Seattle - Citi - Mod - Attorney - Single Income - Pls Help!

**Spencer** · 04-20-2010, 05:32 PM

I just found this site today and I am loving it. I have been reading the last 6 hours non stop and my eyes hurt, so forgive any typos. By direction of my attorney I have not paid my mortgage in 6 months. I was led to believe this would get the banks attention and that without being late the bank likely would not come to the table to discuss a mod / refi.

Today the attorney called and said Citi indicated I pre qualified for a HAMP. [on a side not, I have never authorized Citi to talk to someone regarding my account, nor do I have any documentation from the lawyer for retaining services. Seems like a privacy protection issue to me).

Citi asked that I plan to pay a $2035 payment in 11 days, and a $2500 in the coming trial months. Here is my situation: I bought the house in 2006 for $345,000 with 7.25% interest (my first home and primary residence). I currently own $333,000 and i estimate it would sell for $280,000 today.

My credit dropped to 636 (so far) after the no payments now for 180 days. I am not late on a single other bill. I gross $8590 a month and my payment is $2740, just making that threshold at 31.8%. I am not overlay attached to the house and I am considering whether a continued no payment until foreclosure is the best option over the anticipated 2% first year, blah blah and up to %5 years 5-29.

What I really want is to be debt free. I anticipate it will take 5-7 years before I see equity in the home. I have to decide if its worth a 7 year foreclosure hit or accept a standard mod deal truly not buying me much wiggle room in monthly expenses. I am sending these questions to my lawyer shortly (pasted below).

If anyone has any advice please do let me know. I am also debating if I should dump the lawyer and go about this myself. I have this theory that "no one will care as much about you and your interest as you yourself will".

I dont trust the lawyer will work as hard for me as I will for myself. I just dont want to lose any leverage that the lawyer may bring to the table.

Dear XXXXXX

Thank you for sharing this. I have been reading quite a bit of information today regarding the HAMP (its in my nature). As a result I have numerous questions. Please advise how may be best to address these:

1) Applicants to HAMP have reported they lost eligibility due to mistated income (verbal vs actual). As of Feb 26th, 2010, quite some time from when I provided those initial documents, my salary increased by approximately $3,600 annualy. This is reflected in my last 3 paystubs. I assume this means we need to update the data?

2) I am confused by the ability of this program to benefit my situation. From what I have read, the program limits modifications to 31% of gross monthly income. My gross is $8590 per month. 31% equates to $2662. My current payment is $2740 (31.89% of gross income). I interpret this to mean I would only gain $78 a month reduction?

3) I understand that there are other incentitives available to the HAMP modification, such as: extending the life of the loan; interest only payments; foreberance; etc? Are the inital $1000 and 5 year $5000 incentives standard, or are all of the possibilities variable and debatable?

4) Should I be considering other alternatives, such as an "in house loan" modification, etc.

5) HAMP Negatives: I understand I will get a hit on my credit (I know, somewhat irrelevant being 6 months late) with a code identifying me as "paying under a partial payment plan"; Is this and the "late payments" information in my credit report negotiable with CitiMortgage? It appears some individuals have successfully negotiated this.

6) You mentioned that there would be a payment due May 1st (11 days from today) of $2035. Is this a "good faith" payment or is this considered the beginning of the three month trial period. You also mentioned a trial period amount of $2500. Can you please explain the difference between these two amounts, confirm start dates of these payments and what these payments go to: principal & interest or Citi / HAMP admin fees?

7) Principal reductions sound almost non existant. You mentioned the new Obama plan adds this "principal write off" to future HAMP Mods. Is Loan To Value a consideration in the mod and if so, to what benefit to the borrower?

8) Has Citi confirmed we are applying for HAMP and not Forebearance?

9) Also in consideration of credit score impact, does Citi require applicants to obtain credit counseling due to debt to income ratio as a condition of the trial period?

10) Can you please provide me with the results from my "Forensics Loan Audit"? Was this used in initial negotiations with Citi?

I understand that HAMP is the best program out there, but I would like to consider the aspects and potential benefits of the program before committing to it. I think think the "best program out there" is relative to ones situation and I want to ensure my time and money is going into the appropriate resolution.

***************************************

Readers:

Thanks for any thoughts, consideration or advice you all may have. I appreciate your reading and wish you all the best on your pursuits as well.

**Maurice Bedard** · 04-20-2010, 07:00 PM

Hello and welcome to LoanSafe Spencer! Glad you found us.

OK, let me see if I can give you a little guidance here.

If anyone has any advice please do let me know. I am also debating if I should dump the lawyer and go about this myself. I have this theory that "no one will care as much about you and your interest as you yourself will".

This is very true in most all cases. I feel that lawyers can be good for consults and general counsel. A big retainer etc. is not necessary, but maybe 1 hour here and there to help with questions or paperwork is all that is needed. I have worked with many, many lawyers and more often than not, they don't do much to help and wait till the last minute with a lot of stuff. In some cases, they are absolutely necessary, but to walk away, you need just a few hours here and there of legal advice.

1) Applicants to HAMP have reported they lost eligibility due to mistated income (verbal vs actual). As of Feb 26th, 2010, quite some time from when I provided those initial documents, my salary increased by approximately $3,600 annually. This is reflected in my last 3 paystubs. I assume this means we need to update the data?

Yes, they always ask for updates.

2) I am confused by the ability of this program to benefit my situation. From what I have read, the program limits modifications to 31% of gross monthly income. My gross is $8590 per month. 31% equates to $2662. My current payment is $2740 (31.89% of gross income). I interpret this to mean I would only gain $78 a month reduction?

Correct and that is if you are lucky. I assume they will not ever help you with that income. Even though it is not a whole lot, they see it has money to pay.

3) I understand that there are other incentives available to the HAMP modification, such as: extending the life of the loan; interest only payments; forbearance; etc? Are the inital $1000 and 5 year $5000 incentives standard, or are all of the possibilities variable and debatable?

HAMP is 100% voluntary and for the most part, they are not going by the guidelines. I feel this BS is more to confuse people, then to help.

4) Should I be considering other alternatives, such as an "in house loan" modification, etc.

Yes, most definitely.

5) HAMP Negatives: I understand I will get a hit on my credit (I know, somewhat irrelevant being 6 months late) with a code identifying me as "paying under a partial payment plan"; Is this and the "late payments" information in my credit report negotiable with CitiMortgage? It appears some individuals have successfully negotiated this.

Some have and a lot haven't. It is a crap shoot. Really....

6) You mentioned that there would be a payment due May 1st (11 days from today) of $2035. Is this a "good faith" payment or is this considered the beginning of the three month trial period. You also mentioned a trial period amount of $2500. Can you please explain the difference between these two amounts, confirm start dates of these payments and what these payments go to: principal & interest or Citi / HAMP admin fees?

It is almost always the 1st payment.

7) Principal reductions sound almost non existent. You mentioned the new Obama plan adds this "principal write off" to future HAMP Mods. Is Loan To Value a consideration in the mod and if so, to what benefit to the borrower?

They are almost non-existent. Loan to Value is used to see if you need help, will default and future possible appreciation. Everything is used to benefit the servicer.

**Spencer** · 04-22-2010, 02:15 PM

Thanks Moe: It appears that the HAMP will not do me any good. I assume Citi case workers are instructed to get everyone to 31% if the numbers work. I think I may be better off playing hard ball under a in house mod. I have nothing to lose here- I can take a foreclosure hit and be debt free by the time they boot me out. Staying in the home only prolongs the debt free though saves me that nasty foreclosure scar on my pride.

One more question. I have not been served the notice of default which to my understanding must legally contain disclosure of legal fees, dates, and much more info than the general standard letter they send each month I am late. Once I receive that document, is it 120 or 190 days to foreclosure sale (uncontested)?

Ever hear of "credit cleanup" attorneys getting a foreclosure removed. I have a contact who swears they can do it... I dont see how legally.

Thanks again- this site is a bright star in a dark time.