HAMP 2nd Lien Modification

[Fiveaces]

I am currently working with NACA to restructure my first loan. However, NACA does not deal with 2nd liens so I'm on my own with that one.

Do I qualify for the HAMP 2nd Lien Program? I've read through the materials online and it is not clear to me whether or not I MUST have my first loan modified by HAMP in order to qualify for the 2nd lien program.

Does anyone have any facts/success/advice?

[ama125]

2MP (second lien program) was designed to work in tandem with HAMP, so the first would have to be modified under HAMP in order to qualify for 2MP. As for NACA not dealing with seconds, I have seen people on here post success in getting both loans modified through NACA so I'm not sure why they would have told you that. Sorry, I don't have any suggestions or advice, but you could try going through your servicer to get a HAMP mod. As for 2MP, it is unclear as of right now if any servicers have started rolling that program out yet. I was told by BofA that they have, but haven't seen any reports from folks here to confirm it.

[imlars]

Originally Posted by Fiveaces

I am currently working with NACA to restructure my first loan. However, NACA does not deal with 2nd liens so I'm on my own with that one.

Do I qualify for the HAMP 2nd Lien Program? I've read through the materials online and it is not clear to me whether or not I MUST have my first loan modified by HAMP in order to qualify for the 2nd lien program.

Does anyone have any facts/success/advice?

You must have the HAMP on the first loan in order to get the 2MP on the second. Also, keep an eye on how far behind you get on the second loan as it could go into charge off while you are working on the first one. Once it goes into charge off it is no longer modifiable and you will have to deal with a collection agency to make payment arrangements. It is a black mark on your credit but at least it is no longer accruing interest once it goes to the collection agency.

[ChrissyF1214]

2MP (second lien program) was designed to work in tandem with HAMP

This might sound like a stupid question, but how do I know if my mortgage was modified under HAMP? It was modified earlier in the year, through Indymac are all the modifications under HAMP? My 1st was modified, my 2nd I am told can not be that the loan is "pooled" with private investors. If the 1st was modified under HAMP are the lenders supposed to work in tandem with HAMP? I get no straight answers from Indymac. I am trying to reduce my interest down from 8.875% with no luck!

[MyHAMP]

Originally Posted by ChrissyF1214

This might sound like a stupid question, but how do I know if my mortgage was modified under HAMP? It was modified earlier in the year, through Indymac are all the modifications under HAMP? My 1st was modified, my 2nd I am told can not be that the loan is "pooled" with private investors. If the 1st was modified under HAMP are the lenders supposed to work in tandem with HAMP? I get no straight answers from Indymac. I am trying to reduce my interest down from 8.875% with no luck!

Is your new payment 31% of your gross income? Is there a change in APR after 5 years? Did you fill out official HAMP-paperwork? Were you on a trial-payment for at least 3 months? Did you get your final modification on your new mortgage AFTER July?

If YES, than it's HAMP - If NO (especially to the "July" and "trial"-question or 31% of income), it probably isn't..

[davephx]

I don't believe mortgages charge off like credit cards do under banking regs. If they do I have never heard this is an issue for HAMP. Are you reading this somewhere.

Also only one report of any 2MP use which is small servicer I never heard of. If 2nd is the same servicer as first there are reports of "2MP type" mods but last heard there are no 2MP participants.

[ChrissyF1214]

Is your new payment 31% of your gross income? Is there a change in APR after 5 years? Did you fill out official HAMP-paperwork? Were you on a trial-payment for at least 3 months? Did you get your final modification on your new mortgage AFTER July?

If YES, than it's HAMP - If NO (especially to the "July" and "trial"-question or 31% of income), it probably isn't..

No, mine isn't. I believe it's 31% of our gross, not sure how they figured it out. At the time I have to say the Indymac representative I got was very good with me. I was afraid to report TOO much monthly expenses thinking that they would say we were over extended & wouldn't give us the modification. She kept telling me I needed "more" to report, which I did. My loan APR DOES change after 5 years. It's 4.25% for 4 years then the 5th year it changes to 5.25%. The paperwork does NOT state HAMP. We were on a trial for 3 months, but our payment changed 4/1/09. Not July. Could I be eligible to try to file under HAMP for the 1st even though it was modified already? In hopes that the 2nd loan would modify as well? Indymac did tell me that I could re-submit again in 6 months. Not sure if it would help at all. I don't think they would make it any lower & it's probably pointless. I just was thinking if then the 2nd mortgage MIGHT work with me? The lower % brought me down about $200 and change, still 30 years. I was hoping they would have made it 40 years (and worry about the length down the road) but they didn't offer that to me. Maybe HAMP will?

[MyHAMP]

Originally Posted by ChrissyF1214

No, mine isn't. I believe it's 31% of our gross, not sure how they figured it out. At the time I have to say the Indymac representative I got was very good with me. I was afraid to report TOO much monthly expenses thinking that they would say we were over extended & wouldn't give us the modification. She kept telling me I needed "more" to report, which I did. My loan APR DOES change after 5 years. It's 4.25% for 4 years then the 5th year it changes to 5.25%. The paperwork does NOT state HAMP. We were on a trial for 3 months, but our payment changed 4/1/09. Not July. Could I be eligible to try to file under HAMP for the 1st even though it was modified already? In hopes that the 2nd loan would modify as well? Indymac did tell me that I could re-submit again in 6 months. Not sure if it would help at all. I don't think they would make it any lower & it's probably pointless. I just was thinking if then the 2nd mortgage MIGHT work with me? The lower % brought me down about $200 and change, still 30 years. I was hoping they would have made it 40 years (and worry about the length down the road) but they didn't offer that to me. Maybe HAMP will?

If your mortgage (after the recent mod) already is at 31% of your gross, you are not eligible for HAMP. Even if you slightly above, the NPV might be a problem (since you are current now).

Also, as davephx pointed out, there are no 2MP modifications right now. If you are behind on your second mortgage and you are underwater on your first so that a foreclosure wouldn't pay off for the second, you could also stop paying the second and put that money aside (on a savings account - DON'T spend it). If the second mortgage sees that you are struggling and not paying, they might be willing to work with you or in a best case scenario, are willing to accept a settlement. If they are not willing to work with you or are foreclosing, use the money you put aside to bring your loan current OR - if you are upside-down - file CH13 BK and use the saved money to pay the attorney/court fees. Your second mortgage will be stripped and you get rid of it.

So there are many options...

[davephx]

IF every 2MP gets going yes it may be worthwhile to do HAMP to get to 2MP. That is an advantage of non HAMP now can do later.

But under 2MP if HAMP mod it seems could do 2MP even later when hopefully there are participants that will offer it.

[ChrissyF1214]

Thanks so much for your advice. I have been paying & I am current on my 1st modified loan, haven't been late or missed a payment. My 2nd mortgage the interest is just so high. I wish they would work with me. I think I am going to stop paying, keep the money on the side & see what happens. I do have an appt. next week with a bankruptcy attorney just to see if that 2nd loan could be stripped, over email he pretty much said no, so not sure if all states are different (I'm in NY) or if he doesn't know what he's talking about. I'll see next week what he says.

[davephx]

2nd can only be stripped in Chap 13 not 7

The bankers/Republicans blocked the attempt for cram down in Chap 7.

State does not make a difference

[ladyfijiana]

I am also with IndyMac both first and 2nd.
First was modified without our asking in May of this year.
2nd still is with high of 11% and we haven't heard anything from them yet.
We did send our paperwork in October for 2nd to be modified...I am waiting patiently and hopefully very soon I will get a call from them reducing my interest to match with first would be great.

[imlars]

Originally Posted by ladyfijiana

I am also with IndyMac both first and 2nd.
First was modified without our asking in May of this year.
2nd still is with high of 11% and we haven't heard anything from them yet.
We did send our paperwork in October for 2nd to be modified...I am waiting patiently and hopefully very soon I will get a call from them reducing my interest to match with first would be great.

The only modifications IndyMac is doing is the HAMP and 2MP. They stopped modifying second mortgages about 2 months ago. All they offer now is a repayment plan for those that are 3 months or more in arrears and you only are given 6 months to pay off the entire delinquency. Interest rate doesn't change.

[Hopefull2009]

I don't believe mortgages charge off like credit cards do under banking regs. If they do I have never heard this is an issue for HAMP. Are you reading this somewhere.

Davephx - I was told by Aurora about ? 5-6 months ago that they charge off 2nd mortgages rather than foreclose. The rep actually said this was a "good" thing because once it was placed with a collection agency, the repayment terms would be better - go figure. She did say if the 2nd were to charge off, it wouldn't have any effect on my HAMP I was applying for. In Sept, when I spoke directly with the underwriter for a status update, she confirmed the charge-off information. Who knows - the stories seem to change from day to day, but in theory - that 2nd mortgage really isn't worth a whole lot to them these days I guess depending on the home's value.

[Social Apocalypse]

Any updates on 2MP?
When your second charges off, how do they handle the lien? I am sure it's still there and sold to the collector, right?

[davephx]

Originally Posted by Hopefull2009

Davephx - I was told by Aurora about ? 5-6 months ago that they charge off 2nd mortgages rather than foreclose. The rep actually said this was a "good" thing because once it was placed with a collection agency, the repayment terms would be better - go figure. She did say if the 2nd were to charge off, it wouldn't have any effect on my HAMP I was applying for. In Sept, when I spoke directly with the underwriter for a status update, she confirmed the charge-off information. Who knows - the stories seem to change from day to day, but in theory - that 2nd mortgage really isn't worth a whole lot to them these days I guess depending on the home's value.

Interesting.

I also pulled by credit report and my 2nd shows that sevicer BOA charged it off in August. BUT. BUT.. I still get about monthly calls from BOA warning me they already have sent letter of acceleration etc so they think they still can foreclose. But I tell them how far under I am (they are half way to China underwater) and I'm in the HAMP trial and they are appeased.

Charge off doesn't always mean sell to a collector. With cc they often retain and keep up collections they just have to write off after 180 says accounting wise.

I am not clear if 2nd not being a lien would help or hurt for HAMP. It would mean more equity - less underwater for the NPV test. But help the budget. But NPV Test seems more critical.

Here is some research results still confusing:
From My second mortgage became a charge off - What is that?
Property retains the 2nd lien: The charge-off does not remove the second lien from your property unless you pay it off.

HOWEVER.. I like this answer well a little better from
Letting Your Second Mortgage "Charge Off" :: Mortgage and Foreclosure Law Blog
your second mortgage would charge off as bad debt and become unsecured debt. The reason is that there is no equity in the home to foreclose on. Two years ago, in this situation, the holder of your second may have decided buy out the first mortgage and sell the home to recoup their $50,000. Now, that doesn't make financial sense. So in this situation, if you don't pay your second for at least 6 months, it will charge off as bad debt; but what does that mean?

That means the holder of your second makes an accounting entry and "writes off" the $50,000 you owe them as a loss. However, they will continue to collect on this debt. Usually they send it to debt collectors who will harass you for months. Eventually, if you are employed, they are likely to send the debt to a law firm to sue on, for collection.

---
SO if no equity and it therefore becomes unsecured... that is good because the rest can be dischaged in BKK and not interfere with HAMP.

It also depends of State law and can depend if purchase money 2nd or not.

Here is a post on a bkk forum:
in CA (a non-recourse state) they MUST go after the property first. Whether you are a 1st, 2nd, or 3rd lien holder you must take action against the property. If there is a deficiency they would have to eat it. Since going after the property was their ONE ACTION, they are not allowed a "2nd action" to seek a judgement against me for the deficiency. Again they must pay off all liens ahead of them.

The 2nd or 3rd could ONLY seek a judgement against me if they became unsecured assets. Meaning the 1st foreclosed making the other lien holders unsecured debt. Since the 2nd and 3rd haven't had their ONE ACTION yet, under CA law they can now seeking a judgement and wage garnishments. But this only applies to NON-purchase money. A 2nd used for to purchase the house cannot seek a judgement against you and goes away.