I am self-employed and my income went down 70% due to the economy and impact on my industry. I am sole provider for my household. I was told by nonprofit housing counselor in my state that I would not qualify for a HAMP Mod. I also, to the best of my ability, entered my eligibility data on the HAMP site and the system calculated the data and sent a response that I likely would not qualify. For these reasons, I let precious months go by without applying for a Mod on my Chase 1st (an unfortunate decision as I could have saved myself $1,000+ for mortgage "catch-up" as described below, giving us more to live on rather than compounding our struggles).
When finally my seasonal business allowed me to amass enough money to catch up on around 6 mortgage payments I was behind on, I paid over $11,000 to the company that Chase appoints to handle their foreclosure which did stop the auction. I resumed regular monthly payments thereafter. The unfortunate thing is that the $11,000 just about wiped me out as I also caught up for the several months that i was behind on my HELOC on top of this. So, where this money could have kept us going for several months, believing I would not qualify for a Mod, I threw all my money at the problem leaving us broke again as we headed into our low season for my business. Needless to say, it wasn't long before we were right back where we started--behind on both loans. A short-sale was out for us for a number of reasons: A. We had nowhere to go and with the hits to my credit, who would rent to us; 2. The $3k you get to move out would not have been enough to move us, place deposits, pay initial rent; 3. I have a 3rd with a private party who would not approve the short-sale. I was considering a Chapter 7 BK but was not keen on the idea as that would not solve our housing problem.
Late last year (early Dec. 2011), after reading that The White House was pressuring HAMP participating lenders to approve more Mods, having by then missed around 7 mortgage payments on my Chase 1st again, I decided I had nothing to lose by applying for a HAMP Mod. I had a number of unconventional challenges: 1. I had not yet had my 2011 tax returns prepared (required by Chase from self-employed). They ask for your "latest" tax return so I had to submit my 2010 returns. I did not know if that would fly, but it did. 2. They asked for the 2 latest bank statements. These would have shown close to zero income because of being off-season for my business. I decided to be proactive and included a letter of explanation explaining that I might have income of over $20K in a month "in season" and "$0" for a few months in "off season". I therefore explained that I was including a full 12 months of bank accounts for my business checking, personal checking, joint checking and savings account. I noted all deposits and made certain that all transfers between accounts were noted on the accounts on both sides of the transaction. I used PDF maker software (Adobe Acrobat Pro but there are now cheaper options) for each bank statement and a notes tool (only in PRO addition) to make notes regarding each deposit, transfer and, where relevant, debit/check.
I had downloaded all of these in PDF form from Online Banking but it was the Notes tool in PDF maker that I needed. I then ran a 12 month date range of all deposits to my business checking account and my business PayPal account, made PDFs of these and made notes. I wanted them to clearly see that my deposits over 2 months totaled enough to afford a modified 1st at 31% of income. I feel that had I not done this, my Mod might not have been approved. Even though all the deposits were on my bank statements, there was just too much to wade through and all the transfers between accounts, despite the notes, could have caused my actual income to have been miscalculated.
I also was concerned that I might not qualify because my HELOC had just re-set Jan. 1 from around $550 to around $1,550 (yes, it tripled). I disclosed this in my December Chase Mod application with an added note, but to my surprise, they only considered what my HELOC payment had been and still was as of December since that is when I applied.
I also submitted a detailed hardship letter with PDF copies of articles pulled from the web about the industry-wide drop in my industry since the economy nosedived. I was concerned that my hardship letter was not going to help my case which is why I approached it this way. The reason why I was concerned about this point is that my income decline wasn't sudden tied to an event like being laid-off or a newly diagnosed, serious medical problem. It had steadily begun spiraling down starting in 2007 a few months into the economic decline. I also included a table that i inserted into the letter (it was around 4 typed pages) showing my most recent sales showing a slight up-tick compared to the year before and attached an article that the industry was starting to recover.
They asked for a few months of utility bills (I forget how many), business bills, and a business P&L which I put together myself (it was easy and you can get a format by a Google search if you do not have accounting software that will do it). By my calculations, though, I wasn't sure if my P&L showed enough income to meet the eligibility requirements and, of course, it had to match up to my bank statements. What I did not know was exactly how they do their calculations and adjustments and exactly how much the modified mortgage payment they would offer might be to ensure that my income was not too high or too low. Also, on the Income/Expense portion of the Request for Modification, I was concerned because my household expenses totaled $700 less than HH income based on the pre-reset payment on my HELOC and, post HELOC re-set, my HH expenses exceeded my HH income by $100. I listed my pre-reset hELOC total on the form but with an asterisk noting what it was raising up to Jan.1. The Chase Rep I who took my initial trial application said they were only taking my then CURRENT HELOC into consideration so, in hindsight, I am not sure I would have added the not about the re-set which might have just confused things.
So . . . I hope you are getting the gist: had I listened to the housing counselor or just gone by my own calculations, including on the HAMP site eligibility calculator, I would have never pursued the Mod or would have given up along the way!
My application for the Trial Mod was early November 2011. I received a letter requesting Trial Mod paperwork back about 3 weeks later (late November). I received notice that the Trial was approved in mid-January. My 1st 3-month trial payment was for March 1, 2012. So it took around just 60 days to be approved for the trial and 90 days before my 1st trial payment was scheduled. I made my 3 payments on time over the phone each month. This was a reduction from around $1,360 a month (including impounds) to around $1,045 (including impounds). The $1,360 was INTEREST ONLY since my first reset after 3 years during which time I was paying around $2,000+ every month. My real concern was that my Chase 1st was due to reset from interest only to P&I next year, 2013. My Chase adjustment letters said my payments for P&I would go up to $2,175 to be fully amortized by maturity. For my HH Assets, I used garage sale value on personal property (jewelry, art, home office equipment, HH goods which is what an attorney advised as that is what these items would likely sell for (and the banks are really only interested in your liquid assets like pension fund, whole life insurance, stocks & bonds, etc. which I had none of).
I had not made any 1st mortgage payment since maybe June or July 2011 so I was behind by around 6 month by the time my trial approval notice arrived and by around 8 months when my 1st Trial payments started. At the time that my Permanent Mod was approved (July 2012), I was behind around 1 full year and all of these payments have been put onto the back of the loan where I will never feel them since I will be close to 90 in 25 years. (Note: so had I done this sooner, the $11K I caught up my 1st with last time, could have been used to live on and made our lives less of a struggle as they just would have been put onto the back of the loan too I'm sure).
I successfully completed my 3-month trial on May 1 (6 months from when I first applied for the Trial). Eleven weeks AFTER completion of the trial, just last Friday, I received my Permanent Mod docs! I had nervously posted here because I saw at least one post from this year from someone who received their permanent mod dics within a week of completing their trial. That person also was able to see the status of their Mod approval in their Chase online account but I wasn't. Turns out, my account was in a frozen status due to having gotten as far behind as an Auction date so they freeze your account until you get your permanent mod so this is why my Mod Status didn't display. it likely took 10 more weeks for my file to be evaluated by Chase's remediation team because I was self-employed and submitted 12 months documentation (as compared with someone just submitting a W-2 and 2 mos. bank statements).
TERMS OF PERMANENT MOD
My Trial Mod had included around $170,000K principal forgiveness over 3 years which, were we to ever sell our home, would be very meaningful as it could mean regaining equity in what is now an underwater value of -$300K+. However, the Permanent Mod does not offer me this. Here are the terms:
1. Prior Principal and interest: $2,253
2. New P&I: $730
3. Prior Interest Rate: 2.755
4. New Interest Rate: 2.0%
5. Prior Arm Index: 0.46%
6. New ARM index: Not Applicable
7. New principal balance of Note (1st only): $485,000 (rounded for this post)
8. New principal bal includes all arrearages including impounds except late charges)
9. $245,000 of new principal balance (rounded for this post) will deferred for 24 years (but will be old if home is sold).
10. 1st payment due Aug. 1, 2012
11. Final balloon payment of $380,000 (rounded for this post) due on the new maturity date
12. Years 1-5: interest 2%, P&I $729.98, plus taxes & homeowners insurance ("impounds") = $1,045 on 60 payments
13. Years 6: interest 3%, P&I $848, plus impounds = "may adjust Aug. 2017" on 12 payments
14. Years 7-24: interest 4%, P&I $973, plus impounds "may adjust Aug. 2018 periodically" on 219 payments
15. "Not withstanding the foregoing, $380,000 (rounded for this post) will be due on new maturity date in 30 years.
16. $1,000 year credit to me for 5 years if I pay everything due when do.
So, the wild card is that I am not sure what my payments will actually total in years 6-24 since the interest rate is subject to adjustment. If the market comes back within 6 years and we decide to sell, that may not be a concern. What I am not sure of is whether 3% and 4% respectively are the interest rate caps which I will need to ask my Chase Rep who has been nothing short of fantastic every step of the way.
YOUR TAKEAWAYS FROM THIS POST SHOULD BE:
1. Don't assume you aren't going to be eligible no matter what your own calculations are and no matter what even a Housing Counselor advises you.
2. You do not need to pay anyone to help you provided you are thorough and detailed. I got my permanent mod by myself my first time trying and despite many challenges that might have affected my eligibility.
3. I do not subscribe to the theory of "just give them what they ask for" as they may turn you down without asking for supporting documentation because an underwriter gleans that you are not eligible from your incomplete picture. I over-provided what they asked for but certainly would have been found ineligible based on only what they did ask for since it would have painted a negative and incomplete picture (due to the seasonality of my business).
4. I suggest typing whatever you can; organizing sections with cover sheets describing the section that follows (i.e. "Last 12 months business bank deposits from online banking for my seasonal business" and including any explanations that will help the underwriter understand the relevancy of each document and explains anything unusual such as funds that were borrowed not earned, unusual one-time expenses and what they were for, explanation of drop in income, etc. Keep it neat and organized. If you do not have a fax or copier, go to your local Kinko's or UPS Store to use theirs.
If you are not detail-minded, try a neighbor, colleague, relative or your tax preparer to help you (or a housing counselor or paid service). But if you use a middle-man, stay involved and make certain they understand your complete picture.
I may have a couple of updates when my Chase Rep gets back to me on my open questions. I will post them in this thread. I owe a lot to this forum and want to give back. Next I will be working on settling my HELOC. I am currently following the advise on that thread.
Good luck to all. Know that my Chase experience has been a good one as compared to BofA, who was the servicer on my HELOC and strung me out on the Mod I applied for with them requiring more and more documentation over 5 months of inaction on their part then selling the HELOC to a collector when they learned I was in the Chase trial (which would have obligated them by law to modify the HELOC to match the Chase Mod's terms since they both participate in FHA).