FHA Partial Claim?

[Lilli]

I called BofA to inquire about a loan modification and principal reduction for my FHA loan (in which my $180k condo is underwater by $60K). After going through the initial filtering process call, the rep said I qualified for a partial claim. I told her I don't want a partial claim, I want a loan mod and principal reduction. She said I'd be assigned a to a person who would be calling me to talk about this. So that BofA person called and I'm getting ready to return the call, but I want to know what I have to tell them, what numbers do I need to produce, to qualify for a modification and not a partial claim? I'm not interested in incurring another loan to pay off, even if it is interest free. Any advise?

[Cat Damiano]

HI Lilli,


The FHA HAMP program follows the guidelines set forth by HUD. Servicers are not able to deviate from these guidelines. They are not able to offer principal forgiveness but instead principal forbearance which in the case of an FHA loan is a Partial Claim.

The borrower is limited to 12 months PITI for delinquent payments. If a buy down is needed to meet the 31% front end DTI ratio requirement, the amount up to 30% of the outstanding principal balance as of the date of default is deferred using a Partial Claim (inclusive of delinquent payments and legal costs), then a loan modification of the remaining principal balance amortized over 30 years and an interest rate reduction, as applicable, is executed.


This Question and Answer document for servicers has some great information regarding the FHA HAMP program:

http://www.nls.gov/offices/hsg/sfh/nsc/ml0923qa.pdf

[Lilli]

HI Lilli,


The FHA HAMP program follows the guidelines set forth by HUD. Servicers are not able to deviate from these guidelines. They are not able to offer principal forgiveness but instead principal forbearance which in the case of an FHA loan is a Partial Claim.

The borrower is limited to 12 months PITI for delinquent payments. If a buy down is needed to meet the 31% front end DTI ratio requirement, the amount up to 30% of the outstanding principal balance as of the date of default is deferred using a Partial Claim (inclusive of delinquent payments and legal costs), then a loan modification of the remaining principal balance amortized over 30 years and an interest rate reduction, as applicable, is executed.


This Question and Answer document for servicers has some great information regarding the FHA HAMP program:

http://www.nls.gov/offices/hsg/sfh/nsc/ml0923qa.pdf

Thank you so much! I'll take a look at this tonight. I sent in my package May 8, forgot a couple of docs, BofA negotiator responded very quickly asking for the missing docs to be faxed asap. Do you know if FHA HAMPs are treated special? I've seen so many horror stories on this site and I was surprised that mine is going so smoothly so far.

[Cat Damiano]

I don't think they are treated special, but it is good that yours is going smoothly.

Please keep us posted on your progress.

[Lilli]

I don't think they are treated special, but it is good that yours is going smoothly.

Please keep us posted on your progress.

I faxed over the missing docs (late) last night and got a voicemail this morning from my negotiator saying my docs were received and I should be getting details on my partial claim in 1-2 weeks. My head is spinning from how fast their response is... I'll keep you posted. And thanks!

[Lilli]

I faxed over the missing docs (late) last night and got a voicemail this morning from my negotiator saying my docs were received and I should be getting details on my partial claim in 1-2 weeks. My head is spinning from how fast their response is... I'll keep you posted. And thanks!

B of A sent me an approved Partial Claim workout... in record time. My new mortgage payment is $2.60 less per month than my original with the additional $5,000 partial claim note tacked on to the end of my loan. I guess this would be a dream scenario considering they responded in record time from the beginning (only 6 weeks from the time I submitted my original request). And this would be great if my only problem was that I was behind a few months on my loan due to a medical setback. But I didn't just have a medical setback that caused me to be delinquent for 4 months, I also had a decrease in income of $500.00 a month (ex-husband lost job = no child support). I read the above FHA Q&A document, but I just can't beleive this partial claim is my only option. It doesn't help my situation because I'm not able to make my current monthly payment with my reduced income... I guess my only solution is a short sale?

[Cat Damiano]

Was the lender notified of your decrease in income?

[Lilli]

Was the lender notified of your decrease in income?

Yes, I wrote it all out in my hardship letter along with all my documentation. As of my last post, I responded to BofA on June 7th by rejecting their partial claim offer in writing based on the fact that my original front end DTI was 34.9% and this new payment only brings my front end DTI to 34.1% (they need to get it down to at least 31%), and that I'd like to be considered for a loan modification (as I had originally requested) based on my decreased income...etc...
Someone called yesterday and left me a message saying they are my new work-out rep and they'd like me to return their call to discuss my situation. Again... a little dumbfounded on these timely responses. I'm going to wait another day or two to call back just so I can go over all my numbers again.

[Cat Damiano]

Ok, when you speak with them, let us know how it goes. According to the guidelines they are supposed to bring the payment to 31percent. Hopefully they can work it out for you.