Litton Loan Question

[christy4]

I've been attempting another loan modification with Litton and upon calling the ERT dept today, I received some details regarding our trial mod offer from Litton.
Our previous mortgage payment was $599.04 with no tax or insurance escrowed.
While I do understand that under the new mods the tax and insurance will now be escrowed, has anyone discovered how Litton figures these amounts for the three month trial period?

Our new payment under the mod is $1089.07!!!!! When I asked for a break down of that amount, I was told that the payment going to principal and interest is now $524.17 and the amount going to land tax and insurance is now $564.90. Total amount of $1089.07 that I have to pay monthly to Litton for Sept, Oct, and Nov.

The payment is 31 percent of gross income BUT I'm confused as to how they came up with the $524.90 monthly for tax and insurance considering that our total land tax is only 649.68 YEARLY. I pay our insurance montly, which is $87.50 for a YEARLY total of $1050.

Is is possible that Litton will be collecting one year of tax and insurance during the 3 month trial modification and after that, the monthly payment will go down?

I'm anxiously awaiting our packet with all the details so maybe I'll know more then. I was just wondering if anyone else had this situation?

[christy4]

Ok, I made a call to Litton and spoke with someone who could explain the high escrow for the land tax and home insurance.

The reason for that amount is to get our payment at 31 percent of verbally stated income. Once we pass the 3 month trial period and the modification is totally completed, we can submit a request for an escrow analysis based on the actual amounts for the tax and insurance. I was told that it would probably take several months AFTER the 3 months of payments before the mod was totally done. I guess I'm looking at making the $1089.07/month payment to at least February.

SUPPOSEDLY, Litton will refund any overpayment in escrow each year. I'll believe that when I see it!!!! Litton would owe us a refund of $5079.12 every year. I can't see that happening!!! Right now we have over $400 in a suspense account that I've been told will just sit there.

It will also be interesting to see what happens when I send in all necessary documents verifying income and expenses because we just incurred $30,000 worth of medical bills for our daughter's emergency appendectomy two weeks ago. No insurance so that adds to our monthly expenses. Will the amount of the payment change once Litton gets proof of expenses? And, if we sign the trial modification offer, does that lock us in to that payment?

I guess I need to do some further investigation.

[nitag]

With my trial mod which will be complete 8/1, Litton did not care about our expenses.. I think if they did they would do 31% of our net not gross.. Mine is 31% of gross and 38% of net... They only asked about my car payments and any credit cards that I pay.. When ERT Called me yesterday and told me my mod was complete and they were just waiting for my 8/1 payment he broke it down for me.. 2% for 5 yrs then my interest would go up 1% a year till it caps at 5.13%... I was required by Litton to do Housing Counseling through hope... It sounds like they will have to rework your taxes, are you currently behind on the property taxes?? Seems like they wouldn't want to have to refund you that much money!!!

[christy4]

No, we are not behind on property taxes and we have been paying home owners insurance monthly. I can't see Litton refunding over 5k per year either but the reason for the high escrow is to get us at 31 percent of income.

I just want to make sure that we don't jump at this modification with high escrow that isn't based on actual land tax and insurance, only to be locked into it.

Maybe I need to pass on this modification and request our numbers to be reworked.

[nitag]

If there is a way to get them to rework those numbers I would. Although they will do a review on your escrow and HAVE to give you back that money. When I was switched from Avelo to Litton an escrow audit was done within the first couple of months and my payment went down a $118 per month and Litton sent me a refund check for I think $236, can't remember the exact amount.. But like I said, they can't keep that money....

[christy4]

Yes, I was told that after I made the three months of trial payments and the modification was completed, I can request an escrow analysis. The escrow payments would then be based on the actual amounts for tax and insurance.

Knowing Litton, I'm worried that the payments for principal and interest would then increase to keep our total payment at 31 percent of our income. However, once the mod is complete, I don't believe they can raise the P & I payment can they?

I want to be sure of that before we sign anything.

[christy4]

We received the trial modification offer on 7-28-09. One part of the paperwork says that documents and first payment of $1089.04 is due on August 4th and another says that payments are due on the first of Sept, Oct, and Nov. Calling Litton for clarification did not help much---one rep said due on Aug. 4 and another said not due until Sept. 1.

Anyway, the whole trial mod offer is so very vague and includes incorrect amounts for escrow and a supposed escrow shortage that we simply cannot sign the agreeement as it is. Our amount going to escrow with the trial mod is $564.90 monthly which includes a 60 month payment for escrow shortages at a total of $2,529.43. Our total yearly land tax is only $668.69 and total yearly amount for insurance is $1050.00. Both together would be $1718.69 for one year so I have no idea how they figure we have an escrow shortage. We are not behind on tax and we pay our home insurance monthly so there is no shortage. I was also informed that during the three month trial period, I have to continue paying our home insurance. First half of land tax is not due until Feb 2010, last half in July 2010. There is no escrow shortage.

I would have no problem paying the $1089.07 payment for the three month trial period as we would have basically one year of tax and insurance already escrowed. But, we cannot maintain that payment amount for the life of the loan or even past the three month trial. As usual, calls to Litton are of no help! With this trial mod offer, principal and interest payment is $524.17 and I need to be sure that when the actual tax and insurance is escrowed, that our P & I payment won't go up to keep our payments at $1089.07. (I could see Litton doing that!)

Today I sent an email to Larry Litton to voice my concerns with the trial modification offer and let him know about the high escrow amount. We'll see if I get a response!