31% - Obama Plan

[chrisblack]

My wife and I put in for a mo mod with GMAC under Obama's new plan. My first is with GMAC 626k and second is with Citi $150k. Our loan at present is 30% of our gross income.

However, since we took the loan:

• Our house is $200k under water
• Our loan will reset next Oct
• My wife gave birth to twin girls - and was out on disability (doctor mandated per the high-risk pregnancy)
• My wife was unable to return to work full-time
• We have incurred higher than expected nanny costs due to my wife returning to work
• My mother-in-law is ill and we now pay a portion of her monthly housing fees
• Via the above we have incurred substantial credit card debt

This all leads me to my question which is, can the Obama plan be applied to people who are under financal duress, yet have a mortgage payment that is less than 31% of their gross income.

For example, can I refi to a lower interest rate and/or have my loan become a 40-year vs. a 30? Also, the Obama plan will 'extingush' secondary leinholders (i.e., seconds). Will this not apply?

[Moe Bedard]

Hi chrisblack,

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


The Obama plan will not extinguish second liens automatically..............it offers incentives for those investors that are participating..............this participation is voluntary..........


According to the guidelines:

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.


If you do not meet the eligibility for this program..............you may want to contact GMAC and see if there are other options from the investor on your loan or what they can suggest.........
GMAC
1-866-899-5308

[chrisblack]

Thanks ***. So, if I am already below 31%, but facing a hardship and with a house underwater and a loan that will reset next year, will I qualify for assistance. I have already submitted to GMAC under Obama's plan, but am still waiting for a response.

[Moe Bedard]

That is what I included the GMAC contact number for............

You would need to see what they say.........

[~Jess~]

You won't qualify under Obama's plan, but they may have a different mod program available to help you...

[saeta78]

I have a question on this 31% rule and see if someone can help out.

I know its 31% of gross pay (before taxes) which should be your mortgage amount.

I am about to fax over new pay stubs and I know the gross amount but trying to figure how many steps for my mod.

Step 1 - reduce interest as low as 2%
Step 2 - extend amort to 40 yrs
Step 3 - forbear a portion of principal

What is included in "mortgage"? Does that include, principal & interest only? Or does it also include your taxes and insurance?


In my situation, if it includes taxes and insurance then they would need to forbear a portion of the principal.

Thanks!!

[Moe Bedard]

The Mortgage payment includes PITIA:

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.


These are the waterfall steps that the servicer will take to get to the target of the 31% of gross income..................

Step 1a: Request Monthly Gross Income as specified above.

Step 1b: Validate total first lien debt and monthly payments (PITIA). For purposes of making a provisional modification offer during the trial modification period, the borrower’s unverified income and debt payments can be used. Provisional information and modification terms will be verified in a timely manner.

Step 2: Capitalize arrearage. Servicers may capitalize accrued interest, past due real estate taxes and insurance premiums, delinquency charges paid to third parties in the ordinary course of servicing and not retained by the servicer, any required escrow advances already paid by the servicer and any required escrow advances by the servicer that are currently due and will be paid by the servicer during the Trial Period. Late fees are not capitalized.

Step 3: Target a Front-End DTI of 31%. The lender/investor shall follow steps 4, 5, and 6 to reduce the borrower’s payment to the level corresponding to the Front-End DTI Target.

Step 4: Reduce the interest rate to reach the Front-End DTI Target (subject to a floor of 2%). The note rate should be reduced in increments of 0.125 %, and should bring the monthly payment as close as possible to the Front-End DTI Target without going below 31%. If the resulting modified interest rate is at or above the Interest Rate Cap, this modified interest rate will be the new note rate for the remaining loan term. If the resulting modified interest rate is below the Interest Rate Cap, this modified interest rate will be in effect for the first five years, followed by annual increases of 1% (100 basis points) per year or such lesser amount as may be needed until the interest rate reaches the Interest Rate Cap, at which time it will be fixed for the remaining loan term.

Step 5: If the Front-End DTI Target has not been reached, extend the term of the loan up to 40 years. If term extension is not permitted extend amortization. The 40-year term begins at the start of the modification (after the borrower successfully completes the Trial Period). Note that the servicer should only extend to a term that is necessary to reach the Front-End DTI Target; there is no requirement to extend to a 40-year term.

Step 6: If the Front-End DTI Target has not been reached, forbear principal. If there is a principal forbearance amount, a balloon payment of that forbearance amount is due on the maturity date, upon sale of the property, or upon payoff of the interest bearing balance.

[saeta78]

Thanks ***. I know you posted this somewhere before. Good to know that it does include all.

[ladyfijiana]

The Mortgage payment includes PITIA:

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.

Thank you again *** for all the great information you provide us.

I have a question here, Indy Mac is sending us a modification but they are not including tax and insurance for us. It clearly says that the amount (modified) doesn't include tax and insurance which for us is another $300.00.

Do you think it is a mistake the mortgage co.

Thanks again!

[Moe Bedard]

It may not be a mistake,.............you would need to check with IndyMac because if it doesn't include the Taxes and Insurance............it is not the Making Home Affordable modification..........

[snapple candy]

***,
I am wondering what you think. I just received this from an attorney with regards to pushing WAMU/Chase to give me loan mod thru Obama Plan (I am fannie mae backed):
Remember, the Obama plan is entirely voluntary. Lenders do not have to
participate. Last I heard two weeks ago, they had not yet published
regulations on the modification procedures or issued lender identification
numbers that are required in order to process claims. I have been busy with
other matters and have not checked CFR recently.
Doesnt those lenders servicing Fannie and Freddie loans have to comply? Or is that just fairy tale too until regulations put in place?

[Moe Bedard]

I can only go off of what the FannieMae guidelines state:


This Announcement provides guidance to Fannie Mae servicers for adoption and implementation of the Home Affordable Modification program (HMP) for Fannie Mae loans.

Under the HMP, servicers will use a uniform loan modification process to provide eligible borrowers with sustainable monthly payments. The HMP implementation guidelines set forth in this Announcement apply to all eligible one- to four-unit owner-occupied properties securing Fannie Mae portfolio mortgages and MBS pool mortgages guaranteed by Fannie Mae.

The HMP will replace the Streamlined Modification Program introduced in Announcement 08-33 and the Early Workout™ program announced in Announcement 08-31. The HMP will expire on December 31, 2012.

All servicers must participate in the program for all eligible Fannie Mae portfolio mortgages and MBS pool mortgages.

Servicers may also elect to participate in the HMP for other qualifying mortgage loans that:

 are not subject to Fannie Mae’s credit loss guarantee, and

 are held by servicers in their own portfolios or are serviced by servicers for other portfolio or securitization trusts or investors.

These other qualifying mortgages are referred to as Non-GSE Mortgages in this Announcement.


A mortgage loan is eligible for the HMP if it is a Fannie Mae portfolio mortgage or MBS pool mortgage guaranteed by Fannie Mae and all of the following criteria are met:

 The mortgage loan is a first lien Fannie Mae conventional mortgage loan originated on or before January 1, 2009. Jumbo-conforming loans are eligible.

 The mortgage loan has not been previously modified under the HMP.

 The mortgage loan is delinquent or default is reasonably foreseeable; loans currently in foreclosure are eligible.

 The mortgage loan is secured by a one- to four-unit property, one unit of which is the borrower’s principal residence. Cooperative share mortgages and mortgage loans secured by one-unit condominiums and manufactured homes are eligible for the HMP.

 The property securing the mortgage loan must not be vacant or condemned.

 The borrower documents a financial hardship by completing a Home Affordable Modification Program Hardship Affidavit (Form 1021) and provides the required income documentation. The documentation supporting income may not be more than 90 days old (as of the date the
servicer is determining HMP eligibility).

 A borrower in active litigation regarding the mortgage loan is eligible for the HMP. The servicer may not require a borrower to waive legal rights as a condition of the HMP.

 A borrower actively involved in a bankruptcy proceeding is eligible for the HMP at the servicers discretion. Borrowers who have received a Chapter 7 bankruptcy discharge in a case involving the first lien mortgage who did not reaffirm the mortgage debt under applicable law are eligible, provided the Home Affordable Modification Workout Plan (Form 3156) and Home Affordable Modification Agreement (Form 3157) are revised as outlined in the “Acceptable Revisions to HMP Documents” section of this Announcement.

 The borrower agrees to set up an escrow account for taxes and insurance prior to the beginning of the trial period if one does not currently exist.

 The mortgage loan is not insured or guaranteed by a federal government agency (FHA, HUD, VA, and Rural Development).

 Regular servicing option MBS pool mortgages and portfolio mortgage loans subject to lender recourse are ineligible for the Fannie Mae HMP.

 Borrowers may be accepted into the program if the HMP Workout Plan is fully executed and returned to the servicer prior to the expiration of the program on December 31, 2012.