreeing to this s***!

I called the hamp admin and filed another complaint.

We have some serious issues we need to correct with our house...foundation, plumbing, electrical. Our credit is now shot and we have NO credit cards, so an interest only payment will allow us
to spend some money on the house....to improve the value....We CAN qualify for a regular modification, but would like the option of an interest only payment. Slashed wages hurt us more than anything.

[ciscokidinsf]

Why is everyone so surprised? I was one of the very first to get a Permanent Modification (EMC) and I clearly spelled out that they do want a balloon payment.

My Modification Terms with EMC - Need your opinion TODAY!

I got exactly the same offer as the person who started the thread. I rejected it. Then, I attended a NACA event in the hope for a slightly better deal (like a 40 yr mortgage or something) but got exactly the same payment amount and they wanted another 90 day trial period. And they weren't even budging on the 2nd mortgage with a crazy 11% interest. Forget it. I am also doing a short sale. Yes I do want to stay in my house, but the permanent modification offers from EMC/Chase are ludicrous, and really, since they paid back their TARP loans, they don't even have to offer anything reasonable. Please don't expect anything. I was at the NACA event, and of all the people in their Tables no one got anything. I 'accepted' the offer just so they will stop charging me late fees since my first 'trial' payment is due December 1st.

Don't get your hopes up too much. Sorry to be a bearer of bad news.

[briknope]

Originally Posted by IRAKENJI

Hi everyone! I'm finally able to post on this thread. Our final modification came in Oct 9 after over a year of negotiations with Chase. Our original loan amount was $611K with an int rate of 7.335% (5/1 ARM, 40 years) not due to adjust till 2011 but did not want to wait that far for a loan mod. My wife is not on the loan, just me. To make a long story short, here are the final loan mod terms:

1-5 years = 4.33% (PITI = $3712.04)
6-27 years = 5% (PITI =$3910)
28-40 years = no rate given (40 year loan term)

Here is the catch: a balloon payment in the amount of $297,000 due and payable when the loan matures in July 2036.

I called Chase because I was not sure about the balloon payment. Chase said it's basically the difference of the old payment to the new modified payment which is a difference of about $1100 compounded with interest tacked in to the loan.

It is a no-win situation. Yes, they kinda made the payments somewhat affordable but will "collect" the difference when the loan matures. So, if I refi 10-15 years down the road and still has a loan balance of let say $400K, then the balloon payment of $297K will be added along with the closing costs with the refi loan amount ($400K + $297K = $697K!!!). I'm no math genius but that puts me back to square one again. I will be receiving my social security payment then and still owe that much? Wow!!!

So, my wife and I decided not take the final loan mod and will short sale our house instead. We bought the house back in 2006 for $688K put 10% down payment. The house now is worth about $400-$420K. It just does not make sense for us to pay for a mortgage balance of $600K and the house is only worth about $400K. We love our house but we are just being practical.

We put the house on the market last week and have an offer for $400K that my realtor will present to the lender.

This site is awesome. I was able to get alot of information and knowledge

So, there you go.. that is our situation. What do you guys think about not taking the final load mod?

Thanks.

Big question is what do you think the home MAY be worth in 10-15 years? In that length of time you may be in a good (but not great) position by then.

[ciscokidinsf]

Originally Posted by briknope

Big question is what do you think the home MAY be worth in 10-15 years? In that length of time you may be in a good (but not great) position by then.

Doesn't matter. It is a bad deal, period. First, you cannot ever leave EMC/Chase/WAMU, because a refi triggers the balloon payment and then, even if you paid your '30 year' mortgage, you still have near $300K due after, with no reset option. You cannot sell for almost 20 years just to be even! Its a sucker's bet because the bank doesn't lose a penny. You do. Renting is a better deal compared to this.

Trust me, I agonized for 10 days when I got my permanent modification offer, talked to an attorney, a Real Estate and an Accountant. Even if I let my 2nd go unpaid, it is a bad deal.

Some people are getting a better deals, but only if Freddie and Fannie back their loans and they are underwater beyond 30-40% Other than that, everyone else is up s.h.i.t.'s creek without a paddle.

[IRAKENJI]

Yes, it is a bad deal all the way around. We're better off renting and saving the difference from paying mortgage to renting (about $2500). Since I'm the only one on the loan, we will try to buy again when the market is "good" and my wife will be the primary barrower. I was told my a loan officer that as long as they don't put a "judgement" against me after the short sale and keep up with our credit/payment history, we should be able to buy in 18-24 months as per VA guidelines (I hope so).

Again, thanks for the input.

[Chased around and around]

On the balloon payments I look at it like this. If your interest is very low for say 5-10 years, after making payments for those years you will make some kind of dent in the principle. Maybe just maybe our values may be back to where we started when we attempted to fill the American dream and buy the banks property. Then you could refi into a fixed loan or maybe just sell and move on.

No one has idea where our country will be in 10 years, I know the government will have us in BK but maybe the housing market may rebound.

I say take the mod, make your payments, if all else fails a few years down the road, stop payments, live free then before foreclosure file BK.

I plan to be thorn in chases side for many years to come...