Declined HAMP - Too Much Savings

[BasketJoe]

I provided my bank statements a couple of months ago. I had several payments that had not cleared, so my total savings was $23K. Today my savings is 14K. fficeffice" />>>
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1st Question - "What do they use to get the total for acceptable savings for 3 months? Gross, Net or Expenses?" >>
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2nd Question - my counselor said that the underwriter would not allow me to send in updated statements. Is there an appeal process? Has anyone heard anything different? I can’t believe that I jumped through so many hoops and they are going to decline me.>>
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Thanks for this forum. It has helped me keep my sanity and my fight alive.>>

[Evan Bedard]

Hi BasketJoe welcome and thank you for joining.

1st Question - "What do they use to get the total for acceptable savings for 3 months? Gross, Net or Expenses?" >>
>>
2nd Question - my counselor said that the underwriter would not allow me to send in updated statements. Is there an appeal process? Has anyone heard anything different? I can’t believe that I jumped through so many hoops and they are going to decline me.>>

It is going to be very hard to get approved for a modification with a large amount of savings. These lenders are expecting homeowners to use their savings to pay their mortgage. They should definitely allow you to send in updated statements along with an LOE explaining that you only had that much because of transactions that did not yet go through..

[mom_of_two]

Originally Posted by Evan Bedard

Hi BasketJoe welcome and thank you for joining.



It is going to be very hard to get approved for a modification with a large amount of savings. These lenders are expecting homeowners to use their savings to pay their mortgage. They should definitely allow you to send in updated statements along with an LOE explaining that you only had that much because of transactions that did not yet go through..

Hi Evan

The statement I sent was showing around 10,000 balance, but I also had credit card debt for 15,000 and 401k loan abour 20,000, and I mentioned in my hardship letter that I took a loan from 401k to keep up with the bills and to keep some cash on hand in case of an emergency. Will this casuse me a problem?

[BasketJoe]

Thanks so much Evan for your response. I have learned a lot from your insight. Quick follow up question/s, how do I get them to let me send in current statements if my counselor said that the underwriter would not allow it. Can I contact Loss Mitigation or another dept.? Also is there something in the HAMP guidelines or FAQs (I have not found anything) that list the amount of acceptable savings? My current amount is less than 3 mo. expenses or net pay and my property taxes are due next month which would take half my savings. Finally, LOE = Letter of Explanation? Thanks Again!

[MAXIE19]

Originally Posted by BasketJoe

I provided my bank statements a couple of months ago. I had several payments that had not cleared, so my total savings was $23K. Today my savings is 14K. fficeffice" />>>

Originally Posted by BasketJoe

> >
1st Question - "What do they use to get the total for acceptable savings for 3 months? Gross, Net or Expenses?" >>
>>
2nd Question - my counselor said that the underwriter would not allow me to send in updated statements. Is there an appeal process? Has anyone heard anything different? I can’t believe that I jumped through so many hoops and they are going to decline me.>>
>>
Thanks for this forum. It has helped me keep my sanity and my fight alive.>>

For purposes of the loan modification process, it is best to make your payments online....this way you are cognizant of your statement closing date and in control of the delivery dates for your payments. When you pay by check, you have no control when the 3rd party presents your check for payment which could mess up your accounting. For example, my statement closing date with my bank is the 24th of the month. This way, I make sure that I program all my bills to be paid prior to the 24th of the months so that I am not presenting an unrealistic picture of my cash reserves.

The guidelines are inconsistent as to whether the 3 months reserves refer to your mortgage payments or your total monthly expenses. Some say mortgage payments, others say monthly expenses. In order not to give the banks any room to deny you, it is best to stay below 3x your mortgage payments. This way it would not matter whether their measuring stick is mortgage vs monthly expenses.

Regardless of what your counselor has to say, I will still update your file with the much more accurate and recent bank statement. What is it going to hurt. If they are going to reject you due to the excessive savings, give yourself a fighting chance by updating your file with a much more accurate picture of your liquid assets.

[davephx]

The 3 months is only mortgage payments and its in the directives for imminent default but current.

For in default is a bit more vague and Fannie may have different rules than non Fannie etc.

[lennox]

I have a question. Were you current on your mortgage payment when you sent them the bank documents showing you had savings?

Also...from Fannie Mae form 1021 (dated April 2009)...

Cash reserves do not include assets that serve as an emergency fund (generally equal to three times monthly debt payments).

Of course, I'm beginning to think it really doesn't matter what the HAMP rules are...because the banks seem to be interrupting the rules in anyway it benefits them.

[davephx]

But ... HAMP Checklist as of 10/14/09 has this requirement for ALL HAMP mods:

Borrower is experiencing financial hardship and does not have sufficient
liquid assets to make contractual mortgage payments

[laidoff]

Does anyone know if a 401k is considered a liquid asset? If so, does it matter whether the holder is qualified to draw on it without penalties?

[davephx]

Originally Posted by laidoff

Does anyone know if a 401k is considered a liquid asset? If so, does it matter whether the holder is qualified to draw on it without penalties?

Fortunately NO! It is exempt even in bankruptcy - there is clear somewhere in the guidelines do not include retirement plans. Thank goodness.

[BucketJoe2]

Originally Posted by lennox

I have a question. Were you current on your mortgage payment when you sent them the bank documents showing you had savings?

Also...from Fannie Mae form 1021 (dated April 2009)...

Cash reserves do not include assets that serve as an emergency fund (generally equal to three times monthly debt payments).

Of course, I'm beginning to think it really doesn't matter what the HAMP rules are...because the banks seem to be interrupting the rules in anyway it benefits them.

Thanks lennox - great info. I was behind 4 payments. I was working on getting a mod back in March then was approved for HAMP in June. That was another point I made with my counselor is that if I paid my deliquency payments and property taxes I would have no money. The big hurdles to me are the NPV and 31% income. Doesn't it state in the guidelines that if you pass the NPV they must offer a modification?

[fm820]

i also have a question regarding savings, i have co-signed my inlaws in their CD accounts, total 23k...will the bank consider this as my savings eventhough the CDs are under 3 people's names. It so happened that my in laws wants my name in the account in case of emergency, i will have an access. My mortgage servicer is BofA, and those CD accounts are also under BofA.

thanks....

[davephx]

On the CD - whose social security number is used. That may control who its going to show up as owning on the bank records.

[fm820]

i will call the bank and make sure of it...i dont receive the statement, and the other people in the account are out of the country, that's why they want my name on it for emergency...thanks

[Needanewjob]

Going to bed I guess..

If your bank account shows that you have over 3 payments worth of reserves, you can fail, the reasons are you are not considered in imminent danger of defaulting on your loan.. If you call Citi mortgage you will get different answers on this depending on who answers the phone, but i've done test modifications using the software and putting in different amounts of savings. I've seen them declined with over 3 months of savings.. Seems to have loosened up on that rule lately..

FYI, when submitting financials over the phone, never list your 401 k as an asset.. Seen lots of people declined on that because the rep did not tell them that retirement funds do not need to be included.. Just fyi. GOod luck

I would keep fighting it but you may have to deplete your savings, pay off all your bills and call back.. Best number 866-272-4749....

[davephx]

I assume 3 months is at the full unmodified mortgage payment?

I worry since I have business combined with personal bank checking and for short periods of time have excess cash. But rarely and only for short periods of time more than 3x regular (Unmodified) mortgage payment.

[Needanewjob]

Originally Posted by davephx

I assume 3 months is at the full unmodified mortgage payment?

I worry since I have business combined with personal bank checking and for short periods of time have excess cash. But rarely and only for short periods of time more than 3x regular (Unmodified) mortgage payment.

Yes it's 3 unmodified payments and if it comes and goes it should be fine.. I've actually seen modifications where people were told just to deplete there savings, if it's not a huge amount its not a big deal. But when you initially apply online the software tool can deny you for the 3 payments. It's best to get on the trial and then explain your assets later.. We are all pretty lucky actually, we are at least on trial periods, unfortunately I spend most of my day declining people and it breaks my heart. No income no modification.

[davephx]

Yes HAMP was never designed for those with no or low income or who can't amortize even at 2%/40 yrs at 31%.

Solving that would take billions more. But getting participants for the 2MP program is vital to help many that get mods on 1st be able to not redefault or have 2nd foreclose - even if they are underwater the 2nds might force hand in foreclosure.

I realize how hard it must be when you have to talk to so many who simply will not qualify because income is too low.

[Needanewjob]

Originally Posted by davephx

you have to talk to so many who simply will not qualify because income is too low.

It's the hardest thing i've ever done. People in the Detroit area have gone from 100k a year to nothing. How did they know that the car market was going to go under when they signed there mortgage? These people are not dead beats that don't want to pay they are people that were in the wrong industry at the wrong time. These people can't even short sale, they owe 400k and there house value is down to 80k.. All they can do is walk away, but where can they go? There credit is screwed up..

Life is hard and life isn't fair.. But i'm here and at my job to help as many people as I possibly can.. Even if by helping them it's just telling them the truth..

Anyway, I work there and with all the lost documents and the confusion, i'm as frustrated as anyone..

[davephx]

Yah I am amazed at the good attitude of almost all the loss mit reps I talk to. No pressure to get on to next call, they just have always try to be very helpful just like you have been here with questions tossed at you with your inside perspective.

Maybe because at least I have a decent chance but can feel for you guys/gals with all those you can't help, yet gratifying for those you think you can help save their home.

[lennox]

It sounds like the initial measurements of qualification are all very quantitative. Are any qaulitative measures added when determining the initial test results? It's just that not everyone has the same "cookie cutter situation" that can be explained with numbers only.

For example, we do have a decent savings. But...the savings alone does not explain our hardship or financial status.

My husband was diagnosed with prostate cancer in early 2009. With surgery he was off work 12 weeks. With that said, we are extremely fortunate that my husband has secure a well paying union job with great health insurance. What he doesn't have though...is any kind of sick pay, or short term disability. So without these "cash reserves," we would have zero money, while he was or is off work. While I have income; it is not even close enough to cover our debt and expenses alone. Had it not been for these funds, I have no idea how we would have survived while he was on sick leave.

The cancer has a 100% cure rate. However, he is also facing 8 weeks of radiation. Again, given the physical nature of his job, he won't be able to work for the 8 weeks. His income is $5000.00 a month. Going from $5000 a month to zero without emergency funds would devastate us. The reality is, we will always have to have and set aside funds for this account (and even moreso now). Since my husband has never been able to get a disablity policy, this account was created for this purpose. To us, keeping this account with funds is no different then paying into a disablity insurance policy.

I've explained this in our hardship letter and our asset sheet.

We have the toxic option 1 mortgage. It is set to recast in 2011. The main thing we hope for is to get the interest rate fixed. If we don't qualify for HAMP, I'm hoping we can work with our servicer for an in-house mod.

It just seems like there is a "sweet spot" that is a very small window when you are considered for HAMP. On one hand, you don't want to have too much savings or too little of a hardship. Yet on the other hand; you have to prove to them that you will be able to afford the new modified mortgage.

[langlang]

Hi lennox, I think HAMP is largely quantitative because to do it otherwise would slow down the process even much more than it is now.

I think you have two issues to deal with- your mortage in general, and then your husband's medical situation (it's good to hear that success rate is 100%). I think if you more or less treat each separately it will be easier for you to deal with.

For your husband's radiation treatments, perhaps Citi would give you a forbearance period or something like that (since it is a one-time thing)? That is done in-house at Citi, and is up to them alone. 3-month forbearance periods are not uncommon, and it sounds like that would be long enough for your husband.

For HAMP, I guess you can do the math and figure out what your long-term gross income should be, and then use 31% of that as what a HAMP mod would give you. If your current mortgage payment is less than 31% of gross income, then I guess you probably don't qualify for HAMP at this time. But I would think your chances are reasonable of getting your loan modified before it resets in 2011.

I understand your complaints about HAMP. But I don't think its possible for them to create a 'catch all' program that will help everybody with all possible circumstances. As davephx says, to do that would cost even more money and I don't think the government can print enough before it all becomes worthless.

[houstonguy]

I am in a similar situation as well, it looks like I have "too much savings" because our retirement savings and kids' college funds are in regular brokerage accounts.

Please let the forum know if you find some way around this!

Thanks!

[Elora123]

Originally Posted by lennox

It sounds like the initial measurements of qualification are all very quantitative. Are any qaulitative measures added when determining the initial test results? It's just that not everyone has the same "cookie cutter situation" that can be explained with numbers only.

For example, we do have a decent savings. But...the savings alone does not explain our hardship or financial status.

My husband was diagnosed with prostate cancer in early 2009. With surgery he was off work 12 weeks. With that said, we are extremely fortunate that my husband has secure a well paying union job with great health insurance. What he doesn't have though...is any kind of sick pay, or short term disability. So without these "cash reserves," we would have zero money, while he was or is off work. While I have income; it is not even close enough to cover our debt and expenses alone. Had it not been for these funds, I have no idea how we would have survived while he was on sick leave.

The cancer has a 100% cure rate. However, he is also facing 8 weeks of radiation. Again, given the physical nature of his job, he won't be able to work for the 8 weeks. His income is $5000.00 a month. Going from $5000 a month to zero without emergency funds would devastate us. The reality is, we will always have to have and set aside funds for this account (and even moreso now). Since my husband has never been able to get a disablity policy, this account was created for this purpose. To us, keeping this account with funds is no different then paying into a disablity insurance policy.

I've explained this in our hardship letter and our asset sheet.

We have the toxic option 1 mortgage. It is set to recast in 2011. The main thing we hope for is to get the interest rate fixed. If we don't qualify for HAMP, I'm hoping we can work with our servicer for an in-house mod.

It just seems like there is a "sweet spot" that is a very small window when you are considered for HAMP. On one hand, you don't want to have too much savings or too little of a hardship. Yet on the other hand; you have to prove to them that you will be able to afford the new modified mortgage.

I can more than understand your situation regarding the cancer. My husband was diagnosed in 2007, went for surgery and later radiation. This depleted our savings and then some. He then lost his job this year. We applied for modification this year. We are beginning the trial payments this month. HAMP. We have social security and unemployment as are total income and really no savings. I believe they are looking for hardships as well as little to no savings, just my take on the whole thing.

[lennox]

leora, I am really sorry about what is happening in your life right now. I hope your husband is recovered from his cancer. Did he lose his health care when he just lost his job?

From reading your past posts, I get the impression you are very strong and cope with stressful situations well.

TSM