GMAC denied mod because of insufficient income?!?! - Mortgage Forum

kcofield · 11-22-2009, 10:47 AM

Hello!

I am new to the forums and like all of you, so glad I found it! I am young (23) and don't know what my next step is.

This is my first and only home, bought in June 2007 in Florida. My fiancé is the co-owner. I believe the interest rate is 6.0% and it is a 30 year FHA fixed. Original loan amount was 170k and we now owe about 164k. According to zillow.com, our house is only worth about 130k.

I lost my job in June 2009 and was unemployed until October 26th, 2009. I was receiving unemployment compensation and my fiancé still had his job so we were just barely making payments . I learned about the Making Homes Affordable Program and printed out all the forms from GMAC online and submitted everything. A couple of weeks later, we received a letter in the mail saying that our application for a loan mod was denied because of insufficient income and we should sale the house. It says that if our current value of the home does not cover what we owe, we should short sale.
OKAY...WHAT THE F***?!?! I thought this program was created to help people who could no longer pay their mortgage? And now they deny us because of that reason?! It does not make any sense to me.

So we have been thinking about short selling the house and moving up to Colorado with his parents and getting an apartment there. Problem is, his parents have a house here that they are trying to sale that my fiance currently takes care of. So we can't really move until their house sales.

Even bigger problem:
My fiancé was laid off September 15th. He received a package that paid him for 2 more months but as off 2 weeks ago, that money has run out. He can't find a job and my job only pays for the bills and food not including the mortgage. We have not paid Novembers bill, won't be able to pay December. In January, we can get some student loans but that will only pay one month of mortgage.

I called GMAC and asked about being denied the loan mod and the only thing she said was that if our income has increased, we can re apply. Okay..it has decreased not increased! I told her that and that we will not be able to pay November and December but MAYBE January and the only thing she told me was that after 2 or 3 months they will start the foreclosure process.

So thats it. GMAC does not want to help me so my house will go into foreclosure in either January or February. Sorry this is so long, I just think you should have all of the details. A few questions:

1) Whats up with the loan mod? Why are they denying us because we don't have enough money?
2) I was told by a friend that if we are late on our payments, we can not short sale. True/False?
3) If my fiance lands a job and we can start making payments, there is no way we can make the back payments. What happens with the money we owe? Does GMAC roll it into the back of the mortgage?

I am so lost. If you have any advice I'd greatly appreciate it.

heidi79 · 11-22-2009, 01:19 PM

Welcome to the forum, sorry to hear what you're going through. FHA loans are somewhat harder to modify than fannie or freddie loans. The denied you becuase you don't show enough income, unfortunately, the bank wants to see that you can pay in order to get the mod, it's backwards, but that's the way it works.

The only thing you can do while he's not working is to try to stall a foreclosure, call and ask them about a forebearance agreement, tell them you need to suspend payments or ask if there's a way they can put you on a plan to make 1/2 payments until the job situation improves. Right now with only 1 income there is nothing you can submit as income in order to cover all household expenses plus mortgage.

Once he's able to find work you can reapply with more income, if he's getting unemployment income you can use it to qualify.

You can definitely start a short sale process if that's what you'd like to do, being late with payments doesn't stop you from being able to do that.

Rolling past due payments to the end of the loan is a type of modification, if you'd like to keep the house re-apply when he's working again.

I-LOVE-MOEBEDARD · 11-22-2009, 01:30 PM

Hi and welcome. I'm not an expert on FHA loans, there are others here who have info on that.

I myself have been denied twice, once was due to "insufficient income." I am now, after 11 months, going into my trial modification that I was just approved for with Chase. The lesson is don't give up.

A couple questions:

What % of your gross income does your mortgage represent right now? If it is more than 31%, they should consider you for a modification. The HAMP guidelines state that insufficient income is not a deal breaker in itself - though they could require you to go to debt counseling.

What you need is a modification that you can consistently pay and not have to rely on irregular income to do so. Student loans are just that. Student - not mortgage - loans.

What state are you in? Make sure you know your foreclosure laws because they differ by state. Their threat that after three months they will "start the foreclosure process" is on the one hand true, and on the other a threat because that can get extended for months while you are working on getting a modification.

That said, there is no guarantee of anything other than get ready for a ride. Many of these folks won't consider you for a mod till you are three months late; however that is no guarantee you will get the mod. Collections people will try to get your money ANY WAY THEY CAN. I do not deal with collections - ever. If I have the need I go to loss mitigation or some other team ---- never collections.

I'm not sure they are using a calculator that works sometimes. So you need to keep pushing. Read through this forum. Find out what is said about FHA loans and about GMAC. And good luck.

kcofield · 11-22-2009, 03:48 PM

Thanks! I'll try to call about the forbearance tomorrow on my lunch break.

kcofield · 11-22-2009, 04:04 PM

Quote:

Originally Posted by ********b02

A couple questions:

What % of your gross income does your mortgage represent right now? though they could require you to go to debt counseling.

What state are you in?

Thanks for the reply!

My mortgage right now (with me working 40 hours and him receiving unemployment) is 50.4% of our income. This is according to a worksheet found on moneyunder30.com. This is also with me filing up my car only once a week and him filing his car just once a month! And with $400 for groceries, which we have been able to do.

As for the debt counseling, we did that a year 1/2 ago and we were able to take 5 credit cards and cut the APR in half on all of the cards. We are still paying on those cards but it is only $250/month vs. whatever it was before.

We are in Florida. I'll have to check the foreclosure laws later tonight.

Thanks again!

MyHAMP · 11-22-2009, 04:37 PM

Quote:

Originally Posted by ********b02

The HAMP guidelines state that insufficient income is not a deal breaker in itself - though they could require you to go to debt counseling.

Well, "insufficient income" actually is a deal breaker as soon as it's not enough to generate a positive NPV and brings the interest-bearing principal below 100% LTV.

The DTI, as you know, can be a deal breaker as well since the OP is dealing with a FHA loan. If you exceed a certain DTI, HAMP is not an option any more.

So the (lower) income can actually get you twice when dealing with a FHA-loan: NPV and DTI.

MyHAMP · 11-22-2009, 04:40 PM

Quote:

Originally Posted by kcofield

We are in Florida. I'll have to check the foreclosure laws later tonight.

Now being in Florida is an advantage - and I'm speaking from experience here....

kcofield · 11-22-2009, 06:16 PM

Quote:

Originally Posted by MyHAMP

Now being in Florida is an advantage - and I'm speaking from experience here....

Oh really? Why is that?

MyHAMP · 11-22-2009, 06:26 PM

Quote:

Originally Posted by kcofield

Oh really? Why is that?

Because Florida offers more rights to homeowners than the majority of other States where you can be kicked out of your house MUCH faster....

~Jess~ · 11-23-2009, 09:50 AM

Quote:

Originally Posted by kcofield

Thanks for the reply!

My mortgage right now (with me working 40 hours and him receiving unemployment) is 50.4% of our income. This is according to a worksheet found on moneyunder30.com. This is also with me filing up my car only once a week and him filing his car just once a month! And with $400 for groceries, which we have been able to do.

As for the debt counseling, we did that a year 1/2 ago and we were able to take 5 credit cards and cut the APR in half on all of the cards. We are still paying on those cards but it is only $250/month vs. whatever it was before.

We are in Florida. I'll have to check the foreclosure laws later tonight.

Thanks again!

I'm very confused by the bolded. Your first mortgage percentage has nothing to do with your gas, groceries or other expenses. It's simply your mortgage payment divided by your income. So, for example, if you mortgage payment is $1000, and your gross income is $2000, then 1000/2000 = 50%. Groceries, gas, utilities, etc are not used for calculating your mortgage percentage.

Also, $400 a month for groceries for 2 people is rather high. I spend that for a family of 5 with dietary restrictions (no dairy or wheat/gluten products). That also includes all of our hygiene products, cleaning supplies, and my husband's chewing tobacco. Check out Hot Coupon World for tips on how to save big (it's a free site

)

litehouse01 · 11-23-2009, 11:28 AM

But it figures in to back end debt ratio per month of expenses..........I would ask about an in house mod as well..........don't give up until you exhast all options

delco · 12-21-2009, 09:23 AM

is this also applicable to a non-fha loan owned by chase?
just received message that i was denied due to insufficent income by chase
applied last spring due to recent and current disabilty have been dealing with immenent default dept as i was current up to nov

bystander · 12-28-2009, 02:08 AM

Any luck on the forebearance?

litton nightmares · 12-28-2009, 07:29 AM

Hi, I am very sorry to hear about the struggles you are having.

Some thoughts:

1) You are very young, so why buy a house that is seriously underwater? not worth what you owe and that problem would just INCREASE with a HAMP mod, you will owe MORE than you do with all the payments tacked on. After about 7 years with a HAMP, your mortgage would be at 5%, just one point less than where you are at right now. If you were my daughter, I'd tell you to check out the new government short sale, plan, take the money for the keys, and go to Colorado with it.

2) Don't throw good money after bad, your student loans are for your education, not for bailing out the bank by paying the mortgage on a home that has lost considerable value, in a very short time.

3) If you REALLY have your heart set on staying there, your fiancee will need to have a job, FAST-- or have at least NINE MONTHS of unemployment payable, that they CAN count as income.

kcofield · 12-29-2009, 06:15 PM

Quote:

Originally Posted by ~Jess~

I'm very confused by the bolded. Your first mortgage percentage has nothing to do with your gas, groceries or other expenses. It's simply your mortgage payment divided by your income. So, for example, if you mortgage payment is $1000, and your gross income is $2000, then 1000/2000 = 50%. Groceries, gas, utilities, etc are not used for calculating your mortgage percentage.

Also, $400 a month for groceries for 2 people is rather high. I spend that for a family of 5 with dietary restrictions (no dairy or wheat/gluten products). That also includes all of our hygiene products, cleaning supplies, and my husband's chewing tobacco. Check out Hot Coupon World for tips on how to save big (it's a free site

)

I JUST saw this post. I didn't get an email notification for some reason.
Anyway. The percent that I got included groceries and gas because of the spread sheet I was using. It dosen't really matter anymore because I lost my job last week so we are both unemployed now.

Where do you live? Grocery price fluctuates from state to state even city to city. We don't spend exactly $400 a month. I usually spend $70-$80 each trip which is usually once a month. I'm actually pretty proud of this amount. I use coupons and by BOGO's a lot.

kcofield · 12-29-2009, 06:17 PM

Quote:

Originally Posted by bystander

Any luck on the forebearance?

No luck. And I lost my job last week due to nothing to work on.
I sent in a financial analysis form last week before Christmas so I am waiting on a response.

~Jess~ · 12-30-2009, 10:42 AM

Quote:

Originally Posted by kcofield

I JUST saw this post. I didn't get an email notification for some reason.
Anyway. The percent that I got included groceries and gas because of the spread sheet I was using. It dosen't really matter anymore because I lost my job last week so we are both unemployed now.

Where do you live? Grocery price fluctuates from state to state even city to city. We don't spend exactly $400 a month. I usually spend $70-$80 each trip which is usually once a month. I'm actually pretty proud of this amount. I use coupons and by BOGO's a lot.

We're in central California.

But seriously, everyone should check out that site! It's completely free, I don't get anything for referring y'all, just want to share ways to save money on groceries and household supplies.

Every little bit helps in this economy!

kcofield · 12-30-2009, 10:47 AM

Quote:

Originally Posted by ~Jess~

We're in central California.

But seriously, everyone should check out that site! It's completely free, I don't get anything for referring y'all, just want to share ways to save money on groceries and household supplies.

Every little bit helps in this economy!

Cool, I may check it out later today. Thanks.

litton nightmares · 12-31-2009, 11:36 AM

Quote:

Originally Posted by kcofield

I JUST saw this post. I didn't get an email notification for some reason.
Anyway. The percent that I got included groceries and gas because of the spread sheet I was using. It dosen't really matter anymore because I lost my job last week so we are both unemployed now.

Where do you live? Grocery price fluctuates from state to state even city to city. We don't spend exactly $400 a month. I usually spend $70-$80 each trip which is usually once a month. I'm actually pretty proud of this amount. I use coupons and by BOGO's a lot.

I agree with you kcofield.

Jess, you're right about the percent matter, but in my view way out of line about the rest of what you had to say. I don't think, $400/month for grocery shopping is extravagant, by any means. While it is true, some people have gotten to be VERY thrifty in the grocery stores, I can tell you shopping for a household that varies from upward of 4 members, (depends on whose home and I frequently have extras for supper) that when I tried doing the coupon thing it was a dismal failure, I ended up with LOTS of overpriced items I normally did NOT buy and found they had scanty portions. A lot of the coupons were for frozen food, I don't usually want, and when I bought enough for everyone, it proved to be a lot higher at the cash register than usual, granted I got told on the receipt how much I "saved" way more than usual--but then I ended up with teenagers, whining because next time I didn't get them pretzel DAWGS, and pizzas, lol.

I shop at a couple places, including some local farms for food. I spend around 175.00 a week, minimally. For Christmas I did go over budget, I bought a prime rib roast from a farmer who does the butchering on site.
It was fantastic, and after we finished the roast, I cut the ribs, made a 2nd meal and THEN, took the bones and made a HUGE pot of onion soup, which we are still finishing off the last of. So I try to be thrifty. BUT, there is only so much you can cut from a grocery budget. Fresh fruits, fresh vegetables, cost a lot of money these days. I buy a huge bag of jasmine rice, it used to cost about 10 bucks, now I can't find it for under 20.

litton nightmares · 12-31-2009, 11:41 AM

Quote:

Originally Posted by kcofield

No luck. And I lost my job last week due to nothing to work on.
I sent in a financial analysis form last week before Christmas so I am waiting on a response.

Hey K, if you are getting unemployment, HAMP is supposed to help as long as you can show it should continue for nine months, or more, if you can't find work. Do not get discouraged, even though I know how discouraging it can feel, things do seem to be going in a better direction for getting the help we need to keep our homes.

goldgem · 12-31-2009, 02:58 PM

Quote:

Originally Posted by ~Jess~

We're in central California.

But seriously, everyone should check out that site! It's completely free, I don't get anything for referring y'all, just want to share ways to save money on groceries and household supplies.

Every little bit helps in this economy!

Jess, which site are you referring to?

~Jess~ · 12-31-2009, 06:17 PM

Quote:

Originally Posted by goldgem

Jess, which site are you referring to?

Sorry, it was in an earlier post. It's Hot Coupon World.

Click on the "forums" tab at the top of the screen.

BECERRA99 · 01-26-2010, 12:54 PM

I know exactly what your going through kcofield. I have been going through hell and back. I was in the exact situation you are in and got out of it just this last november. My income was cut in half last July and was making enough to make my mortgage payments and bills. I found out in late October of 2009 that because I have an FHA secured loan I qualified for what they call PARTIAL CLAIM. Fha will bring you up to date in payments no matter how much it is (mine was $4500.00). Its like a second loan. they will add it to the end of the loan and you pay them back when you sell the house of finished paying for it. NO FINANCE FEE. Check it out.

heidi79 · 01-26-2010, 01:31 PM

becerra,

did they also lower your interest and payment besides doing the partial claim?

BECERRA99 · 01-26-2010, 02:44 PM

No. I didnt refinance and have yet to get a permanant loan mod. Im scared to. Iv heard a lot of bad things about people that are told they are accepted than a few weeks later told never mind. I didnt give as much info as I should have on the partial claim. You have to be about 4 months behind on you mortgage to qualify for it. When I asked GMAC about it they didnt know what I was talking about. I learned about the partial claim because I spoke to a counsler at the Hope hotline. When I was put on what they called a forbarance plan they didnt explain to me that if I was denied a loan mod that I would have a balloon payment after the 4 month trial. So in Oct of 2009 when I was told I was denied for the third time the said by Nov I would have to pay the diff of what I hadnt paid. I called the hope hotline and the told me about the partial claim. I dont think a lot of people are aware of that being available.