Paying down mortgage for mod?

[jet-a]

Hello - asking this question for a friend...

They live in CA and have a mortgage that is about 20K over the conforming limit for the Obama mortgage plan.

He was self-employed but lack of work forced him to take a regular job with a significant pay cut.

He has some money saved and wants to see if he can get a loan mod under the Obama plan that will be more in ine with his new income.

Can he pay the 20K to principle to get the loan under the conforming limit and then apply for a mod? His loan is with Wells Fargo.

Thanks for the info!

[Dan Bailey]

He would be better off dealing with wells fargo to try and get a mod(non-obama) and using that money to meet his monthly payments.

Hardship must be proven with the obama plan, plus other variables-one of which is that the decision to modify is voluntary except for freddie and fannie investors. He would be putting 20 k towards a gamble that they will modify the loan.

[LHarveyMadman]

Paying down a jumbo loan to below the conforming limit does not make it a conforming loan. It was originated as a non-conforming loan, and it will remain classified as such regardless of the principal balance.

Even if this "conversion" were possible, the major limiting factor in your friends' case is that their loan might not be backed by Fannie or Freddie. If not, then the Obama plan will not help them. Until the change last year (retroactive to summer 2007, if I recall correctly), Fannie and Freddie were not investing in jumbo loans (i.e. loans over $417,000), so it is very likely that your friends have a different investor on their loan.

Several folks here have gotten modifications on their jumbo loans well before the President announced his plan.

[Dan Bailey]

LHarveyMadman says it better than I can!

[jet-a]

Thanks very much for the info...i'll pass it along to my friend!