Credit card/unsecured debt

[Skipper]

Can anyone comment on their experience as to how credit card (or other unsecured debt) is viewed by the mortgage companies/government, when determining qualifications for a "Making Home Affordable" loan modification under the Obama plan?

Thanks in advance for your thoughts.

Skipper

[faith]

Skipper,
They calculate all your debts and they have also guidelines for Home Affordable Modifications, see link below:

Making Home Affordable - Home Affordable Modifications

Modification Evaluator for Home Affordable Mortgage Modification

Making Home Affordable - Modification Evaluator

The new plan calculates it based on the following:


GMI is Gross Monthly Income which is 31 percent
PITIA is Principal, Interest, Taxes, Insurance and Association Fees
DTI is Debt to Income Ratio



Below is only an example and is not intended to indicate the exact results you can expect if you qualify for this plan


Example:
Your Gross Monthly Income is $4,000
31 percent of your GMI is 1,240 which is the Target monthly payment

Loan $200,000 at 7.5 perent for 30 years 1,398.43
Taxes & Insurance is . 250.00
PITIA 1,648.43



Modify rate to 4 per cent to achieve a DTI of 31 percent


Modified rate to 4 per cent is $ 954.83
Taxes & Insurance 250.00
New payment 1,204.83

[Skipper]

Thanks for the links.... I am optimistic, as BofA has me in the "active processing" state,

In my situation, my current monthly income will easily cover my post modification secured debt obligations, if modified to the 31% level (now currently 50% due to work related loss of income) plus cost of living expenses. When I add in the unsecured (credit card) debt obligation(s), it pretty well takes all my remaining income. I am in the process of debt counseling as per the MHA requirements, so I hope that there will be no issues.

Keeping my fingers crossed!

Skipper

[SillyWorld]

They cvould care less about your other debts as long as no debts have a lien on the 1st, they at one time may tell you if you have hardtimes do not pay CC as they cannot take your home, but do not pay your mortgage and they can take your home

[Murray12]

Yes what Silly said. The only reason they calculate credit card and other debt it to see if you are required to have counseling.

[ttby4444]

I think I had a similar result when I was told by my lender that the credit card debt does not come into play when applying for a loan mod. This is a problem for me since I have a surplus without the credit card debt but almost none with it included. I just want some releif on my interest rate before I ruin my credit between either credit cards or my mortgage.

I tried explaining to the woman on the phone that the reason my credit cards were maxed were because of the high interest rate and addition of a child. She replied suggesting I file for bankruptcy......

Not sure how to proceed now.

[Skipper]

I would definitely speak to a HUD counselor (through the President's "Making Home Affordable" program) or call NACA and get some professional, no-cost advice.

Look through the different topics of discussion on this website and you will find a ton of helpful people and information.

Best of luck!

Skipper

[sammyt74dp]

Skipper, Our unsecured Debtgot us denied from the MHA program. Yes, it will be a factor.

[Skipper]

Hi,

Was the denial for a modification, or re-finance (both are parts of the MHA program).

From what I have read, unsecured debt may be a factor for a re-fi.

On the other hand, all I have read regarding a modification is that if back-end debt exceeds 55% of monthly gross income, that it is mandatory that the applicant agree to work with a HUD approved credit counselor, in an effort to bring the back-end debt below 55% (my emphasis added/paraphrase).

Can you expand on your circumstance?

Skipper

[sammyt74dp]

Denial was for Modification. Currently 6 months behind on Mortgage, not paying unsecured debt either at this point. Makes no sense to. Loan Mod was denied because unsecured debt threw us out of the Ratio requirements , with our reduction of income. So we are filing Chapter 7 BK and will reapply after, we'll see. I don't have a whole lot of confidence in Wells Fargos or any mortgage servicers intentions at this point. The HUD /NACA and all those credit cancelors are not making any difference with the MOD process. If the bank wants to do it ,they will, but not if it is a huge difference in payment probably under $300 a month difference is their preferred range. Any more than that they would rather have the home back to liquidate it and write the loss off. Doesn't make sense, but this is what is really going on. There is alot of feedback that the MHA act is failing more and more everyday due to lack of Bank participation.

[Skipper]

Originally Posted by sammyt74dp

Denial was for Modification. Currently 6 months behind on Mortgage, not paying unsecured debt either at this point. Makes no sense to. Loan Mod was denied because unsecured debt threw us out of the Ratio requirements , with our reduction of income. So we are filing Chapter 7 BK and will reapply after, we'll see. I don't have a whole lot of confidence in Wells Fargos or any mortgage servicers intentions at this point. The HUD /NACA and all those credit cancelors are not making any difference with the MOD process. If the bank wants to do it ,they will, but not if it is a huge difference in payment probably under $300 a month difference is their preferred range. Any more than that they would rather have the home back to liquidate it and write the loss off. Doesn't make sense, but this is what is really going on. There is alot of feedback that the MHA act is failing more and more everyday due to lack of Bank participation.

Hi...

Is there equity in your home? I think that the NPV(?) test may apply. Also, who is your servicer (bank/lender) and your investor (Freddie/Fannie, etc.?)

Skipper

[sammyt74dp]

No Equity. Upside down about 40-50k at least. Put 10% down at the end of 2007 lost all of that plus some an additional 40 - 50k in the red. Wells Fargo is the servicer and Freddie Mac is the investor. No 2nd Mortgage just the first.