What is this "balloon payment" in HAMP?

sahm2two · 10-30-2009, 01:00 PM

What is this? Does everyone have this? I was just reading a few posts on here and saw it mentioned.

MyHAMP · 10-30-2009, 03:33 PM

Quote:

Originally Posted by sahm2two

What is this? Does everyone have this? I was just reading a few posts on here and saw it mentioned.

No, not everyone. It occurs if 31% of your gross income are insufficient to pay off your entire loan over 40 years at 2% (and then at 3%, 4% etc.). In HAMP, that's the "interest forbearnce" (NOT forgiveness).

That "balloon" is the amount due in case you would refinance, pay-off or sell your house under a modified HAMP in case principal forbearance was part of the deal (the interest-free part, taken out of the loan so you can get to 31% gross - the 3rd step of the "waterfall").

Otherwise, this amount would be due by the end of your modified loan term.

sahm2two · 10-30-2009, 04:21 PM

We do not have a forebearance so would this not apply to us? And when you say sell or re-fi under HAMP do you mean in the 5 year modified time?

MyHAMP · 10-30-2009, 04:36 PM

Quote:

Originally Posted by sahm2two

We do not have a forebearance so would this not apply to us? And when you say sell or re-fi under HAMP do you mean in the 5 year modified time?

If you don't have a forbearance in your HAMP, it doesn't apply to you.
By sell or re-fi under HAMP, I meant it is due WHEN you re-fi or sell. It doesn't matter how far you're into your mod.

sahm2two · 10-30-2009, 04:47 PM

Quote:

Originally Posted by MyHAMP

If you don't have a forbearance in your HAMP, it doesn't apply to you.
By sell or re-fi under HAMP, I meant it is due WHEN you re-fi or sell. It doesn't matter how far you're into your mod.

I am confused...just trying to understand. When/If we modify our mortgage and say decide to sell in 5 years....would we be accessed penalties?

sahm2two · 10-30-2009, 04:49 PM

I think I understand..

Could I end up with a balloon payment?Yes. If your servicer determines that a principal forbearance is required to get your monthly mortgage payment to an affordable level, the principal forbearance amount, say for example this was $20,000, would be subtracted from the amount used to calculate your monthly mortgage payment, but you would still owe the money. You would have a $20,000 balloon payment that accrues no interest and was not due until you paid off your loan, refinanced or sold your house.

sahm2two · 10-30-2009, 04:51 PM

We are not in that situation where they need to "subtract" part of our loan to get it to an affordable monthly payment...I assume that is also what you meant by the refi or selling....that IF we had a forbearance we would need pay off that additional amount correct?

MyHAMP · 10-30-2009, 05:39 PM

Quote:

Originally Posted by sahm2two

We are not in that situation where they need to "subtract" part of our loan to get it to an affordable monthly payment...I assume that is also what you meant by the refi or selling....that IF we had a forbearance we would need pay off that additional amount correct?

Absolutely right!

A HAMP with a forbearance - if you DON'T re-fi, pay off early or sell your house earlt - said "balloon" would become due after 40 years.

They put that forbearance-amount on "hold", interest-free, as long as you are still making HAMP-payments.

MyHAMP · 10-30-2009, 05:42 PM

Quote:

Originally Posted by sahm2two

I am confused...just trying to understand. When/If we modify our mortgage and say decide to sell in 5 years....would we be accessed penalties?

No penalty. But let's say you owe $250K but 31% of your gross income at 2% interest over 40 years only alows you to pay off $200K, $50K goes into forbearance and you pay the loan only on the $200K.

However, if you pay off early you have to pay the remaining balance of the $200K PLUS the $50K from forbearance.

caldwellb02 · 10-30-2009, 06:32 PM

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Liz Medrano · 10-30-2009, 07:26 PM

We were offered a HAMP modification with a "forbearance" of $180,800. We are going to walk; there is no way we will ever own our house. They lowered the interest to 2%, and extended our loan to 40 years....it's just not worth us keeping the house...we will be dead before it is paid off.

MyHAMP · 10-30-2009, 08:01 PM

Quote:

Originally Posted by Liz Medrano

We were offered a HAMP modification with a "forbearance" of $180,800. We are going to walk; there is no way we will ever own our house. They lowered the interest to 2%, and extended our loan to 40 years....it's just not worth us keeping the house...we will be dead before it is paid off.

What would be your monthly savings compared to your previous payment? How much are comparable rentals in your neighborhood? Did you expect a principal forgiveness?