Completed 3rd trial payment and RECEIVED Modification Agreement 7/28/09

[3girls]

I finally did it!!!!!!!!! Today via Fedex, I received the 2nd step in the MHA process. I paid my three trial period payments on May 1st, June 1st and July 1st. The fedex I received has a cover letter that starts "Thank you for complying with the terms of the Home Affordable Modification Trial Period Plan by providing your financial information and making your payments."...."The enclosed Home Affordable Modification Agreement(Modification Agreement) reflects the new terms of your modified mortgage that will go into effect once you complete the trial period plan.
Step 1 Complete and return the enclosed agreement by the due date
Step 2 Continue to make your trial period payments on time (we already completed all three).

The agreement goes over
1. Representations - again -That we have financial hardship, that we live in the property, no change in ownership, ect.

2. Acknowledgement and Preconditions to the Modification

3. The Modification - states that my MODIFICATION Effective Date is September 1, 2009 and that my first Modified payment is DUE OCTOBER 1, 2009!!!!!!! and new maturity date for my loan, the new modified principal balance, a principal balance that will be deferred to the end of the loan
AND......
1-5 years @ 2%
6 year @3%
7 year @4%
8 year @5%
9-40 years @5.42%

We a so excited this will allow us to save our home, and saves us about $1400 each month. It has been a really long process and I can see the light at the end. If anyone has questions ask away.

[alikeith]

CONGRATS!!!!!!

Does you payment stay at 31% of your gross income during only the first 5 years? That is something i was curious about. Did you owe more than your home was worth?

[3girls]

Yes the payment stays at 31% for years 1-5 the only changes in the amount will be for escrow.

No we were not upside down with this mortgage and had only the one mortgage (no second mortgage).

I forgot to add that I did this myself thru Countrywide/BAC

[alikeith]

Thanks! I was curious if they just tried to keep it at 31% for the first 5 yrs or life of loan. i guess they figure your financial situation should be better in 5 years.

Can i ask another question? Did you have much equity in your mortgage. I have about 20,000 and i am worried this way cause me to fail the NPV test they do.

[alikeith]

i forgot this question too! How much of a forbearance did you have to have if you dont mind sharing?

[3girls]

We have about 75,000 in equity give or take. I didn't have a forbearance just a principal deferrment of 14,000. It becomes like a ballon payment and the end of the loan, but they do not charge interest on it.

[alikeith]

Well that gives me hope then. You have that much equity, and they figured it was better off to not foreclose.

I knew that on the balloon payment. I guess i worded it wrong. Sorry..

[Housebroken13]

Did they do a principle reduction, what happened to the amount that you were past due on?

[alikeith]

Usually they add all the late payments on to the loan.

3girls-Do you know who the investor is on your loan? I think thats my last question....lol... Appreciate you taking the time to answer.

[Housebroken13]

So they did not lower the principle amount? Were you paying PMI? what was the amount you had left at the end of each month after all you expenses? Did they explicitly state what they based your modification on? I don't like the step interest rate program they laid out, why not just make it fixed for the entire term?

I have a second, and am upside down on the 1st.

[alikeith]

housebroken-
If you read my questions above, i asked about if they had equity or if they were upside down. They stated they werent upside down and had equity, therefore there would be no reason for Principal Reduction.

[bittersweetme]

Way to go 3girls !!!! Congrats ! I am NOT going to give up either ! I usually6 go so far and then say eh forget it. Not when it comes to this. I am very happy for you

[sandyg]

Congrat's 3!!!!!!!!! Saving your home is a big deal! Maybe now you can breath and have a good nights sleep. This gives us all HOPE for our future.

[kdtran08]

Originally Posted by 3girls

We have about 75,000 in equity give or take. I didn't have a forbearance just a principal deferrment of 14,000. It becomes like a ballon payment and the end of the loan, but they do not charge interest on it.

did they ask you for updated income and other documents before and after receiving the permanent mod? Do you have to make payments for august and September? Thank u for your time. Congratulations!

[ama125]

3girls - That's such great news and thank you so much for taking the time to update and answer people's questions. So happy for you! Any chance of finding out if they will send you a copy of your NPV worksheet? I really want to know what some of those values are that they are putting in to it and let others know so we can toy around with the FDIC one. Thanks again and CONGRATS!

[THANKS2U]

Originally Posted by Housebroken13

So they did not lower the principle amount? Were you paying PMI? what was the amount you had left at the end of each month after all you expenses? Did they explicitly state what they based your modification on? I don't like the step interest rate program they laid out, why not just make it fixed for the entire term?

I have a second, and am upside down on the 1st.

The step rate is the basic rate for HAMP, but may be different per each circumstance -

And they did lower the principal by 14,000

the 14 will become due as a balloon payment whenever they sell or the loan is paid off

it matters not that they had equity, as equity has NOTHINg to do with being able to make your monthly payment or not , Equity is just invisible money, not money in hand

[alikeith]

no equity has nothing to do with paying your mortgagem, i agree. The reason i initially inquired about her/his equity is because if you do have alot of equity and arent upside down, the investor may see it as more beneficial to foreclose vs giving you a mod.

[THANKS2U]

Originally Posted by alikeith

housebroken-
If you read my questions above, i asked about if they had equity or if they were upside down. They stated they werent upside down and had equity, therefore there would be no reason for Principal Reduction.

Being upside down and or having "equity" in the home has nothing to do with whether a person is able to make their monthly mortgage payments and therfore, would not determine whether the bank does give, or does not give, any principal reduction.

In 3 girls case the bank did give her a principal reduction of 14, 000

In this case the 14,000 principal reduction was given as a non interest balloon payment and not a principal forgiveness.

The point is the bank gave the granted the 14,000 off the loan principal to reduce payments.

When the hosue is sold or the loan comes to term, the 14,000 must be paid back only at that time...

Gets confusing but that is my opinion from what I understand about HAMP and from 3 girls has stated

[alikeith]

Actually, they did not giver her a principal reduction. They gave her a Principal Forbearance. It reduces the principal amt they charge interest on, but not your actual Principal. In the guidelines it states this may be one of the ways to get your payment reduced. You dont pay interest on that principal forbearance, but you still owe it when you sell your home, refince, ect.

The investors dont have to approve the mod. The point i was trying to get across is if its more beneficial to foreclose, they can go that route vs giving you a mod. If you have alot of equity, it may work to THEIR advantage to not approve the mod.

[alikeith]

I have been doing alot of reading online...lol.....I have been coming across alot of articles regarding it sometimes being more cost effective for the lender to foreclose vs approve the mod. This is where the NPV calculation comes into play. I would think considering how many homes are in or at risk for foreclosure, they would rather just modify. I hope at least.

[ama125]

Originally Posted by alikeith

I have been doing alot of reading online...lol.....I have been coming across alot of articles regarding it sometimes being more cost effective for the lender to foreclose vs approve the mod. This is where the NPV calculation comes into play. I would think considering how many homes are in or at risk for foreclosure, they would rather just modify. I hope at least.

I think you are right on the money. On a case by case basis, it may in fact be more cost effective to foreclose, but in the grand scheme of things, you would think they would not want any more foreclosures PERIOD. I think this is why Fannie Mae has instructed that for their loans, a modification should be pursued if the results are negative, so long as the principal forbearance amount does not reduce the interest-bearing principal to less than 100 percent of the mark-to-market loan-to-value (LTV) ratio. As for loans owned by lenders other than FM, the same rule still applies but it is at the servicer's discretion to pursue the modification if the NPV is negative.

[alikeith]

How do you know who owns your loan? I know my investor is BONY

[Kavman25]

Originally Posted by alikeith

I have been doing alot of reading online...lol.....I have been coming across alot of articles regarding it sometimes being more cost effective for the lender to foreclose vs approve the mod. This is where the NPV calculation comes into play. I would think considering how many homes are in or at risk for foreclosure, they would rather just modify. I hope at least.

Alikeith, can you give me a link to teh NPV that you used?

[alikeith]

i dont have one. The only one i have came across is the FDIC one, which does not take into account all the MHA guidelines. Sorry!

[ama125]

Originally Posted by Kavman25

Alikeith, can you give me a link to teh NPV that you used?

Here is the link for you but as noted, this is the NPV test for the FDIC's loan modification program (it uses a 3% interest rate floor as opposed to the MHA which uses 2%, also it does not calculate taxes, insurance and HOA into the modified payments like the MHA does). Only use this as a reference. If you understand Excel, you'll be able to look at the formulas within the cells to see how some of those values are calculated. FDIC: FDIC Loan Modification Program Guide – "Mod in a Box" (it is listed on this webpage).