WFHM - Denied for Modification

[SlammedDime]

Hello everyone,

I've been reading so much the last few days, almost enough to make my headspin... My name is Matt, I'm 25 years old and in need some help.

Like many others, I purchased my home at the wrong time... my now-wife and I were getting married soon so we wanted to buy a house... no biggie, we could afford it. Skip 2 years ahead - she gets laid off and has to go on unemployment. We were still able to afford the house, barely, and by barely I mean we had enough surplus cash at the end of the month for one dinner at McDonalds. And to boot, 1 week after she got laid off we found out that we were pregnant. Fortunately, she has since found a new job, however making less than she was at her old job, but at least more than unemployment.

Some background on the Mortgage:

> 30year Fixed I/O-10 years at 6.875%
> LTV at time of purchase was 100%.
> LTV now is around 125% (based on new home prices in my subdivision and recent sale prices)
> Loan and Title are strictly in my name (we weren't married at the time yet, and due to my excellent credit and her, not so excellent, this was the best way to do it)
> Loan is owned by Fannie Mae

Some facts about our life

> We each own a vehicle, mine is paid off. I had two motorcycles as well but sold them for the extra cash and to drop off the extra insurance payments.
> No credit card debt
> We cut coupons like crazy to save as much money as possible shopping, buy in bulk to save money, etc.

So when I had the chance to apply for the Making Homes Affordable modification program through Wells Fargo, I jumped at the opportunity. So, I stepped through all of the hoops, sent in all the needed paperwork, they did the appraisal, sent the information to the investor, and then I got a letter in the mail stating:
"This request would be outside of your investor guidelines"

Where do I go from here?

[SillyWorld]

I would not deal with the Monkey Bankers...

And Welcome to the Forum...

You May want to go to NACA.com apply and upload info they seemed to help many with the Fanny Investors

[Moe Bedard]

Thanks for joining and sharing your story!

OK, let me guess, you are not late? If so, I bet that is the reason. If not, the problem may be in your financials or income and expense sheet.

[Murray12]

What is your income? Your wife's? What is the value of the house? What is your mortgage payment including taxes and insurance? Are you sure they included your wife's income?

[SlammedDime]

Originally Posted by SillyWorld

I would not deal with the Monkey Bankers...

And Welcome to the Forum...

You May want to go to NACA.com apply and upload info they seemed to help many with the Fanny Investors

I'll glance over their website, thanks!

Originally Posted by Moe Bedard

Thanks for joining and sharing your story!

OK, let me guess, you are not late? If so, I bet that is the reason. If not, the problem may be in your financials or income and expense sheet.

Correct, haven't been late not even once.

Originally Posted by Murray12

What is your income? Your wife's? What is the value of the house? What is your mortgage payment including taxes and insurance? Are you sure they included your wife's income?

Not quite sure I wanna share all of that. I will answer the last question and that is 'no'. At the time I filed, my wife was still on unemployment which would have run out by now and I did not know if she would have had a job, thus I did not include any of her income (and I didn't include any of her expenses either for that matter (car, insurance, life insurance)).

[Murray12]

I understand, but no one knows who you are. Just trying to figure out if they wrongly denied you. Can't help if I don't know the numbers.

You can add your wife's income even though she is on the note, but if you can qualify on just your income than I wouldn't bother giving her income.

The only thing that matters for the HAMP is your housing expense compared to your income.

[SlammedDime]

I suppose you're right....

My wife isn't on the Mortgage or Title, I'm the only borrower, so I don't believe I need to include any of her expenses or income, as she does make enough to cover them, so really I could live alone and still afford the place... Some rough/raw numbers:
Gross monthly income: $3900
Current mortgage including ITI and HOA dues: $1880 (No principle, loan is I/O for first 10 years)
Estimated value of house: $200K
Loan ammount: $242K

[Murray12]

So your max mortgage amount is $1209 including PITA and HOA. Subtract taxes, insurance, and HOA to get the amount that they would have to reduce the mortgage amount to. What does that number come to?

Instead of guess why you were denied, I would get an answer to why you were denied. Then you can re-evaluate. If you can't get through to your mortgage negotiator, I would call Hope Now and have them get on the phone with you and your servicer. I know a lot of people don't have a high opinion of Hope Now, but I have recomended them to several people and they were happy. You could also go the NACA route, but I don't have any experience with them. Just my opinion.

It is also my opinion that it is BS that they just say "This request would be outside of your investor guidelines" without giving you the reason. Really makes me mad the way they treat people.

[SlammedDime]

I definitely plan on hopping on the phone tomorrow when I wake up to call WF and find out the actual reason for the denial... thanks for the info so far, I'll update once I have more information on the denial.

[MissNervous]

NACA.... Im so glad I went to them..... I listened to sillyworld and am so glad this member found me and gave me some guidance.... I was not getting anywhere other than reading and reading and reading on here... I needed someone to direct an answer to me that gave me some actual guidance... and that was... I went to NACA.... .... I was impressed with the attention, focus and above all else, they went through all my paperwork and I felt like I could breath from the relief of sitting infront of a councilor that wasnt holding out their hand for $2000 fees to work on my loan mod.

Now I have only just submitted the paperwork and have less than 2 months till my auction... however, I really suggest you give naca a shot.... go to naca.com...

and good luck!

[SlammedDime]

Ok, called WF

They state they explored multiple options for my account and based on my expenses and mortgage payment and income. Essentially, my expenses are too high for any sort of modification. So, to lay it all out (this is based on the worksheet that I sent them)

Gross monthly income (from above): $3900
Mortgage payment: 1737.68
Food: $200
Utilities: $144 (as monthly costs for electricity vary, this is a 12 month average of electricity, plus water)
Transportation: $40 (gas costs)
Phone/Cable/Net: 192 (includes cell phones, cable, internet, home phone)
HOA: 146.06
Credit Cards: $0
Car Payments (insurance): $70
Total expenses: $2529.74


So with that in mind, some basic DTI calculations:
Current Front-End DTI: 48%
Current Back-end DTI: 48% (I have no credit card payments, and no car payments, the only payment that show on my credit report is the mortgage).

So if they need to hit the 31% threshold, the PITIA can't exceed $1209.
I/O portion of mortgage payment = 1387.02
Escrow portion = 350.66
So the loan itself can't exceed 858.34.
A 3.5% interest rate would drop the I/O payment to 857.43, making my total payment 1202.85 with PITIA all included.

That is well within the guidelines of the HAMP program.

If you include the 'new' mortgage payment into my monthly expenses, I would have an extra $500 surplus....

So either my numbers are wrong, or Wells is just giving me the run around. Should I try calling the exec office, or just pursue some of the other options in this topic like NACA

[SlammedDime]

After doing some further thinking, I believe the reason may be because they may have to include principle in the calculations, even though I'm not paying it right now... with that in mind, it's not possible to do HAMP unless they hit the third step of chopping $$ off the principle ($7K), which they don't seem to want to do. I plugged the numbers, and at 40 years, at 2%, PITIA comes to more than 31% of my gross without chopping anything off principle.

So then I started plugging some numbers including my wife's income and expenses, and it would be possible to reduce the interest rate to 5.375 with the current 30 year term to arrive at a 31% DTI, which would reduce my overall payment by around $300... which would be better than nothing... so I may refile the modification and try that....

[shade]

What they will do is pull principle and place it at the end.
Example you owe 100k but with 31% of your income to the payment work you would have to be at 90k balance. They wont cut the 10k outright rather they would at it as a balloon payment at the end of the loan due on 40 years.
IMO I think this is more than fair. Also who is your investor?
If the government (Fannie or Freddie) own your loan you have a much much bigger leg to stand on and complain until you cant talk anymore.
Also under the HAMP guidelines there is no limit on backend Debt to Income the rules clearly state that if a borrower is over 55% then they need to go to counseling to formulate a plan to try and bring it down. There is NOTHING that says if you have X DTI then you dont qualify