40 years @ 2.5%?

[lakerbob]

Hi all!

Great site! Very happy to stumble across it. Wondering if anyone has any insight in to my situation.

I'm one of the lucky one's who kept a job with my employer, but shifted to a lower paying position with dim prospects of getting my old position back due to the economic slowdown. Ended up with a 40% paycut. My job with the company is very secure (union), but I am at the bottom of the pay scale now, and will be for a long time.

Been crunching some numbers, and in order to get a mortgage payment (principal, int, and insurance) down to 31% of my monthly gross income, the terms would have to be in the ballpark of 2% over 35 years, or 2.5% over 40 years. Is that feasible?

Also, that's if i work a 6th day every other week, which is available to me, and so far I have been doing, but is tiring. I would like to work only 5 days a week, every week, but that does not seem feasible to keep my house.

I have a first with Suntrust who says BofA owns is the investor, and a 2nd with National City.

Any thoughts?

Thank you

[Moe Bedard]

Hi lakerbob,


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

according to the modification guidelines............


If the modified rate is below the market rate, the modified rate will be fixed for a minimum of five years as specified in the modification agreement. Beginning in year six the rate may increase no more than one percentage point per annum until the note rate reaches the Freddie Mac Primary Mortgage Market Survey rate on the date the modification was executed. If the modified rate exceeds the Survey rate, however, the rate for the remaining term of the loan is the modified rate.


Here is a link to the guidelines.............

http://www.treas.gov/press/releases/...guidelines.pdf


Here are the steps that the servicer will follow to get to the target 31% mortgage payment on the first lien including principal, interest, taxes, insurance and hoa dues................versus gross income.


In summary, participating servicers will (in order):

• Determine that a loan meets the minimum eligibility criteria (owner occupied, originated before January 1, 2009, UPB equal to or less than $729,750). If yes:

• Obtain sufficient income information to determine if the borrower has a front-end debt-to-income (DTI) ratio of 31% or greater (verbal income may be accepted for initial evaluation subject to verification prior to final approval). If yes:

• Capitalize (add to the loan amount) accrued interest, past due taxes and insurance, delinquency charges paid to third parties (e.g., for inspecting the property), and escrow advances by the servicer – but not late fees or other default fees charged by the servicer;

• Determine how much of an interest rate reduction is required to get the borrower's mortgage payment to 31% DTI, and if the DTI still exceeds 31% at the rate floor of 2%, modify the loan in other respects specified in the Guidelines;

• Apply a Net Present Value (NPV) test to determine if modification (including the incentive payments) provides the investor with a better financial outcome than foreclosure. If yes:

• Put the borrower on a trial modification at the new interest rate and payment for three months.

• If the borrower is current at the end of the trial modification period, the servicer will execute a modification agreement that includes escrows for taxes and insurance even if the prior loan was not escrowed.

[kat10]

***,
Is this federal program the best to be offered? Are the banks that have FreddieMac/FannieMae loans able to offer any other loan mod programs?
k10

[Moe Bedard]

this is the program being offered by them as well along with the refi option.........but for that your loan to value can be not more than 105%.

[CW California]

***
Any idea on how to apply a Net Present Value test?

[Moe Bedard]

that is something that the servicers would have the application for.

[lakerbob]

I guess my question is more of, how far will they go to keep you. My income did drop 40%, but my job is very, very solid for the future due to a union contract (i'm a longshoreman), but the prospects of it going back to where it was are slim to none.

[Moe Bedard]

the answer to how far they will go is in my post above of the steps that the servicer will go through to get to that 31% target.

[kat10]

***,
How do you think they may look at this scenario? House value: 200-225k? Maybe less who knows. Loan: 160k

• Apply a Net Present Value (NPV) test to determine if modification (including the incentive payments) provides the investor with a better financial outcome than foreclosure.

k

[Moe Bedard]

according to the guidelines...........


Apply a value test to determine if the cost of the modification (including the government’s incentive payments) is less costly for the investor than not modifying the loan (loans held by borrowers who have a lot of equity or whose incomes are very low in relation to the value of their homes probably will not pass this value test)

[lakerbob]

Are lenders participating in the plan yet?

[Moe Bedard]

most that are have put the program on their websites.

[Jule215]

I have an excel program of the NPV that Indymac is using, and I'm assuming other lenders...I got it off another forum, but I've found it very useful...You can plug in your numbers, and it shows how long your income can be before you don't pass...Conversely how much equity you can have before not passing...Possible payments, etc.

I can't figure out how to post a link to it directly from the one I've downloaded...( I'm not very tech savvy)!! I could maybe post a direct link to the post that referenced it, but I'm not sure that's allowed...If someone will tell if it's OK, I'll try...Or if someone can tell me how to post my excel copy, I'll try to do that as well.

[lakerbob]

What forum was it on? That sounds great

[chasepmt2hot-firefighter]

***, why is NACA about to get 2% for the life of the loan? If it can be done and is available to some American people than why not? Some of us can't utilize NACA or we would already be on ship.

[Jule215]

Here is the link for the indy mac bank NPV calculator. input your scenario ie. mortgage amount, number of months late, taxes, insurance and it will run the numbes for you. the excel sheet will calculate what the cost of foreclosure is, versus modify your interest only, extending loan out to 40 years and/or principle forbearance. good luck!


http://www.fdic.gov/consumers/loans/loanmod/NPV.xls

[Jule215]

By the way you need to adjust all of the figures to line up with what's currently being offered, i.e the current freddie rate, and the program interest rate floor @2%, along with your own personal details...I hope this useful to some people...Perhaps a moderator would like to post it where more people might see it.

[determined1]

I used this--this is awesome. Thank you!!!

[hlane]

Thank you so much for posting the link. We sent in all the addiitional info to our company yesterday for them to review us for this program.

[kat10]

What is the current Freddie rate?
thx

[Jule215]

You're welcome...As far as the Freddie rate goes, I'm not sure, but I do believe it's below 5%, so I'd go with 4.5, 4.75..Something like that.

[kat10]

I used the Freddie rate of 5.1 and floor rate 2.0, we failed due to current value being too high. I played w/#,we can only have 34k+ prop value. Zillow figures do not apply to our area or home. Our house is a modular w/small property and comps are not easy to come buy.
What does the "months to Redefault" mean? This variable changes our status from pass to fail ?

[Jule215]

I'm not exactly sure what that means...And that's one of the variables I havent' played around with...Somewhere online, there was a document that explained all of those terms...I remember reading it, before I ever found the excel model...You might google around for it.

[hlane]

Am I understanding correctly that if you "Pass" and meet all the other requirementsthen & your servicer is participating then they are required to mod your loan under this program? I've played around with the calculator and keep coming up with 38% is where we are now and that we pass.

[baileys dad]

Hlane,
I think thread #2 in this string details the steps that the lender goes through in making a decision...when i called Litton to say I didn't think the Obama plan would cover me, they said " Are you living in the house" Me: "yes"

Them:"Is the house worth less than 729K"...then the agent answered his own question..."yes, your home is worth 444K, so you qualify."

Now, my understanding is it's based upon the size of loan, not value of the house...all i can say is it should be interesting to see how well lenders are able to figure this mess out

Hlane, sounds like you fit....maybe take your info and start a new thread for *** to check...