US Bank mod? / story

[daytona1]

Hello all what a great site...well I am another of those people who have always been responsible and paid everything on time my entire life...never late on anything. Long story short is my income dropped substantially last yr due to the economy. We continued to service our obligations through savings, etc. We have a 1st with US Bank for ~550k taken out in July 07. Fixed at 7.25% for 3yrs then goes to float. at 4.4% over 1yr libor with a 7.25 floor..(I just caught the floor in looking at the docs this week...had no idea about that.) The loan is fully amortizing with payments of ~3800/mo. we have over equity 2nd with Irwin Home equity for 150k at 10.02% interest only for 10yrs, taken in July 07 also. payment is ~1300/mo. Taxes are current and are not escrowed, also no PMI. Really in order to protect the rest of my retirement and to continue servicing my other debts I stopped paying both mortgages last month and contacted USB for a modification. They are sending the papers now..I believe that I have a true hardship in that my income dropped and my savings have been severely crimped...I have other assets but they are not liquid.

My net (after all taxes, etc) income is 5k mo now and my wife just went back to work with hers being about 3k. (My income is headwed back up as well so that is a plus) My other obligations are about 5k/mo, taxes, cards, living, expenses, etc. My plan is to cut those down to about 3k/mo after I am able to free up some investments and assets that are entirely illiquid...but I'm not sure I should share that with the bank or if they would even care.

What I am would like to do is mod my first to an interest only for a couple (or few) yrs at say 3.5-4% and then talk with Irwin after that to see if they would be willing to either reduce prin or cut their int rate to like 5%...they are totally screwed because I doubt the home in today's environment would bring 500k. I would like to stay and can if I can get some time and breathing room to get close to a cash flow neutral postion at least.

I know USBank and Irwin still own both mortgages so that is a plus. If I could get my "mortgage outlays down to ~2k or so a month everyone (especially the banks) will be happy in that they have performing loans. I live in KY and it is a long process to foreclose, I will also litigate if need be. For now I am planning to work "direct" with the party's.

Does anyone have experience with USBank and or Irwin and their process? I am planning on doing the hardship and am looking for guidance on how much surplus/deficit is reasonble to get to where I feel I need to be.

Thanks for looking and sharing.

[Moe Bedard]

Hi Daytona1,


Welcome to the forum and thank you for joining..............


US Bank is participating in the Making Home Affordable modification program.........in order to be eligible for the program.............the mortgage payment on the first lien alone including PITIA, would need to be more than the 31% target that the program is working to achieve of gross income...................

The guidelines state:

Front-End DTI is the ratio of PITIA to Monthly Gross Income. PITIA is defined as principal, interest, taxes, insurance (including homeowners insurance and hazard and flood insurance) and homeowners association and/or condominium fees. Mortgage insurance premiums are excluded from the PITIA calculation.

The borrower’s income will be verified by requiring a signed Form 4506-T (Request for Transcript of Tax Return) and obtaining the most recent tax return on file for each borrower on the note. For wage earners, the two most recent pay stubs for each wage earner on the note will also be required. For self-employed borrowers or for non-wage income, the borrower’s income will be verified by obtaining other third party documents that provide reasonably reliable evidence of income.

Borrowers must also represent and warrant that they do not have sufficient liquid assets to make their monthly mortgage payments.

The borrower’s Monthly Gross Income is the amount before any payroll deductions includes wages and salaries, overtime pay, commissions, fees, tips, bonuses, housing allowances, other compensation for personal services, Social Security payment, including Social Security received by adults on behalf of minors or by minors intended for their own support, annuities, insurance polices, retirement funds, pensions, disability or death benefits, unemployment benefits, rental income and other income.



The contact information for US Bank along with the information regarding the program can be found here.........
Making Home Affordable - Loan Modification and Refinance



These are what most lenders consider to be generally acceptable hardships....

1. Loss of job or reduction in income
2. Death of the homeowner, spouse or family member
3. Illness of homeowner or family member
4. Divorce or separation
5. Forced job relocation by employer
6. Adjustable rate reset-payment shock

The best way to set up a hardship letter..........

* First, describe the hardship and the circumstances that caused it
* Explain what steps have been taken to correct the situation
* Provide the lender with your plan to get back on track and stay there
* Assure the lender that you are a responsible homeowner who just needs a second chance and that you are very motivated to save your home.

[daytona1]

I have a probably a silly question, but do banks care about credit card and other unsecured payments when they are looking at doing a modification...What I mean is, if you stopped paying your other obligations and could pay them instead do they take that into consideration?

[Moe Bedard]

While they are not looking at credit being good for a modification.........they will look at that type of debt for the back end ratio versus gross income............if it is over 55%, then they will recommend debt management counseling with a HUD counselor to improve that percentage.

According to the guidelines:

The Back-End DTI is the ratio of the borrower’s total monthly debt payments (such as Front-End PITIA, any mortgage insurance premiums, payments on all installment debts, monthly payments on all junior liens, alimony, car lease payments, aggregate negative net rental income from all investment properties owned, and monthly mortgage payments for second homes) to the borrower’s Monthly Gross Income. The servicer must validate monthly installment, revolving debt and secondary mortgage debt by pulling a credit report for each borrower or a joint report for a married couple. The servicer must also consider information obtained from the borrower orally or in writing concerning incremental monthly obligations.

Borrowers who otherwise qualify for a modification under this program, but who would have a post-modification Back-End DTI greater than or equal to 55%, will be provided with a letter stating that they are required to work with a HUD-approved counselor and the modification will not take effect until they provide a signed statement indicating that they will obtain counseling.

[daytona1]

Thank you... I have stayed current on everything else. It's been a choice to deal with one or two Institutions, vs several. Any mod would keep everyone happy and I can eliminate some other debts with asset sales....I might even sell my home when things improve a bit in a few yrs.

[daytona1]

Does anyone know Irwin Home Equitys loss mitigation phone number? I believe they still own the loan but PHH services...or should I call PHH?

[daytona1]

Found them...thx