HAMP Denied

[Mermaid]

Thank you Moe for this site it is a wealth of info. After prequalifying for the HAMP program and after four months of making the trial period payments I received a letter to notify me that the modification was denied. I immediately called Citi to verify and find out why I was denied. They told me that the reason is that when the rep was taking down my financial info over the phone he used my NET salary instead of gross salary to preapprove me. Also, they told me that if I made just a few dollars less, I would have qualified for the HAMP. So now I am $2500 behind on my mortgage payments (never been late before, ever!) and being charged delinquency fees ($15/month). Since I have suffered a loss in pay I certainly don't have the money to pay $2500. Now what do I do? Will they now review my loan for a Traditional Mortgage? I am really getting scared now.

[Evan Bedard]

Hi mermaid welcome and thank you for joining.

Since I have suffered a loss in pay I certainly don't have the money to pay $2500. Now what do I do? Will they now review my loan for a Traditional Mortgage? I am really getting scared now.

That is a ridiculous reason to have been denied and theres no reason you should have to pay those fees, it is CITIs mistake. I would try to fight this and keep calling and speaking to as many reps as needed be until you find someone who will listen. Call in and ask to speak with a manager/supervisor and explain to them what happened.

Also yes it is possible to get a traditional loan mod. I personally am not a big fan of the HAMP program.

[Mermaid]

So, Moe, should I keep trying for the HAMP (is DENIED really DENIED?) or should I focus on a Traditional Mod? My current 1st mort is $1184.00 and has a good rate of 5.25%, my second is what's killing me - payment of $565.00 rate is 9.14%. After 15% pay cut take home pay is about $2900. I will try to get them to stop the monthly $15 delinquency charges. If I am qualified for a Traditional Mod will the $2500 late payments (accrued during HAMP trial period) be tacked on the back of the new loan?

[Mermaid]

I mean, Evan, sorry.

[Sunbeam]

Mermaid,
I am going for a traditional modification right now and am hopefully in the home stretch. I understand from my negotiator that late fees will be waived. I also understand they will need to establish an escrow account (I did not have one). I also have been made to understand that they are taking into account ALL of my expenses and looking at net income since a lot of my deductions are not anything I have control over...medical, retirement (being a teacher, you have not option but to contribute). I have been told that my monthly savings will be, once this is done, about 600.00. My current mortgage is $2200.00, so that is significant.

I also am not a fan of the HAMP because it is both cut and dried and wishy washy at the same time.

[Mermaid]

Thank you Sunbeam. I do have an escrow account, hope that will help the process. How long has it taken you to get to the "home stretch". I am in similar position with deductions (not to mention the pay cut!) as I am a state government employee. Also, is your mortgage underwater? Mine is about $90K under. Do you have a 2nd mort? If so, is Citi combining both 1st & 2nd? Citi rep told me today that Rebecca Brown will be reviewing my financials & will contact me for possible mod. This is my home of 16 years, cannot imagine foreclosure.

[iamkitty]

Hi mermaid welcome and thank you for joining.



That is a ridiculous reason to have been denied and theres no reason you should have to pay those fees, it is CITIs mistake. I would try to fight this and keep calling and speaking to as many reps as needed be until you find someone who will listen. Call in and ask to speak with a manager/supervisor and explain to them what happened.

Also yes it is possible to get a traditional loan mod. I personally am not a big fan of the HAMP program.

Evan, what is a traditional mod versus a HAMP mod?

[ama125]

Evan, what is a traditional mod versus a HAMP mod?

HAMP is short for Home Affordable Modification Program, part of Obama's Making Home Affordable initiative. A traditional mod would be any kind of mod that the servicer can do on their own outside of that program. We don't know what they are exactly, how many ways they can do it, or what the guidelines are for those in-house type of mods because the servicers do not make that information publicly available.

[davephx]

I also am not a fan of the HAMP because it is both cut and dried and wishy washy at the same time.

Very well but.

31% x gross income = first is cut and dried. If already at 31% of less just on the first - denied. If too low income to make piti at 2% 40 years denied unless rare forbearance used.

Most else seems wishy washy depending on the servicer.

[MyHAMP]

Mermaid,

Did you verify if the information about "income too high" is actually accurate?

Is your current mortgage less than 31% of your gross income?

The comment "you are just a few dollars above" sounds VERY suspicious to me because there are no limits for HAMP. Here's why:

Let's say your income would indeed be about $300/month gross lower and would bring you into that range, your savings between your current payment and a HAMP "qualifying payment" would be $93/month. Let's be generous and make that $100.

So is your current mortgage payment $100 LOWER than 31% of your current gross income?

If not, the CA lied and you should demand that they re-calculate your application. You might not save as much as previously expected but you certainly meet the guidelines!

And if you are really just slightly below the 31% cut-off, how much does HAMP help in that case? $100 gross equal $31/month savings.....

[Mermaid]

Gross is $3830, my 1st mort payment with insurance & taxes is $1184 (my 2nd is $565). So doing the basic 31% calc does show that my 1st is $3.00 under the 31%. Too bad I didn't know more when I called to prequalify, now I'm really in a mess due to Citi's error in prequalifying me. Now I am late two months (and have no $ to catch up) and have been told that soon I'll be dinged with late fees. There are also "delinquency fees" on my acct (two $15.00 charges) that they told me are for the Appraisal(?). Supposedly, a "counselor" will call me soon to discuss options. Maybe the "missed payments" will help me get a Traditional Mod? Is this all a blessing in disquise? I just feel like I've been set up & not quite sure what to do or expect now, very worried.

[Isabel]

The 31%. Is that 31% of your gross income.
Your mortgage with taxes and insurance should be less then this 31%? Do they take other household expenses into account.

How does it work

let's say I make $1,000 gross. 31% is 310 but my other expenses might be 800. So wouldn't they decrease the mortgage to less than 31% cause even if they keep the 31% of mortgage, one would still be in a deficit.

This might all sound confusing. So basically what are the rules regarding the 31%?

[MyHAMP]

The 31%. Is that 31% of your gross income.
Your mortgage with taxes and insurance should be less then this 31%? Do they take other household expenses into account.

How does it work

let's say I make $1,000 gross. 31% is 310 but my other expenses might be 800. So wouldn't they decrease the mortgage to less than 31% cause even if they keep the 31% of mortgage, one would still be in a deficit.

This might all sound confusing. So basically what are the rules regarding the 31%?

Yes, 31% of GROSS income of borrower.
Household expenses are NOT considered when calculating the 31%.

When you're only making $1000 gross and have expenses of $800, you won't be approved unless you can drastically cut expenses.

Of course, it also matters how much you owe on your mortgage. A $310/month PITI-payment can maybe cover a $50K-mortgage, but certainly not a $500K-mortgage. That's where the NPV-test comes in.

[MyHAMP]

Gross is $3830, my 1st mort payment with insurance & taxes is $1184 (my 2nd is $565). So doing the basic 31% calc does show that my 1st is $3.00 under the 31%. Too bad I didn't know more when I called to prequalify, now I'm really in a mess due to Citi's error in prequalifying me. Now I am late two months (and have no $ to catch up) and have been told that soon I'll be dinged with late fees. There are also "delinquency fees" on my acct (two $15.00 charges) that they told me are for the Appraisal(?). Supposedly, a "counselor" will call me soon to discuss options. Maybe the "missed payments" will help me get a Traditional Mod? Is this all a blessing in disquise? I just feel like I've been set up & not quite sure what to do or expect now, very worried.

In your case, HAMP wouldn't be a help. Even if your first mortgage would be $10 higher, would would you save under HAMP? Yeah, $7/month.

I don't know if there are many other options out there that will get you a significant saving on your mortgage, so if you want to keep the house and have financial difficulties, I can only suggest you look at at other budget-cuts...

Is your property upsidedown? If so and you want to save your home, you might consider stopping paying on your 2nd mortgage. I don't know your financial background well enough (impact on credit score/overall debt/financial situation) to tell you precisely what to do.

[Mermaid]

MyHAMP: My objective was to be proactive and try to prevent foreclosure, keep my home of 16 years, that's why I called Citi Loss Mitigation in the first place and now am in worse shape that I was before! My salary has been cut about $600/mo, my takehome is about $2700. I have cut all unnecessary expenses, adjusted tax withholdings and postponed needed dental & medical procedures to keep up with my monthly bills. I'm in Calif. and my home is about $90K upside down. Have never been late on ANY bill before. Why would I want to consider stopping payment on my 2nd? Can't they foreclose on a 2nd? Any ideas/advice is appreciated. Any idea of what my chances for a Traditional Mod are?

[MyHAMP]

Why would I want to consider stopping payment on my 2nd? Can't they foreclose on a 2nd? Any ideas/advice is appreciated. Any idea of what my chances for a Traditional Mod are?

They can theoretically foreclose - but it's unlikely. Why? Because they have to pay the cost foreclosure but wouldn't get a single penny because all the money of a foreclosure-sale would go the the first lien holder since you are upside down. We are not paying our second either and I'm assuming millions of homeowners are just doing the same to keep their home.

A traditional modification might be an option but you have to be realistic and also consider the lender's POV: If your mortgage-payment is already below 31% of your current gross income, they probably won't be willing to reduce it any further. You won't be "profitable" any more. The 31% (sometimes even 38%) is a number in the industry that is considered "standard". There is no doubt that some people consider 31% as too high because they have other expenses they simply can't avoid (i.e. medical) - but in general, that's the point were many lenders say: "If you want to keep your house, make it your priority and save on other expenses."

Your situation is extremely painful because you always paid all your bills and probably have great credit. Now being current on your mortgage decreases your mod-chances as well (lenders say: "you obviously can pay your loan and don't need a mod").

They are more willing to consider borrowers for a mod who are behind. And that means "good buy, perfect credit".

It's just VERY difficult these days to get a mod that brings you below 31% of your gross while being current. So you might have to decide between keeping your house or keeping your perfect credit.

[Mermaid]

Well, now I AM behind on my mortgage due to the four months of HAMP trial period payments. I hoping Citi will be able to modify my first and my second, I'm hoping they can combine them into one loan. Am I dreaming?

[MyHAMP]

Well, now I AM behind on my mortgage due to the four months of HAMP trial period payments. I hoping Citi will be able to modify my first and my second, I'm hoping they can combine them into one loan. Am I dreaming?

You are really unlucky.
So you even have BOTH mortgages with the same bank/investor? Well, then I wouldn't suggest NOT paying the second mortgage because they could use that as trigger for the first.

You could try to negotiate in regards to merging the mortgages but again, I don't want to give you much hope on that. They would have to forgive principal to make it work since you are under water - something they aren't willing to do right now.

ow since you are behind now, they might be willing to deal with you. As I said - it's very, very difficult to get below 30% gross...but give it a try.

[Sunbeam]

Thank you Sunbeam. I do have an escrow account, hope that will help the process. How long has it taken you to get to the "home stretch". I am in similar position with deductions (not to mention the pay cut!) as I am a state government employee. Also, is your mortgage underwater? Mine is about $90K under. Do you have a 2nd mort? If so, is Citi combining both 1st & 2nd? Citi rep told me today that Rebecca Brown will be reviewing my financials & will contact me for possible mod. This is my home of 16 years, cannot imagine foreclosure.

Hi Mermaid, I started the process in Feb 2009 and nothing happened except I sent a lot of docs to CITI and they lost them and never called me back. Then I tried again in April for HAMP because the people on the phone told me I qualified...I didn't. Two failed BPOS later (the agent never showed up) I am writing to Freddie Mac, my congressperson....I had been listening to NPR and a man was interviewed who got a modification after being interviewed on NPR about the process....I figured one needed some higher profile to get noticed, so I went about trying to 'get noticed' and this actually got my file going in the right direction and into the hands of a wonderful person in loss mitigation who worked with me and my numbers and made it come out the way I dreamed it would, only better.

Yes, we have a 2nd mortgage. It is through a small local bank and I asked them to modify and they were so grand they brought it down from 8.4% fixed to 7.9% fixed. (147000 over 20 years)

Our mortgage w/ CITI was 5 years old. 5.65% with an ARM ready to reset, not right away, but it was still not something I wanted to face. We bought the house 11 years ago and have done major work to it. It is a 100 year old house. We ended up w/ 50k in cc debt due to after all the work we did, found out the rear foundation was a huge problem. YIPE

I had been asking CITI since April or May if they could just fix our rate and lower to something not too unreasonable, like 4.5% I could breath easier.

One of the weird things we were asked for right towards the end of all this was documentation showing we had contacted ALL our creditors and asked them to lower rates, modify or grant us some help. Thankfully I had actually done this. I had some major back and forths w/ credit card companies that wanted to raise rates even though I was never late. I got them to at least hold at current rate. I also had a student loan which I was able to put into deferment. I'm glad I hung on to all that documentation, because I think it was the final thing that Freddie Mac wanted to make themselves feel like they could actually grant me a lower interest rate.

I just got news on was that our mortgage is extended 40 yrs at 4.5% fixed. We have to build an escrow account for tax/insurance (I always paid separate) but our mortgage is going down by over 600 dollars a month and when you include back in the tax/insurance a monthly savings of over 300 dollars. This is basically what we needed to get all of our debt under control, wipe out the stupid cc debt as soon as possible (I hope to never be at their mercy again) and be able to be comfortable. At first I kind of didn't like the idea of extending out our mortgage so long, but then I realized something.....we would not be able to rent for what our mortgage (first) will be...so when we do retire, if we decide to stay in our home, then having a longer mortgage is not the worst thing in the world. And we can, if we can afford it (I really want to build up a cash reserve) pay more.

Sorry for the long post, but I wanted to give you an idea of what I went through. You can see my saga at "Wit's End" under the Ciit heading.

Best of luck and let me know if you have any questions I might be able to help with. This forum gave me the juice I needed to keep pushing ahead.

[Sunbeam]

By the way, our mod brought us (including our 2nd) to 26% of our gross income...I thought that might give you some heart. Be strong! I do think our credit card debt was considered (finally) as dollars we had to put into necessary home repairs, because we could show documentation of when the debt occurred and receipts for the expenses....it wasn't from buying stuff on line.

Oh and we were underwater on our total home value to mortgage debt by about 20K. Not a huge amount considering it is really hard to comp homes in my neighborhood...none are alike.

[darkdays]

You are really unlucky.
So you even have BOTH mortgages with the same bank/investor? Well, then I wouldn't suggest NOT paying the second mortgage because they could use that as trigger for the first.

You could try to negotiate in regards to merging the mortgages but again, I don't want to give you much hope on that. They would have to forgive principal to make it work since you are under water - something they aren't willing to do right now.

ow since you are behind now, they might be willing to deal with you. As I said - it's very, very difficult to get below 30% gross...but give it a try.

Your lender would have to be willing to do an in-house HAMP because HAMP does not allow for less than 31% gross.

[davephx]

I didn't think HAMP could be less than 31% either but Sunbeam got a good deal whether it was inhouse or HAMP.

Without searching I wonder if HAMP CAN go below but they just don't get paid for the difference like they do as I recall from 38% to 31%.... But this may be the first at such a low 26% of gross. I assume Sunbeam its piti (taxes and insurance included) when you say 26%

We are jealous

That credit card issue really is freaky and never hard of before. You did a great job and had the right situation. Others may not be able to do the same especially if very late and tons of cc debt.

But the arugment would be we can get rid of the cc debt in bkk and that is NOT suppose to be an issue with HAMP. But if it was actually inhouse ..well but Sunbeam I believe said it was Freddie Mac that had that cc requirement, so it does sound like a HAMP.

[MyHAMP]

Your lender would have to be willing to do an in-house HAMP because HAMP does not allow for less than 31% gross.

It actually does - however, the lender doesn't get any extra incentives from the gov. to go below 31%.