Loan Modification Ratios *Urgent, please help*

[jennifergirl]

I am reposting this because I cannot figure out how to edit the thread I have to be more clear on some things

I am very desperate as I have been in the modification process with my bank for 10 months! They have asked for new paperwork yet again, but am getting very frustrated and need to know if it is worth me taking all the days and time to do this with a full-time job and little baby. If this does not go through, I will lose my house, so I don't want to give up now, but also don't want to chase my tail for 6 more months either.

Here is the scenario:

Lets say mortgage + int + taxes are $5000 /month

Equity line is around $700 /month

Credit cards are around $500 /month

Let's say other living expenses are around $5000 /month
(childcare, utilities, food, gas, etc)

What range of NET income would I need to make in order to be in the safe zone to possibly qualify?

I think approaching it this way would help me to understand a bit better.

Thank you for all your help!

[Evan Bedard]

Hi Jennifergirl,

What range of NET income would I need to make in order to be in the safe zone to possibly qualify?

I think approaching it this way would help me to understand a bit better.

Thank you for all your help!

Who is your lender and are you trying to qualify for the MHA or HAMP government programs?

[jennifergirl]

Originally Posted by Evan Bedard

Who is your lender and are you trying to qualify for the MHA or HAMP government programs?

My Lender is Chase (formerly WAMU).

Not sure which program I am trying to qualify for. Any idea?

[caligirl21]

Evan,
What is the different between MHA and HAMP?

[B Stevens]

This is a link to a worksheet Wells Fargo used a while back. They have a new one now with a little bit different layout but the info is the same. http://financial.wellsfargo.com/cons...hip.packet.pdf

Your net monthly income minus your monthly expenses should yeild a $150-$250 surplus. I submitted copies of my bills and a tax return showing a refund of $12,000. (utilities, insurance, cell phone, Brinks, etc.) I explained the refund was used to pay off credit cards to make ends meet. I just laid it all out on the table since it was the last time I was going to give them any information. I sent it to a specific person who was willing to see the modification request all the way through start to finish.

[jennifergirl]

OK. Thank you B Stevens.

Now in this scenario, with $150 to $250 left over, my income would need to be around $11,400.

If these are the credit accounts:

• Mortgage + int + taxes are $5000 /month
• Equity line is around $700 /month
• Credit cards are around $500 /month

Am I in range with what they are looking for to approve me if my income is the $11,400?

[B Stevens]

Here is my example because it is not as simple as you are listing.

Net income - $6950

1st Mort - $2897
2nd Mort - $ 535
AMEX - $ 15
Utilities - $ 954 (with copies of the bills)
Food - $1100 (not able to prove it)
Transport - $ 750 (gas, repairs, maint, insurance)
Cell, Cable - $ 380 (with copies of bills)
Clothing - $ 125 (not able to prove it)

Home Value - $380K
Car Value - $ 9K

I had to leave out the brace payments of $160 a month to show an adequate surplus but I only have 5 more payments to make.

Hope this helps a little.

[jennifergirl]

Thank you, B Stevens! That is very helpful!

So, now one more question.

My last submission was stated income with bank records and P&L statement from my business.

Now, I am paid on 1099 and have proof of payment from the company that I have a contract with. I sent them my paystubs because I have them now. There are no taxes taken out of course as I have to pay those myself.

BUT!!

I can be converted to W-2 status. I was presented this option. I can convert right now and it will take about a week or so to convert. I will then have traditional paystubs. Since I will receive benefits, my monthly expenses will go down by about 25% to make up for the reduced income (income is reduced by about 30% when converting since they cover 1/2 of the employment tax and disability, unemployment, etc). They also supplement some other things that will help out. My income will be less, but so will my bills.

Should I go with the 1099 paysubs or wait for the W-2 paystubs? I have a contact there who is working with me directly. I can tell her the situation, whichever way I go. I know 1099 is hard for some reasons, but I can submit it all tomorrow (they want things ASAP). If W-2 is a lot stronger in getting this through, than I will try to convince them to wait.

OF COURSE it is easier to make the numbers with the 1099 income because I can "estimate" taxes, etc.

[jennifergirl]

OK. Thank you B Stevens.

Now in this scenario, with $150 to $250 left over, my income would need to be around $11,400.

If these are the credit accounts:

• Mortgage + int + taxes are $5000 /month
• Equity line is around $700 /month
• Credit cards are around $500 /month

Am I in range with what they are looking for to approve me if my income is the $11,400?

[B Stevens]

I wouldn't estimate anything. That just causes confusion. Explain in your hardship letter about the 10-99 and your need to set aside federal and state income taxes.

[jennifergirl]

Which do you think is better? 1099 or W-2?

I have an option to go W-2 and will do so if it helps me save my house.

[jennifergirl]

Originally Posted by B Stevens

Here is my example because it is not as simple as you are listing.

Net income - $6950

1st Mort - $2897
2nd Mort - $ 535

Does this include taxes and insurance? I am reading mixed things about this, that the target % includes it and on one hand it doesnt.

[B Stevens]

It does include property taxes and insurance. The final percentage depends on which modification program they choose for you. It should be somewhere between 31% - 38% of your net income.

[jennifergirl]

Which do you think is better? 1099 or W-2?

I have an option to go W-2 and will do so if it helps me save my house.

[MAXIE19]

Jennifergirl:

The best way to find out whether you are in the ballpark of what they are looking for is to perform the NPV test. Here is the link and the information that you need to perform the test if you have not already done so.


FDIC: FDIC Loan Modification Program Guide – "Mod in a Box"

1. Original loan amount
2. Original amortization term
3. Original interest rate
4. Is your loan Interest only or Principal and interest
5. Current unpaid principal balance
6. Current interest rate
7. Remaining loan term
8. How many months past due
9. Monthly Income
10. Monthly taxes and insurance payment
11. Current value of home (try zillow.com, chase.com and cyberhomes.com for
home value estimates).

[jennifergirl]

Originally Posted by MAXIE19

Jennifergirl:

The best way to find out whether you are in the ballpark of what they are looking for is to perform the NPV test. Here is the link and the information that you need to perform the test if you have not already done so.


FDIC: FDIC Loan Modification Program Guide – "Mod in a Box"

The links I click on are all documents. What do I click on for this tool?

[davephx]

As others have pointed out this test can be helpful as a guideline but it is not the same secret NPV test that HAMP uses (now at Version 2) The mod is for FDIC and has been in use for other programs a long time, but its not the secret HAMP NPV test

[MAXIE19]

Originally Posted by jennifergirl

The links I click on are all documents. What do I click on for this tool?

Under the workout program guidelines, click on the Net Present Value Worksheet and it will bring up the spreadsheet. Then plug in your numbers as specified.

[alex098]

What do i put into the Borrower's income box in the NPV spreadsheet? Net income from my paychecks? And I don't see any place to put in expenses there - are they not a part of the NPV test?