I have just received my agreement for permanent HAMP mortgage modification. The numbers have me a bit confused; not completetly sure how Ocwen is manipulating the numbers. Here's some details (rounded numbers):
New principle balance: $297,000
Deferred principle balance: $147,000. Of this balance, $125,000 is eligible for forgiveness over three years.
Interest rate: 2% for life of loan.
Interest bearing principle balance: 150,000
Monthly payment: $1189.00 ($456 P&I) for 286 months.
Balloon payment details:
Deferred principle balance as of today: $222,000. I am confused on this, as the contract initially shows this amount to be $147,000.
Deferred principle balance after three years of forgiveness: $97,000
Balloon payment: $97,000. Again, it seems this amount should be $22,000 ($147,000 - $125,000)
I don't understand the change in amount of deferred principle. I am also concerned about the tax considerations for the principle forgiveness. Isn't this reported as income to the IRS? Finally, if I do the math, by the time I've paid off all balances ($150,000 + $97,0000), the actual amount forgiven is $50,000, not $125,000. Don't get me wrong, I'm happy overall with the HAMP offer, but I'd rather pay taxes on the 50K than the 125K.
Any thoughts or advice on the offer, in general, or tax question, in particular? Any input would be appreciated.