Qualifying for HAMP if we have equity in our home???

[curiousinidaho]

Hi All,

New here, but in the same boat as everyone else . . .trying to save our home! I read and re-read all 38 pages of the HAMP guidelines and determined that we do qualify for a loan mod. We sent all required docs to AHMS on 8/28 and they have verified receipt of the docs but have not assigned us a case manager, so no news yet.

A very reliable source told me that AHMS has already sent an appraiser to do a drive by appraisal of our property . . . AKA . . . Proposed Broker Appraisal. Supposedly, the PBA came back with a value of 220,000 and we owe 201,000.

My questions are:

1. Will this small amount of equity be an automatic denial for a HAMP loan mod even though we fit all other criteria?
2. If we are denied due to equity, can we argue this and request another appraisal or request they use the appraised value by the county tax records?
3. Has ANYONE been offered a HAMP loan mod while having equity in their home?

Thanks in advance for any help and advice!

[ama125]

I am trying to get HAMP through BofA and am in a similar situation. Based on just my primary loan and what BofA says my house is worth, then I have a small amount of equity. Factor in my second loan, and I am slightly underwater. The value of the home is a major factor in the NPV test in the calculation of the cost of foreclosure (based on current home value, months to foreclose, etc, to determine how much the house would sell for at foreclosure). The other part of the NPV where home value would come into play is in determining the loan to value ratio after modification. If you pass the NPV, no problem and you get modified. If you fail and there is prinicipal forbearance required, they could still modify your loan so long as the resulting LTV does not go below 100%. Since you (and I) already have an existing LTV below 100%, than any modification would bring it down even lower, meaning if you fail the NPV and require principal forbearance, you will not get modified under HAMP. So, having equity does not automatically mean you won't get it, it is really based on the NPV results.

[curiousinidaho]

Thanks for the reply . . . It's the whole NPV thing that has me stumped. Is there an easy formula to calculate the NPV? Thanks

[ama125]

Originally Posted by curiousinidaho

Thanks for the reply . . . It's the whole NPV thing that has me stumped. Is there an easy formula to calculate the NPV? Thanks

Well, there's no "easy" formula for it, but there is the one for the FDIC mod-in-a-box program. If you read about that program and understand how if differs from HAMP, you can tinker with their NPV worksheet to get a decent picture of how NPV works and what variables come into play. The FDIC did contribute to developing the HAMP NPV model so in lieu of any other NPV model to refer to, this is the best you'll come by. Do note some important differences...you must change the program floor to 2% and adjust the formula for the cell that calculates the modified payment. Also, this program does not include taxes and insurance so that is NOT reflected in the modified payment. It does serve as a guide though in how the HAMP NPV may also look. Use this for illustrative purposes only. At the very least without changing anything, you would know if you could pass THIS NPV test. I've posted about this extensively on the CW forum (you can look up my posts...see the sticky thread titled PLEASE ONLY POST....).

FDIC: FDIC Loan Modification Program Guide – "Mod in a Box"