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How to get principal forgiveness with 2mp

Discussion in 'Bank of America Mortgage Help' started by alivon, Dec 7, 2011.

  1. alivon

    alivon LoanSafe Member

    I have my first with BOFA and have been modified. I am in the 3rd of my
    second's trial period and am trying to find out how to get my second removed.
    I am in a hardship, (I qualified for MHA), my mortgages exceed my value now,
    I have extensive other debt to keep paying on.
    Any suggestions on how to ask for forgiveness... won't they get paid through
    the program?

  2. Cat Damiano

    Cat Damiano Mortgage Wars


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

    There is a series of waterfall steps that are followed in the 2MP program just like the HAMP. If your HAMP modification included principal forbearance or principal forgiveness then the second lien program will follow that.

    Step 1: Capitalization

    In the first step, the 2MP servicer capitalizes accrued interest and servicing advances (costs and expenses incurred in performing second lien servicing obligations, such as those related to preservation and protection of the security property and enforcement of the mortgage) paid to third parties in the ordinary course of business and not retained by the 2MP servicer, if allowed by applicable state law. Accrued interest may be waived or deferred at the discretion of the 2MP servicer.

    Step 2: Reduce Interest Rate

    For amortizing second liens (payment of both principal and interest)

    In the second step, the 2MP servicer reduces the interest rate of the second lien to 1.0 percent. After five years, the interest rate on the second lien will reset at the then-current interest rate on the HAMP-modified first lien.

    For second liens with interest-only payments

    In the second step, the 2MP servicer may, in accordance with investor and regulatory guidance, either (i) follow the procedure above to convert interest-only payments to amortizing payments at 1.0 percent interest, or (ii) retain the interest-only payment schedule and reduce the interest rate of the second lien to 2.0 percent. After five years, the interest rate on the second lien will reset at the then-current interest rate on the HAMP-modified first lien.

    Step 3: Extend the Term

    Step 4: Principal Forbearance/Principal Forgiveness

    Step 4 – Principal Forbearance / Principal Forgiveness

    In the fourth step, if there was principal forbearance or forgiveness on the HAMP-modified first lien, a 2MP servicer must forbear or forgive principal on the second lien in at least the same proportion; however, the 2MP servicer may, in its discretion and in accordance with investor guidelines, forbear or forgive more than the required proportionate amount.

    Partial Extinguishment Option

    In addition to any required forgiveness in the 2MP modification waterfall, 2MP servicers may, at their discretion and when permitted under applicable investor guidelines, agree to partial extinguishment of additional principal as part of a 2MP modification and will be eligible for both modification incentives and extinguishment incentives on any partial amount of principal that is extinguished so long as the UPB of the second lien at initial consideration for 2MP is equal to or greater than $5,000 and the second lien has a pre-modification scheduled monthly payment equal to or greater than $100.

    Full Extinguishment Option

    As an alternative to modifying an eligible second lien, a 2MP servicer, in accordance with investor guidelines, may elect to extinguish second lien in exchange for a lump sum payment. 2MP servicers may, at their discretion, fully extinguish a second lien with a UPB at initial consideration for 2MP of less than $5,000 or a pre-modification scheduled monthly payment less than $100.
  3. alivon

    alivon LoanSafe Member

    Thank you for your reply. I am concerned that the interest rate comparable to my 1st will make the payment too high. The second
    is a LOC. (I know it has no more to draw on, no problem with that). We don't want to borrow to get ahead but can't see paying
    high payments. My trial payment is $906. My current rate is 2.74% which I know is good. Forgiveness and Extinguishment Options
    are probably difficult to qualify. Reducing the rate and extending the term are probably more the style? I feel I got a fair deal on
    my first. Nothing was forgiven so that option to do the same because of it isn't there. I am 58 and hope to be able to afford this
    property that I have had for 31 years for the rest of my time. We have no savings or retirement so the property is it. Any advice
    on how to approach them at this point. Waiting doesn't always benefit as I didn't wait in on the first and was talking to them constantly. thanks again
  4. Cat Damiano

    Cat Damiano Mortgage Wars

  5. imsocalresident

    imsocalresident LoanSafe Member

    1st hamp, 2nd hamp qualify and 3rd.....

    Cat how would think my situation?

    I have 1st 410k hamp modified

    2nd 93500 (exact) with wells fargo 2mp

    3rd 230k(yes 230000) with wells fargo. not qualified 2mp

    I am going to settle. 7months behind.

    would be better i deal with 2nd and 3rd heloc together since its from same bank?

    or settle 3rd itself.

    which one is better for me?

    reason I accept 2mp trial because I'm afraid wf 2nd would fc.

    If they fc they still get 100k even though they paid 40k for fc. Isn't it?

    2nd and 3rd together 323k. They still get 100k.

    I thought they won't settle less than that amount. so I accept 2mp trial.

    and I was gonna work on my 3rd to settle.

    3rd itself is way underwater. so i thought I could settle with better rate.

    This was y scenario.

    Any advise would be appreciated. Thank you so much.

    house value 650000.00 from CMA report.

    what should I do? not accepting 2mp? settle with 2nd and 4rd together?

    or accept 2nd mp just settle 3rd only? what are my chances?

  6. Cat Damiano

    Cat Damiano Mortgage Wars

    Hi socalresident,

    If it were me, since the first is already modified under HAMP, I would accept the 2MP offer from WF and begin that to bring that loan current while trying to negotiate the third lien if that is the one that is completely underwater. Once you have successfully settled the third lien, then re-evaluate the situation at that point and go from there.

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