Curently at 31% - Can I get a loan modification?

[lemonmama]

Hi everyone,

I got a loan though countrywide (now B of A) 2 years ago. When we got the loan, we were told we could refi in 2 yrs to get out of the $250month PMI. Obviously, this is no longer an option because we owe more than 80% on our loan and BofA wont drop the PMI.

My husband was laid off in April and we have now depleted our savings and need a loan modification. The problem is, we are siting right at 31% with my husband's unemployment payments and my income. Due to medical bills, we are barely making it right now.

Does anyone know if BofA will consider the HAMP loan modification if we are already at 31%? Our credit is sitting around the low 500s and although we are not upside-down on our house yet, we dont have any equity, either. Our credit is shot because we have not been able to pay our credit card debt down (we used our cards last year to put sod in and do other home improvements, thinking we'd be able to pay them off quickly ...then he lost his job...) and we had unforseen medical expenses that have gone to collections (major medical stuff with our son, right when my company changed health insurance companies and we had to pay deductables all over again...)

Is it worth it for us to apply for a HAMP modification? Thanks in advance!

[fredk]

I can't help with your question but wanted to suggest you contact your HR department. Often when companies change insurance policies mid-year the new company will transfer over deductibles and out of pocket expense incurred.

You may be able to recoup those 2nd deductibles.

Its worth asking.

[lemonmama]

Hi Fred,

Thanks very much for the suggestion. Unfortunately, we went from a non-deductable plan to a deductable plan, so there were no paid deductables to roll over. Plus, I work for a very small company and the reason we switched was to save the company money. We're all paying more (as employees) and I've been declined by HR on everything I've asked with regards to help with these new financial obligations.

I'm still trying to tell myself I am glad I still have a job, as this was one of the ways our company avoided a third round of layoffs.

[Hopefull2009]

Does your payment included insurance and taxes along with the principal and interest? HAMP would bring your payment to 31% including PITI. If you're already at 31% with those items included, there's not much else HAMP could do I imagine. Maybe your lender has some other program to help temporarily until you're either caught up or ??

[Sunbeam]

I suggest you submit a request for a mod. In the verbage of the Obama medical plan it does state that if there are other unseen expenses, such as medical you may qualify. It is worth a try, but don't take the first NO for an answer. Be persistant. Good luck.

[lemonmama]

Yes - it includes our insurance, taxes, etc.

I think I am going to try for a modification, especially since I just got our mortgage statement and our house payment just went up $100 per month due to an escrow adjustment. We also just learned that our county is sending out property tax adjustment letters next week and everyone can expect close to a $200 increase per year.

Thanks for all the responses, I am going to put together the letter and all the other documentation this weekend. I am sure I'll have other questions as we proceed and I am so glad I found this forum!

[Lhuynh]

what is your total mortgage payments including pitia and you and your husband gross income? sometimes the lender will ask for information that they WANT and not NEED to do a loan modification, so that they can deny you, so make sure what you are sending are what they NEED to do a loan mod and not what they WANT to find a way to decline your loan mod. hope that make sense

[Hopefull2009]

If your payment at the already 31% mark includes PITI, then unfortunately the HAMP doesn't offer any provision to lower it below that. They'll expect you to default on your credit cards, etc. before defaulting on your mortgage. I'd just be very careful with your expenses when you send your mod app in since your payment is already considered "affordable" under the guidelines - you don't want to make a case for them to come back and say you can't afford your mortgage. For the expenses, they'll only use minimum monthly payments based on what is reported on your credit report, so make sure that is reflecting correctly. For the medical expenses, make sure your have all your receipts showing payments, etc. for that - I had to send in copies of medical bills (since they're not included on credit report for verification).

[~Jess~]

The MHAP won't apply to you, unfortunately. However, there may be another modification program that they can offer you. As a side note, I've heard that Countrywide will not consider unemployment as income, a good friend of mine has gone round and round with them over that issue.

[Lhuynh]

hey lemon, are you in an adjustable or fixed?

[lemonmama]

Hi all,

Sorry I didnt answer for a while - I've been super sick and swamped with work.

To answer some questions - we are in a fixed rate of 6.5%. It's a conventional 30-yr loan.

Also, I ran the numbers again and because my house payment just went up (due to my property taxes raising) we are now at 32% instead of 31%. I don't think it's going to make a huge difference to them, but now we are "technically" qualified for the HAMP program, I guess.

As far as showing other bills, etc. it'll be obvious that our credit cards are now maxed and we're paying close to 30% on them, and that we've depleted our savings down to nothing. We have big medical bills in collection right now because of the insurance issue. It's a mess and it's obvious we need help.

Hopeful said:
I'd just be very careful with your expenses when you send your mod app in since your payment is already considered "affordable" under the guidelines - you don't want to make a case for them to come back and say you can't afford your mortgage.

Did you mean "you CAN afford your mortgage"? I just want to be sure I understand.

Thanks again, everyone.

[Hopefull2009]

Did you mean "you CAN afford your mortgage"? I just want to be sure I understand.

No, I actually did mean to say CAN'T afford your mortgage. Think of it this way - you're technically at the point that others are attempting to be modified down to (i.e. "affordable payment"). When you add your bills to that you don't want them to come back and tell you you can't afford your house. If your not late on your payments, it's probably not a big deal, but if you are, I'd just be cautious. As far as your cc bills, they're only going to calculate the min monthly due based on your credit report amount. Unfortunately, the mortgage lender could care less if you default on everything else as long as they are paid.

I'd go ahead and apply. If they deny it, apply again. Apparently, the modification process can go on forever it seems (lol - ask me how I know that :-)

Good luck!

[MrBreach]

Originally Posted by fredk

I can't help with your question but wanted to suggest you contact your HR department.

Good idea, I have got some great advice from them in the past.

[lemonmama]

Hopeful,

I guess I am confused because I am sitting at 32% right now, so wouldn't it be more likely that they'll come back and say that they can't help me because I CAN afford my house? (Even though I know I can't afford this payment right now). I guess I need to know at what percentage should I be with all my bills included...

[Hopefull2009]

Originally Posted by lemonmama

Hopeful,

I guess I am confused because I am sitting at 32% right now, so wouldn't it be more likely that they'll come back and say that they can't help me because I CAN afford my house? (Even though I know I can't afford this payment right now). I guess I need to know at what percentage should I be with all my bills included...

Well, there is no right or wrong percentage as far as bills. The only issue that comes in to play is with the backend DTI. If it above (forget exact amount - 50 o 55%?) then you're required to obtain consumer credit counseling as part of the modification requirement. As far as the modification, they are only looking at your PITI and bringing it to 31% of gross income and considering it an affordable payment. You'd have to find out how they'll treat your husband's unemployment income I suppose (i.e. how long it is expected to last, etc.)?

As far as the affordability option - my thoughts were, if you were already late and behind, it could possibly trigger a scenario of unaffordable and no options. Since you're current and it's not an issue, it wouldn't be a factor. I didn't realize when I posted that that you weren't late or behind on payments right now.

I'd just go and apply - what's the worst that can happen? If you're at 32% - maybe they'll reduce it a few dollars?

[lemonmama]

That's one of my worries...I don't know how they will treat my husband's UI. He just got into the retraining program (TAA) and so they've extended his UI benefits out for another 18 months. There are no jobs here for him to make more than what UI pays him, so that's why he opted for TAA.

I guess the best I can do is try.