Why WOULD SOMEONE NOT BE ABLE TO GET HAMP

[sick and tired]

I just talked to my new negotiator yesterday. She seemed nice but told me I did not qualify for the makeing home affordable. I did not have enough income. I do alright but that being the case. I thought they had to lower intrest, extend loan or reduce principal.
With this being the case she said maybe not that but she felt she could do something.
My question is you only have so much money, what do you think they can do excpt HAMP to get you where you can still afford the payments?

[imlars]

Originally Posted by sick and tired

I just talked to my new negotiator yesterday. She seemed nice but told me I did not qualify for the makeing home affordable. I did not have enough income. I do alright but that being the case. I thought they had to lower intrest, extend loan or reduce principal.
With this being the case she said maybe not that but she felt she could do something.
My question is you only have so much money, what do you think they can do excpt HAMP to get you where you can still afford the payments?

There are alot of variables involved. Is your loan a Fannie or Freddie? How delinquent are you? Do you have a large monthly deficit? HAMP really is the best mod I have seen. Alot depends on who your lender is also.

[AZOwner]

Do you have PMI on your original mortgage?

[sick and tired]

My lender is BOA and I am very far behind over a year. I believe it is through Fannie mae. The deficit is I 31% would be around 900.00 my payment is 1650.00

[sick and tired]

Yes I have PMI. I am willing to do what I need I am just afraid they will come back with something impossible. At my current I am at a deficit of around 400.00

[ama125]

If you meet all the eligibility criteria for HAMP, then the ONLY reason for not qualifying would be failing the NPV test (of which there are many variables in the calculation). "Not enough income" is not a valid reason in my opinion. It sounds to me like they are first considering you for an in-house mod to come to that conclusion. I would press them for info pertaining to the NPV test (do you pass or fail). You can check here to see if it is with Fannie or Freddie:

• For Fannie Mae
  • 1-800-7FANNIE (8am to 8pm EST).
  • www.fanniemae.com/loanlookup

• Freddie Mac
  • -800-FREDDIE (8am to 8pm EST)
  • www.freddiemac.com/mymortgage

If it is listed with either one of those, than even if you were to fail the NPV test, a modification under HAMP should be pursued so long as any principal forbearance amount would not create a loan to value ratio under 100%. What is your current LTV? If you are underwater, than you would stand a chance if you fail the NPV. If you have equity, than the real issue is hoping to pass the NPV and not fail. If you pass the NPV, the LTV does not matter. If you need further explanation or details, please ask. I'd be happy to elaborate.

[flagirl4444]

"Not enough income" could cause one to fail the NPV.

If it is listed with either one of those, than even if you were to fail the NPV test, a modification under HAMP should be pursued so long as any principal forbearance amount would not create a loan to value ratio under 100%

Not exactly true. The latest directive, dated October 28, 2009:

https://www.hmpadmin.com/portal/docs...r/hampfaqs.pdf


Q75.
Are there limits to how much forbearance is required in the standard modification waterfall?
Servicers are not required to forbear more than the greater of (i) 30 percent of the unpaid principal balance of the mortgage loan or (ii) an amount resulting in a modified interest bearing balance that would create a current mark-to-market loan-to-value ratio of less than 100 percent. If the borrower’s monthly mortgage payment cannot be reduced to the target monthly mortgage payment ratio of 31 percent unless the servicer forbears more than the amounts described above, the servicer may consider the borrower ineligible for a HAMP modification. However, servicers are permitted, at their discretion, to forbear principal in excess of the amounts described above in order to achieve the target monthly mortgage payment ratio of 31 percent.

Q71.
Is there a limit to the balloon payment on the end? Is there a maximum amount?
The NPV test will drive the maximum amount a servicer may forbear under the HAMP. If the NPV is negative and the servicer chooses to modify the loan, the principal forbearance may not reduce the interest-bearing principal to less than 100 percent of the mark-to-market LTV ratio.

The forborne amount can change the outcome of the npv test. Once the amount gets to a certain limit, it could make the npv test negative. So the lender is only required to forbear an amount that keeps the npv test positive. This may also explain how one passes the NPV test in the beginning, and then fails it at the end once the lender adds the capitalized interest, fees, etc. onto the amount that would need to be forborne.

[ama125]

@flagirl4444 - thanks for clarifying... I am always reading the FAQs on eFannieMae.com and they have not been updated. Just when you think you understand it all, they go and update with new info (I do recall you posting about this on another thread not too long ago though). I think it was previously buried in another document somewhere about the 30%, but not on the FAQs. They should really explain then how the income impacts the NPV to the borrower. I was told I failed the NPV last month (no reason given, just "you failed the NPV"). But with a raise and lowered property taxes, now we pass. That is another big factor that I think may go unnoticed by a lot of people... how property taxes, homeowners insurance, and homeowners association fees (TIA) do impact the NPV calculations and consequently how much of the income can be alotted to paying principal and interest (PI) vs TIA. Thanks again for the additional information... I missed that the FAQs were recently updated again!

[JJsFrustration]

Originally Posted by ama125

If you meet all the eligibility criteria for HAMP, then the ONLY reason for not qualifying would be failing the NPV test (of which there are many variables in the calculation). "Not enough income" is not a valid reason in my opinion. It sounds to me like they are first considering you for an in-house mod to come to that conclusion. I would press them for info pertaining to the NPV test (do you pass or fail). You can check here to see if it is with Fannie or Freddie:

• For Fannie Mae
  • 1-800-7FANNIE (8am to 8pm EST).
  • www.fanniemae.com/loanlookup

• Freddie Mac
  • -800-FREDDIE (8am to 8pm EST)
  • www.freddiemac.com/mymortgage

If it is listed with either one of those, than even if you were to fail the NPV test, a modification under HAMP should be pursued so long as any principal forbearance amount would not create a loan to value ratio under 100%. What is your current LTV? If you are underwater, than you would stand a chance if you fail the NPV. If you have equity, than the real issue is hoping to pass the NPV and not fail. If you pass the NPV, the LTV does not matter. If you need further explanation or details, please ask. I'd be happy to elaborate.

What does NPV stand for?

[MyHAMP]

Originally Posted by JJsFrustration

What does NPV stand for?

Net Present Value..

[ama125]

If you want to know more about NPV, read the overview...
https://www.hmpadmin.com/portal/docs...pvoverview.pdf

[JaFlNowWhat]

https://www.hmpadmin.com/portal/docs...r/hampfaqs.pdf

...amount resulting in a modified interest bearing balance that would create a current mark-to-market loan-to-value ratio of less than 100 percent....

Does this mean that if I have ANY equity that I fail?

[flagirl4444]

Not necessarily, but most likely. How much equity do you have?

[MyHAMP]

Originally Posted by JaFlNowWhat

https://www.hmpadmin.com/portal/docs...r/hampfaqs.pdf

...amount resulting in a modified interest bearing balance that would create a current mark-to-market loan-to-value ratio of less than 100 percent....

Does this mean that if I have ANY equity that I fail?

The part you pointed out actually focuses on principal forbearance and not on the current equity you might have.

The waterfall-limitation in combination with a high mortgage balance and a relatively low income could lead to a denial due to "excessive forbearance" because the interest bearing amount stays below the market value because a high amount would have to go to forbearance to get your monthly payments to 31% of your gross income at 2% APR for 40 years.

Having equity alone doesn't mean you fail. There are MANY factors in the NPV that can balance that out (i.e. cost of foreclosure). The question truely is: How much equity is there?

[JaFlNowWhat]

Having equity alone doesn't mean you fail. There are MANY factors in the NPV that can balance that out (i.e. cost of foreclosure). The question truely is: How much equity is there?[/QUOTE]

I have run the NPV (FDIC mod in box) and depending on what property value I put in I go from yes to no.

In addition, the property values are so variable, depending on the source. If I use county property appraisal value, my UPB plus past due equity = -5k; using a comp equity = -35k; using BofA cyberchase LOW value = equity =+30k and using their high value (which I believe I can fight as being inaccurate) equity = +120K.

So I just feel totally lost.

[flagirl4444]

The NPV test has to show that the investor would make more money on a modification than a foreclosure. That would mean it's in the investor's best interest for the servicer to modify your loan. There are many variables to the NPV. But if you have a lot of equity it would most likely fail the NPV because the lender could reasonably expect to recoup all of their money in a foreclosure.

Making Home Affordable - FAQs

"...Apply a value test to determine whether the value of the loan to the investor will be greater if the loan is modified (factoring in the government's incentive payments). For example, 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. If the modified loan is not of greater value, the investor and servicer may still modify the loan. However, modification in such cases is not required."

[flagirl4444]

Have you applied for a modification? With such varying opinions on the value, the bank would most likely do a BPO, which is similar to an appraisal and go with that amount. If you feel it's too high, you could ask to see what comps they are using and challenge it if you have more recent and similar comps that show a different value.

[ama125]

I do have a small amount of equity (but factor in the second loan and then I am underwater). For the NPV test, they only use the primary loan so accordingly, I owe slightly less than what the home is worth. I was able to get my home's value from my negotiator. Using the mod-in-a-box NPV, after the UPB is adjusted for past due amounts, the gap closes between what I owe and what it's worth (I owe 418K, house is worth 478K). In the foreclosure scenario, after deducting the REO stigma, foreclosure costs, etc (using the values that are pre-populated in that model), the REO value drops down to 309K. I do not understand fully the rest of it, though (the PV losses). Nonetheless, the point here is that I do have some equity and based on this model, I do pass and have been told by my negotiator that we have been pre-approved for HAMP and am waiting for the trial paperwork so I must have passed the NPV for HAMP.

[MyHAMP]

Originally Posted by ama125

I do have a small amount of equity (but factor in the second loan and then I am underwater). For the NPV test, they only use the primary loan so accordingly, I owe slightly less than what the home is worth. I was able to get my home's value from my negotiator. Using the mod-in-a-box NPV, after the UPB is adjusted for past due amounts, the gap closes between what I owe and what it's worth (I owe 418K, house is worth 478K). In the foreclosure scenario, after deducting the REO stigma, foreclosure costs, etc (using the values that are pre-populated in that model), the REO value drops down to 309K. I do not understand fully the rest of it, though (the PV losses). Nonetheless, the point here is that I do have some equity and based on this model, I do pass and have been told by my negotiator that we have been pre-approved for HAMP and am waiting for the trial paperwork so I must have passed the NPV for HAMP.

Yep, those are exactly the factors I mentioned which can balance out equity. Our new neighbors are moving in right now. The house was on the market for 2 years.

Considering that we passed the initial NPV although they would have to forbear almost $350K shows me how bad the market is...

[JaFlNowWhat]

Quote: With such varying opinions on the value, the bank would most likely do a BPO, which is similar to an appraisal and go with that amount. If you feel it's too high, you could ask to see what comps they are using and challenge it if you have more recent and similar comps that show a different value.[/]

They did approve us for a trial MHA/HAMP recently, so I know we passed the initial hurdle. Just want to be on the lookout for any [more] tricks they try to pull.

[ama125]

I confirmed with my negotiator something MyHAMP posted on another thread... they do run the NPV test again to determine the final modification terms. Assuming that you were correctly approved the first time through, make all the trial payments, and your income has not dropped, you should be able to pass the NPV test on the second go-around. Since servicers could enroll people into the trial based on information given over the phone, I would imagine that some people's documents do not support the information initially stated and that is why one would fail to get a permanent mod. Of course, we have already seen data entry error in the NPV test cause at least one person to fail when they should have passed (and thanks to this forum, that person caught the mistake). If the test were made available, we could catch any errors like that instead of jumping through hoops to find it out. I was told today that my trial should be starting Dec 1, so it will be into the new year before I see anything permanent!

[MyHAMP]

Originally Posted by JaFlNowWhat

They did approve us for a trial MHA/HAMP recently, so I know we passed the initial hurdle. Just want to be on the lookout for any [more] tricks they try to pull.

Since HAMP launched, they updated the NPV-test several times. The good thing, however, is that they have to use the same version for the second NPV test, so you can't fail simply because the test evaluates the same input differently.

[flagirl4444]

It is possible to fail the NPV on the second go around before the final modification. At the end of the trial period, once they know the final amount of past due interest and fees to be capitalized, they recalculate the final terms of the modification. This could change the NPV result, or if it's significant could make the amount they would have to forbear go above the limit. This really depends on who your investor is though, how much additional is to be capitalized, and how close the results were on the initial NPV. If it's one of the GSE's you will probably have better luck. But other investors have more leeway with this and don't have to forbear, or don't have to forbear above a certain limit. If you meet the 31% without needing any principal forbearance, then this doesn't apply.


This is from Freddie's servicing guide. This only applies to FM backed loans. Other investors will have their own hamp processes and procedures:

c) General requirements for preparing the Modification Agreement for any Mortgage under HAMP

Once the Servicer knows the final amounts that must be capitalized, the Servicer must recalculate the final modification terms using the Borrower's verified income and prepare the Modification Agreement. (Pursuant to Section C65.6(b), Servicers must use the Freddie Mac Weekly PMMS Rate as of the date that the Modification Agreement is prepared rounded to the nearest one-eighth of 1% (0.125%.))

If the Servicer, in determining the final amount capitalized for the Modification Agreement, determines that the Borrower would no longer be qualified under HAMP, the Servicer must undertake additional steps required under Section C65.6(b) and in this circumstance only will be permitted to forbear principal below the 100% Mark-to-Market LTV Ratio to the extent needed to achieve the Target Payment, regardless of the final net present value (NPV) result.

A Servicer preparing the Modification Agreement should allow sufficient processing time for the Servicer to prepare the Modification Agreement and provide it to the Borrower for execution, so that the Borrower has sufficient time to return it to the Servicer and make the first modified payment by its due date, which is the first day of the month following the final Trial Period month.

[sick and tired]

I am behind 18 months which I know has added alot of back intrest. I am not under water. My house is valued between 171 ande 204k. I owe 178+ all of the intrest and fees. My income puts me at 960.00 for a house payment if I was at 31%. I am giving all of this because I think I should still qualify for the HAMP unless being SO FAR behind is causing the problem. If they do an in house mod how bad or good can that be?

[flagirl4444]

Being so far behind doesn't necessarily cause a problem. How much are your taxes and insurance per month or year? How much is the past due interest?