Declined HAMP-equity, new options

[chef255]

We were declined HAMP because we supposedly had equity-they are trying to get another type of mod to help us.(freddie mac) My question is we were paying the trial period amount- which was about $500 less that our current mortgage payment- it was a big help and put us close to where we need to be. They want a new workable solutions package from us which I am filling out-when i add up my expenses i come out about $500 in deficit each month.That number is about the same as what the trial period amount decreased our payment by- which is why it helped so much! The case worker is telling me i can't show that much of a deficit each month on the paperwork-and should be no more that about $100. If I show that deficit though, and show that the modified amount is what we need- if I cut expenses down to show little or no deficit than wouldn't it kill our chances of getting a mod? i'm terribly confused here HELP!

[dan m]

i don't recall an equity requirement for HAMP. if your negative 500 then leave it alone. if you adjust it up then they mod your loans to it you'll still be in trouble. anyways all you questions can be answered with some reading. have fun..
https://www.hmpadmin.com/portal/news/announcements.html
https://www.hmpadmin.com//portal/pro...irectives.html

[darkdays]

Dan M has posted the link to the HAMP site. It is very important to keep abreast of the supplemental directives. They are a fabulous source of information. I have never been told I did not qualify for HAMP because of equity in the house. There is no disqualification in HAMP on that issue. It doesn't matter if there is equity in the house (which has dropped from $300,000 to $55,000). It's like playing the stock market, you have equity on paper but if your stock drops the next day to zero, you have zero cash in hand.
It's important to be familiar with the directives because your trial payment is based on verbal income information. Based on that information they determine what your payment could be. If you are able to document that income the payment would be (almost) the same as the trial payment. If you already received a trial payment plan I wouldn't start messing with the numbers too much. If you reduce your numbers be prepared to tell them you reduced by purchasing less food and incidentals because you can't suddenly have reduced your deficit by $500.

[chef255]

Thanks for all of the great info-I was told after paying trial payments of $1498 for 4 months we were told that we were denied because of the equity-Our real payment is $2028 a month. Our GROSS a month is $6316x.31(magic number i think)=about $1957- does that disqualify us too? maybe they didn't tell us that? do they do everything off of gross? the executive hotline case guy told me that he was looking at both gross and net, but comparing our monthly expenses to net. Shouls I not send this paperwork in yet?

[jakelabry]

Doesn't equity come into play with the NPV test?

[chef255]

I can't find out much about that, but does the 31% of gross knock us out anyway? I'm not sure how this works. If i use 31% of our gross that gives us a payment about $100 less than we have now- is that all they would be able to reduce us by?

[darkdays]

I did the NPV excel sheet test I found on this site and even with the equity I pass.

[darkdays]

I can't find out much about that, but does the 31% of gross knock us out anyway? I'm not sure how this works. If i use 31% of our gross that gives us a payment about $100 less than we have now- is that all they would be able to reduce us by?

Under HAMP they can only reduce to 31%. If they opt (UNLIKELY) to reduce you below 31%, they get no HAMP incentive payments.

[Needanewjob]

We were declined HAMP because we supposedly had equity-they are trying to get another type of mod to help us.(freddie mac) My question is we were paying the trial period amount- which was about $500 less that our current mortgage payment- it was a big help and put us close to where we need to be. They want a new workable solutions package from us which I am filling out-when i add up my expenses i come out about $500 in deficit each month.That number is about the same as what the trial period amount decreased our payment by- which is why it helped so much! The case worker is telling me i can't show that much of a deficit each month on the paperwork-and should be no more that about $100. If I show that deficit though, and show that the modified amount is what we need- if I cut expenses down to show little or no deficit than wouldn't it kill our chances of getting a mod? i'm terribly confused here HELP!

Having a lot of equity your house, will get you declined for Ham. Seen it a bunch of times with all investors...

As far as your expenses go, I take applications for people all day long over the phone, and apply them for HAMP. The main thing about the program is your income and getting your mortgage payment down to 31 percent of your gross.. High expenses are used to decline you for this program.. If they offer you a 2 percent interest rate in order to get you to an affordable level, but your expenses are so high that you are still a high risk to default on the loan then you will be declined.. You should be honest, but I see people calling in and inflating expenses or giving the worst case scenario expenses.. Having a negative surplus will hurt you, whether you are tyring to get on the ham program, special forebearance, a Home Savers advance, prettty much all of the programs this is a negative. They want to see that his is an affordable payment for you.. As someone else said they will only take your mortgage down to 31 percent regardless of expenses.. If people offer expenses to me on the phone, I put them on the application. If you are rounding on expenses. Round DOWN

[davephx]

The NPV sheet is NOT what is being used for HAMP.

Yes it seems equity is a big part of the NPV test. If you have equity it favors foreclosure not modification.

Needanewjob - you can really be valuable here!

The new streamlined forms only have debt payments for the back-end DTI 55% to get counseling test. Can you confirm no budget is used for pure HAMP just the other alternative? There is absolutely nothing that I can find in any HAMP/Treasury/Fannie directive for regular HAMP (not refi or FHA) that requires any budget.

Am I blind to something? Your "inside" perspective is valuable.

It also seems cheff255 with the budget is being evaluated for a non HAMP program since she/he says she was denied. I know Fannie as their own program (starts at 3% interest) but don't know much more nor about Freddie.

[davephx]

Also excessive credit card debt is one of the hardship options. If you have excess debt you probably do not have any budget surplus and often a large deficit. The goal of HAMP is to save your home, not pay on your credit cards it seems

[Needanewjob]

Hi Dave,

We run each one of our applications through our NPV test.. If I see very high equity i'll almost alwasy see a decline. I believe the software runs it through and decided whether or not they will benefit more from a modification and the incentives it comes with or whether they would make money doing a foreclosure or other liquidation options. I've also seen it go the opposite way, i've applied people that owe 400,000 dollars on there house and the property value comes back at 80,000. I've seen these loans pass the test when the brwr makes almost nothing. Equity is huge.. Expenses are nothing..

[Needanewjob]

Also excessive credit card debt is one of the hardship options. If you have excess debt you probably do not have any budget surplus and often a large deficit. The goal of HAMP is to save your home, not pay on your credit cards it seems

If you have a negative surplus, lower some of your expenses and then call back.. High bills will only get you denied..

Credit card bills, car payments, medical bills all look exactly the same to the software program that is used.. Lower the better.. If your high mortgage is your main hardship and you've had a loss of income, then they will work on your mortgage. If your problem is you have a 700 dollar car payment then the logic is that people should negototiate those bills . They need to see clients are willing and able to make these new payments.

[grullagirl]

Needanewjob,
Just curious, what do you think the chances of getting a trial made permanent. Going on 6th ontime payment and investor is Freddie Mac?
I'm really starting to panic and I guess am looking for any reassurance I can get.
Thanks

[Needanewjob]

Needanewjob,
Just curious, what do you think the chances of getting a trial made permanent. Going on 6th ontime payment and investor is Freddie Mac?
I'm really starting to panic and I guess am looking for any reassurance I can get.
Thanks

I know how you feel, I work for Citi but my trial period is with Saxon mortgage and im on my 5th month... Your 6th payment is normal and it's how they all are right now. The docs are collected and reviewed for accuracy during the first 3 months. After the 3 months are safisfied and all paperwork is submitted it will then take another 90 days. WHat you are into is normal.. It seems like you passed the hard part. As long as you were honest on your income and you don't have any crazy savings somewhere you should be fine..

[grullagirl]

I spoke w/ the lady who was in charge of collecting the docs, she stated that it was being wrapped up in underwriting and was set for the first permanent pmt. 1/1/10 w/ 2% for five yrs. and then stepped up to 4/75% for the remainder of the term. She said it needed to go to the investor for approval. She also told me to make my Nov. 1st trial pmt. (#6) I'm saying my prayers that this is going to happen.

[Needanewjob]

I spoke w/ the lady who was in charge of collecting the docs, she stated that it was being wrapped up in underwriting and was set for the first permanent pmt. 1/1/10 w/ 2% for five yrs. and then stepped up to 4/75% for the remainder of the term. She said it needed to go to the investor for approval. She also told me to make my Nov. 1st trial pmt. (#6) I'm saying my prayers that this is going to happen.

It sounds extremely positive. Don't know who your investor is but hopefully it's fannie.. Your really right on time. 3 months trial period and the 90 days of review underwring and closing. It really does sound good...
It would sound even better if you had a Citi mortgage closer assigned to the account. Doc collections are still the 3rd party group so it sounds like its' one step away from being assigned back to citi for closing. It's getting close!!! Much closer then most people.

[darkdays]

I can't find out much about that, but does the 31% of gross knock us out anyway? I'm not sure how this works. If i use 31% of our gross that gives us a payment about $100 less than we have now- is that all they would be able to reduce us by?

for HAMP, yes. I re-ran my npv test again to make sure I passed and again it said pass. when I spoke to the HUD counselor who re-submitted my mod application she had also run it and I passed so I think it is your income is already at 31%. I read on the HAMP guidelines that lenders have to make sure you are below 32% (remember that $100 difference might become zero if you calculate out at 31.5% or 31.9%. See what I mean? they will not go below 31%.

[darkdays]

Hi Dave,

We run each one of our applications through our NPV test.. If I see very high equity i'll almost alwasy see a decline. I believe the software runs it through and decided whether or not they will benefit more from a modification and the incentives it comes with or whether they would make money doing a foreclosure or other liquidation options. I've also seen it go the opposite way, i've applied people that owe 400,000 dollars on there house and the property value comes back at 80,000. I've seen these loans pass the test when the brwr makes almost nothing. Equity is huge.. Expenses are nothing..

Large equity will definitely effect the number but it is not an equity yes = npv fail. It's a matter of where does the investor stand to gain the most $$$. A $400,000 loan with virtually no income vs. $80,000 home and the investor will get maybe $40,000 if they sell. If they modify the loan they will make the 40,000 in interest in the first 5 years of the loan. By year 6, they are making more than the $40,000 so it is worth it (for the bank) to modify. The question though is if someone has a $400,000 loan and low income will they be able to afford the new payment? That's where the default % pops in. Property taxes and other expenses will continue to rise and your income has to continue to rise with it to continue to make that payment affordable.

[darkdays]

Interesting Power Point on npv and surplus/ deficit.

NET PRESENT VALUE ANALYSIS AND LOAN MODIFICATIONS - AN