After Obama Speech, will CW qualify me for Loan Modification?

[eastbay176]

Hello Everyone,
Background on my situation:
I live the Bay Area, CA, and I have 1st mortgage with CW worth 492,000 Intrest Only, a 2nd with Chase (HELOC, fixed after 3months after buying, to 15-year balloon) at $66,000 and we put 10% down. House was bought at $615,000 then after refinancing 2nd to fix, it went to $620,000. After adding 2 more kids to the family and a baby-sitting fee of $1500 a month and recently taking a %10 pay cut, we are now negative about $800-$1000 a month. I"m up to date as of now, but will be in default next month due to our savings being delpeted. I have no CC debt (less then $1000), car payments, or student loans.

I contacted CW yesterday to see if I qualified for Obama's Foreclosure Prevention Program and the CW rep took all my information down and agreed I have done everything in our power to squeeze out all the net income I can. So far, he has said that CW doesn't know if I qualify for any programs because they don't know the full criteria of Obama's plans.

Has anyone gotten any approved loan modifications with this high level of a negative expense a month? Should I try to work with NACA instead, or wait on CW? They just asked to fax over our paystubs.

I appreciate this website, everyone sharing their stories and advice. I don't want to lose my home and go into bankruptcy.

Eastbay176

[Moe Bedard]

Hi eastbay176,


Welcome to the forum and thank you for joining.............


The new program uses the mortgage payment including PITI versus the gross income............

here are the guidelines to look over and see if your payment is over 31% of your gross monthly income.........this is the target range that the program, if you qualify, is going to try to get the payment down to.
here is the link...........
http://www.treas.gov/press/releases/...guidelines.pdf

[eastbay176]

Thanks ***. The formula is kind of hard to understand, but I'll re-read it again and see if I qualify.

Eastbay176

[Moe Bedard]

Front-End DTI is the ratio of PITIA to Monthly Gross Income. PITIA is defined as principal, interest, taxes, insurance (including homeowners insurance and hazard and flood insurance) and homeowners association and/or condominium fees. Mortgage insurance premiums are excluded from the PITIA calculation.

[eastbay176]

Thanks for the clarification. In that case, I believe I qualify. I'm wondering if they would take into consideration other expenses like Baby-sitting? In my case, this and my !0% cut has made it very tough for us. I just faxed them our pay stubs, I'll contact them in a few days for the status and if they received our fax.

I'll keep this updated when I get more info. Thanks again.

Eastbay176

[Moe Bedard]

expenses are the back end debt and have nothing to do with the target of 31% that they are trying to achieve with the mortgage payment alone............


The Back-End DTI is the ratio of the borrower’s total monthly debt payments (such as Front-End PITIA, any mortgage insurance premiums, payments on all installment debts, monthly payments on all junior liens, alimony, car lease payments, aggregate negative net rental income from all investment properties owned, and monthly mortgage payments for second homes) to the borrower’s Monthly Gross Income. The servicer must validate monthly installment, revolving debt and secondary mortgage debt by pulling a credit report for each borrower or a joint report for a married couple. The servicer must also consider information obtained from the borrower orally or in writing concerning incremental monthly obligations.

Borrowers who otherwise qualify for a modification under this program, but who would have a post-modification Back-End DTI greater than or equal to 55%, will be provided with a letter stating that they are required to work with a HUD-approved counselor and the modification will not take effect until they provide a signed statement indicating that they will obtain counseling.

[eastbay176]

I called CW to confirm that they received my fax. They told me it takes at least 72 for them to process. She confirmed that my loan was "under review" for loan modification, but I explained that I was trying to apply for the Obama's Home Affordability and Stabillity act. The CW tech explained after they receive our Paystubs, they also check to see if we qualify for that program too. I guess its just a waiting game and I'll have to keep on calling for updates.

In the meantime, I will have to default during this process unless I can get some OT.

[Denali89]

***-

Does a 2nd Home Loan get included in the Front End DTI? Also, in the Back End DTI does "monthly payments on all junior liens" mean a 2nd home loan? How do you invision the new Obama program will asisst with a 2nd loan? Will it be similar to the first loan programs?

[Moe Bedard]

HI Denali89,


Welcome to the forum and thank you for joining.............

In answer to your questions...........

If you are meaning does another property that you own get included in the front end dti..........the answer would be no.........the front end dti is only for the principle residence that is owner occupied as that is the only property that is able to be modified under this plan.

The back end debt ration explanation I have posted above.........it includes all debt...........which would encumber investment properties.





this is what the plan says about second liens..........but anything that will be done on them requires the participation of the investor that holds that lien.................

Second Liens:

While eligible loan modifications will not require any participation by second lien holders, the program will include additional incentives to extinguish second liens on loans modified under the program, in order to reduce the overall indebtedness of the borrower and improve loan performance. Servicers will be eligible to receive compensation when they
contact second lien holders and extinguish valid junior liens (according to a schedule to be specified by the Treasury Department, depending in part on combined loan to value). Servicers will be reimbursed for the release according to the specified schedule, and will also receive an extra $250 for obtaining a release of a valid second lien.

[eastbay176]

Just checked my account and I didn't qualify for a loan modification. I called they CW operator and he explained that loan is already fixed, 3 years left from a 7 year fixed, at a good interest rate at 5.75% and that we were negative about -1000. He said they still don't know the criteria for the Obama plan and that it won't be till next month when they will know. I also found out my investor is Wells Fargo.

I'm currently on-time with payments, I'm just trying to get a fixed affordable 30-year rate and somehow get my 2nd (Heloc, baloon, with chase) into a 30-year fixed too.

What can i do now to help my situation?

[klauss54]

i have been turned down 2 times by cw and my investor is wells fargo i wastold by cw that wells fargo will not do mod talking to cw is a waste of time im going thru naca we will see

[eastbay176]

Thanks for the info Klauss, at least I'm not alone. I'm going to a NACA meeting tomorrow, hopefully they can help based on the success stories here. I'll probably start defaulting... ARe you behind already?

[jberry]

Originally Posted by eastbay176

Thanks for the info Klauss, at least I'm not alone. I'm going to a NACA meeting tomorrow, hopefully they can help based on the success stories here. I'll probably start defaulting... ARe you behind already?

I am going to the NACA meeting tomorrow in San Leandro CA is this the same one you are going to?

Juls

[klauss54]

im in los angeles area im 6 mts behind and have had only contact with naca through phone appt the soonest workshop isnt intill july here naca submitted my info yesterday cross my fingers i intend on figthing calling senators etc good luck

[klauss54]

funny thing cw told me i was 1000 neg and thats not true maybe thats the scripted answer they read

[eastbay176]

Hahaha, maybe they got script ready for those who don't qualify. For me, I was about -1000 and I was on-time and I didn't qualify. Messed up.
Anyway, I went to the NACA meeting in and I really didn't get too much information that I already didn't know. I did find out that they don't re-structure 2nd loans, they only try it is with the same lender. If different lender, you have to deal with them on your own.
IMO, the reason they get the lenders attention is because they have a contracts with most lenders to have an their offers "at least looked at" before a litigation team before actually being declined.

I was thinking of going through NACA for the 1st loan (seems like it would work) and letting go or settling with the 2nd loan (HELOC). What happen if I do this? I heard that the 2nd usually doesn't try to foreclose because they would have to pay-off the first. Would they just 1099 me and sell to a junk collector? Will they just hold-off? Isn't there some type of statue of limitation on what they can do?

[eastbay176]

Also wanted add that NACA seemed really effective and they seem to have the system and manpower to get the right re-structure for you or they'll let you know that is isn't doable (which could be the case for me).

[jberry]

eastbay176,
I also was at the meeting yesterday. With our second we will have it stripped in a chapt 13 bk. but like you I am not sure if our first is doable at this point but I will find out when I meet with the counselor on Thursday.

Juls

[eastbay176]

Thanks Juls, forgot about that. For me, I'd rather not mess with bankruptcy since the 2nd would be my only debt. Might just deal with the 1099 and try settling with Chase or the debt collector. Bankruptcy would be my last resort, but not uncommon at this time. Also ch.13, you have re-payment plan for 5 years based on what you can pay. I'd be looking at ch. 7, 7-10 year hit on my credit.

[jberry]

I understand. If I could find a way I would rather do a 7 than a 13 (payment for 5yrs) but a 7 won't strip the second unless we give up the house (but both 1st and 2nd in the bk).

Due to financial loss we have had, either way we will have to do bankruptcy so hopefully we can do it and still keep the home.

Juls

[eastbay176]

I see. Then ch.13 might be for me too. Ch.13 will be Better then paying a heloc that is upside down. Thanks for the info. Good luck to you, hopefully naca can help us out and give us a better idea what we need to next(hard trying to figure what we can do). I'm in contact with a bankruptcy lawyer and he thinks that we fit some of the federal programs, but with a cost of course. I'm thinking it might be easier on my family to move out and rent and save some $$$.

[eastbay176]

FYI:

After reading the fine print (before signing the electronic agreement) states that if the NACA is successful in working the mod for you, you are obligated:

-to pay $50 monthly fee for 10 years (over 200K loan)
-to volunteer in 5 NACA activities a year for the life of the loan

All this pending that your still on the same Restructured loan NACA negotiated for you.

They never mentioned this during the Seminar...

[teenut]

This is only for Home purchase services. At one time NACA was charging a small membership fee, but due to the demand for the home save program, they have waived this fee. They only ask that you volunteer if able. Naca has been able to get me a modification so even if its difficult, I will make sure I give back some way. I never had to pay a dime!

[eastbay176]

Originally Posted by teenut

This is only for Home purchase services. At one time NACA was charging a small membership fee, but due to the demand for the home save program, they have waived this fee. They only ask that you volunteer if able. Naca has been able to get me a modification so even if its difficult, I will make sure I give back some way. I never had to pay a dime!

Thanks for the Clarification! Might as well try this out then.

[eastbay176]

Update:
NACA has submitted our re-structured proposal today, so we can only sit and pray. I know we still have a long, painful road ahead, but it at least gives us some hope. NACA service has been great to us so far, considering all the people they see everyday.

We still have to somehow settle with our 2nd? Anyone here try to settle with their 2nd (HELOC) successfully.