Chase Modification Approved then Denied

[JJsFrustration]

I posted a similar thread in the Loan Modification forum but thought this could be better discussed in this forum.

I have been trying to get a Loan Modification through WAMU/Chase since 04/09. I have confirmed that it is a FreddieMac loan.

Here is a timeline of the events:

April - Found out my wife was going to be layed off from her teaching position in June. Filled out and faxed forms and required documents.

Couple weeks later received a letter saying I was missing some documents. I spoke to someone, and faxed everything they said I was missing the next day. Followed up the following day to confirm that they received it which they did. Was told it could take 4-6 weeks to process. I called once or twice a week and was told it was being reviewed.

June - On one of my weekly phone calls, spoke to someone who said that it appeared to him that my two packets of paperwork never got married up together. He suggested that I start over. I questioned how could a dozen different people tell me it was in the works and now he's telling me it's not. He said to trust him, he knows what he's talking about and I should start over. He mentions that they put in an automated fax and my documents would now go directly into the system. I start completely over and re-send all documents.

I follow up with him, he had me fax a couple more documents and then tells me everything looks good, it appears we are perfect candidates and he is sending it to processing/underwriting.

July/August I continued making calls once or twice a week to check up on it. I kept getting told it's in Underwriting and they won't have any more information until Underwriting inputs notes into the system. And there is no way to contact Underwriting.

September - During one of my routine calls, I got ahold of someone who says that it appears to her that my file was never sent to Underwriting. She said she looked through all of the notes and did not see the code that indicates that it was sent. Of course, I thoroughly explain my frustrations and get told that there's nothing she can do. She see's that all of the documents are in my file so she'll send it to Underwriting now.

A week or two later I get a call from a represtative from the Escalation Dept. She says she needs updated bank statements and a couple other documents updated since they are now expired.

I fax all of the required documents and confirm wtih her that they've been received.

October - I now have a directly line to the Escalation Dept. Rep so I keep checking in. Approx Oct 9th, I get a call from her saying that the modification has been "Conditionally Approved." She says the condition is that we get our property taxes paid up to date. Then she says hold on, the BPO hasn't come back yet, so we have to make sure that comes back ok. She said it should just take a few days.

I kept checking in twice a week and get told BPO hasn't come back. On Oct 28, she calls and says the BPO is back and has been sent to Underwriting for Final Review. Next day, she called and said that we had been denied. When I asked why, she was unable to give me any details. She said they had tried everything, reducing my rate to 2%, extending loan to 40 years, adding baloon payment, etc… and still couldn't get it to work out. When I said this doesn't make any sense, because I was approved until the BPO came back, she couldn't answer that. I asked to speak her supervisor and she said she would have her Supervisor call me.

Supervisor called back next day and said she would review everything and get back to me tomorrow morning. She said if I don't qualify for the Loan Mod, maybe there's something else they can do.

On 10/30, I spoke to the supervisor and she said that there was nothing they could do in her department but she was going to send my file to a different department that has slightly different guidelines to follow and maybe they were going to be able to do something. I asked what department she was in and she said "Imminent Default." I asked what department she was sending it to and she said "Loss Mitigation." She said she would call me back that afternoon or Monday morning (today, 11/2). I haven't received a call so far today and have left a couple messages on her direct line.

Here are some details on the loan:

Principal balance is approx. 392K, loan was originated 10/07 at 400K.
We have been making the payment during the last week of the month for the past several months so there are approx $1,200 of late charges added.
5/1 ARM 6.375%
Monthly Payment: $2495

My wife is a teacher but was layed off in June. She is collecting $475/week unemployment compensation.
I work full time but have had substantial salary cuts. Current salary is approx $3900/month gross. I have been working some part time work on an on-call basis but it hasn't been much lately and I don't know if this has been factored into my monthly income.

We have also been receiving financial help from my wife's parents in order to make our mortgage payments. This is the only reason why we are current, otherwise we wouldn't have been able to make our payments each month. I don't know if this is being factored into our income or not.

I also do not know what the value of the home came in at. I do think it is more than the principal owed but I do not know by how much. I would guess low to mid 400K.

My guess is that we are being denied because we are not late on our payments and we are not underwater. It just makes no sense why Chase would not want to help keep it that way. There is no way we'll be able to make payments for much longer.

[MHAP76]

Did you apply under MHAP? Loss mitigation was the one who approved me for TRIAL plan for MHAP. You should call them: 877-419-6495.

[JJsFrustration]

Originally Posted by MHAP76

Did you apply under MHAP? Loss mitigation was the one who approved me for TRIAL plan for MHAP. You should call them: 877-419-6495.

Yes, the application/documentation is for MHAP. Thanks for the contact number. I'm still hoping to hear back from the Supervisor with the Imminent Default department but will try contacting Loss Mitigation if I don't hear from her by tomorrow.

[kbspots]

Have read others on this website say they had been told they had to be two months late and not current to get a mod. Don't know if this is true, but is just what I read somewhere on this site.

[JJsFrustration]

Originally Posted by kbspots

Have read others on this website say they had been told they had to be two months late and not current to get a mod. Don't know if this is true, but is just what I read somewhere on this site.

I know. I've read and heard stories about this as well. I wish I knew for sure that it would be the right thing to do. I've been hesitant to do this even though I'd love to be able to skip a month to try to get caught up on other bills. I have a couple of 50% settlement offers on credit cards that I'd love to accept but don't have the cash to do it. If I skipped a mortgage payment I'd be able to. I just paid the October payment on 10/30.

[art4ari]

Hi JJ! I have questions for you since we are almost in the same timeline...

1. Did you have to have an internal BOP?
2. Where in your process your file went to the resolution team? Mine is there.


thanks...

[flyingpuppy99]

Loss mit is who my mod finaly went through. I was just approved 2 weeks ago. Made my 6th and final trial payment a week ago. Dec I start my new payments.

[exhausted girlfriend]

JJsFrustration,

I think there may be some validity to what the rep was trying to say. I suggest you do the math yourself and see what kind of income is going to be needed to fit into the guidelines to make it work. i am thinking that 31% of your income is roughly 1275. I imagine that is difficult for the bank to get your PITI down to this amount. Play with the numbers and consider starting over.

[c150000]

exhausted girlfriend
if they make 3900month plus 475 a week how is it 1275.00 at 31%
or did i miss something?

[exhausted girlfriend]

c150000,

They dont count unemployment income.

[davephx]

The problem may be income too low.
On $392,000 at 2% 40 years you have to have pi of about 1187.

But from the about 1275 you have to deduct taxes and insurance.
That probably puts it way below what is needed to amortize without a lot of forbearance.

[exhausted girlfriend]

Davephx,

That is kind of what i was thinking. It may work for them to find a way to increase their income (probably not by much) to get this approved. There are many stall tactics to use while working on this too.

[c150000]

they dont count unemployment why not?
thats crazy!

[exhausted girlfriend]

unemployment isnt permanent income. by the time they get the loan mod together, your benefits could be gone.

[JJsFrustration]

Originally Posted by exhausted girlfriend

unemployment isnt permanent income. by the time they get the loan mod together, your benefits could be gone.

When I started the process I didn't know whether or not they counted unemployment compensation as part of the monthly income. And I still don't know. I haven't been able to find out what they are counting as income. I've been working part time/on-call as well, I don't know whether they are counting that either. What I do know is they said I was "Conditionally Approved" with the condition being bringing my property taxes current. That was the case until they got the BPO back. So the 31% math equation worked out fine until they saw how much the house was worth. I'm pretty sure it was higher than my principal balance but I don't know by how much. I know it's not a whole lot, probably 10-20%. But I'm also less than 30 days late on my payments so I'm guessing they don't have enough incentive to work it out.

[CHANLY]

I am waiting to hear about permanent mod. I asked about the possibility of it being denied and was told any equity in the property is a key factor ie if you have equity then you might not fit into this program.

[MyHAMP]

Originally Posted by CHANLY

I am waiting to hear about permanent mod. I asked about the possibility of it being denied and was told any equity in the property is a key factor ie if you have equity then you might not fit into this program.

It's not as easy is that. Before the bank can actually GET to that equity, many other expenses (realtor, cost of foreclosure etc.) come into play.

The more equity you have, the harder it is to pass the NPV-test. That's correct. But just having ANY equity doesn't mean foreclosure creates the bigger cash-flow.

[JJsFrustration]

Originally Posted by art4ari

Hi JJ! I have questions for you since we are almost in the same timeline...

1. Did you have to have an internal BOP?
2. Where in your process your file went to the resolution team? Mine is there.


thanks...

1. Not sure what you mean by Internal BOP?

2. I got the call from the "Escalation Department" in September.

April-June, I was told my file was being reviewed.

June-During one of my routine calls, a gentlemen who said "He knew what he was talking about" said that it appeared by two packets of documents were never married up together and I should start over. He helped me through this process, said he had everything they needed and sent it to processing.

July-August-Processing kept telling me it was in Underwriting and wouldn't have any other info until Underwriting updates the notes.

Late August-During one of my routine calls, a lady says that it doesn't appear that my file was ever sent to Underwriting. She said she reviewed all of my notes and didn't see the "Code Number" that indicated it had been sent. She said she could view all of my documents, it looked like everything was there and she would send it now.

September-Rep from Escalation department called and had me fax over current financial docs, bank statements, etc… I've been dealing with that department since.

Are you dealing with the "Executive Resolution Team"? If so, how did you get in contact with them?

[JJsFrustration]

Originally Posted by MyHAMP

It's not as easy is that. Before the bank can actually GET to that equity, many other expenses (realtor, cost of foreclosure etc.) come into play.

The more equity you have, the harder it is to pass the NPV-test. That's correct. But just having ANY equity doesn't mean foreclosure creates the bigger cash-flow.

I'm thinking the equity plus the fact that we are current on our mortgage is the problem. Nobody has said that it didn't pass the NPV-test but maybe that's the case. The supervisor that was supposed to call me back was out sick today so I'll see what tomorrow brings.

Do you think that if it failed the NPV test they would just say that instead of saying they are sending it to Loss Mitigation to see if they can help?

[MyHAMP]

Originally Posted by JJsFrustration

I'm thinking the equity plus the fact that we are current on our mortgage is the problem. Nobody has said that it didn't pass the NPV-test but maybe that's the case. The supervisor that was supposed to call me back was out sick today so I'll see what tomorrow brings.

Do you think that if it failed the NPV test they would just say that instead of saying they are sending it to Loss Mitigation to see if they can help?

Usually, it's the case that if you don't pass the NPV, they'll tell you so.
Keep in mind that the NPV-test is one the things they do right at the beginning when you apply. Being denied due to NPV after months of being in the process is unlikely and if the guidelines are followed correctly, actually impossible.

There are some lenders out there who simply aren't considering borrowers for a modification if they are current but if they already provided you with the HAMP documentation, I don't think that's the reason, either.

Since you're on HAMP, they have to finish what they started and when you fail the NPV, you will be notified.

My best guess why you're not seeing progress is that your lender is not able to handle the number of applications (backlog).

[MyHAMP]

OK, I just carefully read the initial post:

"I kept checking in twice a week and get told BPO hasn't come back. On Oct 28, she calls and says the BPO is back and has been sent to Underwriting for Final Review. Next day, she called and said that we had been denied. When I asked why, she was unable to give me any details. She said they had tried everything, reducing my rate to 2%, extending loan to 40 years, adding baloon payment, etc… and still couldn't get it to work out. When I said this doesn't make any sense, because I was approved until the BPO came back, she couldn't answer that. I asked to speak her supervisor and she said she would have her Supervisor call me."

So you didn't actually start HAMP in April, right? It looks like you are stuck in the NPV right now. The indication that you would need a forbearance AND having equity AND not being late is a bad sign.

The forbearance would reduce the interest bearing amount. That doesn't score too well in the NPV in combination with a high property value.

If the NPV is negative, the guidelines state that they can not forbear any amount that would create an interest bearing amount which is lower than the current market value of the property. Now since your entire loan - without forbearance - is already lower, I don't think they are actually ALLOWED to approve a HAMP.

See Q71 on this link:

https://www.hmpadmin.com/portal/docs...r/hampfaqs.pdf

So a negative NPV would disqualify you from HAMP.

[davephx]

I think MyHAMP is right and its a combination of the appraisal (BPO forget what it stands for) not having enough equity combined with too low income with the forbearance they even tried (the balloon) and still didn't work. And being current hurts sadly

Forbearances are rare. It actually sounds like Chase is actually trying to make it work vs what others have reported. Chase even just did a good mod on another thread but the person isn't sure she wants to take it.

From what was said it was as I was concerned about yesterday about income too low. That makes the forbearance needed but can't go above market value and per what they said even that didn't get piti down to 31% of gross

[MyHAMP]

Originally Posted by davephx

From what was said it was as I was concerned about yesterday about income too low. That makes the forbearance needed but can't go above market value and per what they said even that didn't get piti down to 31% of gross

Guess you meant "below" market-value..

The problem is that the LTV already IS below 100% even WITHOUT a forbearance since there is equity. If the NPV is positive, the lender could still decide to approve HAMP (although not required) but I think if NPV is negative AND LTV below 100%, HAMP isn't even allowed - according to Q71, previous link.

[gordilox86]

If your loan is owned by Freddie Mac it doesn't matter what Chase wants.

It sounds to me like you qualify for HAMP. What exact reason were you given for denial under HAMP?

If you post your "Original Terms" and your Trial Payment amounts here I will give you my take on whether or not you failed NPV.

Good luck.

[MyHAMP]

Originally Posted by gordilox86

If your loan is owned by Freddie Mac it doesn't matter what Chase wants.

It sounds to me like you qualify for HAMP.

Would be great - but if the NPV is negative and there is equity, Chase COULDN'T even modify that loan to HAMP:

"The NPV test will drive the maximum amount a servicer may forbear under HAMP. If the NPV-test is negative and the servicer chooses to modify the loan, the principal forbearance may not reduce the interest-bearing principal to less than 100 percent of the mark-to-market LTV ratio."

Source: Q71, page 18:

https://www.hmpadmin.com/portal/docs...r/hampfaqs.pdf