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How to prepare for negotiator?

Discussion in 'CitiMortgage' started by mom_of_two, Oct 23, 2009.

  1. mom_of_two

    mom_of_two LoanSafe Member

    I made my first trial payment on Oct 1, when called yesterday, I was told that they have all my paperwork and I should call mortgage outreach's underwriter's dept. at 866-413-4560 and see if I have a negotiator assigned. I just want to be prepared for all the questions negotiator asks, also I am afraid what if they deny, what should I say then

    My case:
    Servicer: CitiMortgage
    Investor: Citibank
    Interrest only loan: 499,999 at 5.75 due to reset 2010
    Gross income: 5864 (31% PITI is 1814, that is possible only with 2% and 50,000 baloon and 40 years term, this is what my trial payment is now)
    Current value of the property: 575,000
    Property location: Forest Hills, New York
    Hardship: Ex-husband stopped helping (but cannot document it, as he is on SSI and was helping me by buying groceries and babysit our 6 years old son)

    I would appreciate any advice, I have two children and dont want to short sell and move.
  2. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    Hi mom of two,

    Did you start paying on the trial period without receiving the documents for it?
  3. mom_of_two

    mom_of_two LoanSafe Member

    Hi Evan

    I was pre-qualified over the phone in June (after only faxing my budget and paystubs, and reason for the hardship, its called "Customer Hardship Assistance Package" which is on Citi's website) and was told that I qualify for HAMP and to make $1814 monthly payment from July 1. In September I received the UPS pacakge, in which they requested all the documents and trial payment period was Oct, Nov and Dec. As such, Oct. 1 is technically my first trial payment.
  4. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    Oh ok, so on the paperwork you received it explained what and when the payments were due correct?

    The only reason I ask is because I have seen many people make a huge mistake by starting to pay on the trial without even receiving it in writing first..
  5. mom_of_two

    mom_of_two LoanSafe Member

    But, I did make trial payments for July, Aug and Sept. without having anything in writing (I thought that Citi just want to speed up the process as being presurred by Obama Admn, and payment was $1,000 less than my orignal payment was, I got too excited and thought its done deal and now reading all the FORUMS I am realizing my mistake....what this mistake is going to cost me?
  6. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    I think you will be ok. It seems a lot of reps are prequalifying people just to squeeze money out of them without even sending the official agreement. No agreement is valid until it is received, signed, and you return it to the bank.
  7. mom_of_two

    mom_of_two LoanSafe Member

    Hi Evan
    Thanks a lot for your help/advice and quick response.
    Do you think I will be approved for permanent mod? I know its silly thing to ask...do I still have any card in my hand that I can use to increase my chances?
    Thanks again
    Best regards
  8. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    Once the trial is complete you will have to resubmit updated financial information. They will then continue to review your case for a permanent mod..
  9. Needanewjob

    Needanewjob LoanSafe Member

    Hello Mary,

    Mortgage Outreach Service won't make any decisions on your loan.. They are a 3rd party hired to simply do the document collection.. They will make sure all of your docs have been received and let you know if anything else is needed. Like people will forget to fill out the 4506t form in it's entirety... When you call MOS department simply ask them if they have everything they need. Once they have everything they will transfer your file back to citi mortgage for final approval.. The whole process will take some time, I just made my 5th trial payment with Saxon. :) We are just starting to see these trial periods get fully approved.. Hang in there and be patient.
    1 person likes this.
  10. hope67

    hope67 LoanSafe Member

    As far as I know, according to HAMP guidelines, there is no balloon option, instead they are supposed to do a principal forbearance, so in your case it should be a 50,000 principal forbearance.

    This is how they are supposed to do the waterfall calculation:

    For example your gross income is $1000, 31% is $310.00, this should include tax, insurance and HOA fee.

    Let's say that your balance is $95,000, the arrears are $5,000

    step 1:Capitalize arrears: The new balance is $95,000 + $5000= $100,000

    Step 2:Reduce interest rate: the question is, can they reduce the interest rate without going below 2% to arrive at $310 payment. If yes, they don't need to go to step 3, if no, they will have to go to step3. In this example, they can't achieve a $310 payment with 2% interest, using a 2% on a 100,000 balance for 30 years will yield a payment of $369.62 which would be higher. They must go to step 3

    Step3: Extend loan term: the maximum term is 40 years. So if they can reach the $310 payment by extending the loan to a term that would not exceed 40 years, they would not need to go to step 4, in this example, they can extend it to 39 years, the payment will be very close to $310, it will be $307.90 which is fine, so there is no need to go step 4

    Let's say in another example, they couldn't reach the payment calculated based on the 31% of the gross income, for example the balance + arrears = $120,000 then they would need to go to step 4:

    Step4:Forbear principal: they would need to reduce the balance you owe by about $18,000..why?

    120,000 - 18,000 = $102,000

    Balance financed = $102,000
    Interest rate = 2% (which is the minimum allowed)
    Term: 40 years (which is the maximum allowed)
    Payment: $308.88 (this is the closest to the $310.00 goal)

    Note: (keep in mind that I didn't provide for tax, insurance and HOA in my example, this is just to give you an idea about waterfall calculation)
    1 person likes this.
  11. 3boys'mom

    3boys'mom LoanSafe Member

    Sorry..but have to say it..HOPE67...you are f*&^% good at explaining..Congrats professor..
    Loved it.
  12. 3boys'mom

    3boys'mom LoanSafe Member

    :rolleyes: I found a good calculator
    http://www.realestateabc.com/calculators/PITI.htm

    just needed to add my HOA to it but now I know that my underwater mortgage would only work if they give me the 2% and the 40 yrs term and if the last resource is the forbearance then HomeQ wouldn't need to do it.
  13. davephx

    davephx LoanSafe Member

    The trial payment agreement that I also never got, is no longer required. Only the final docs which they are very behind on. And then wait who knows how long for approval or denial at final stage.
  14. davephx

    davephx LoanSafe Member

    hope67- but the step 4 forbearance is OPTIONAL, not required that little word "may".

    From reports here forbearance is very rare they seem to decline most folks if can't get to piti = 31% after step 3 sadly.
  15. undecided

    undecided LoanSafe Member

    Thank you for this simple explanation, now I understand LOL
  16. hope67

    hope67 LoanSafe Member

    davephx, according to the guidelines, I don't think it is optional. They should do a principal forbearance agreement setting it up as a balloon payment at the end of the term of the loan. I thought they cannot set it up as a balloon payment, so I was wrong in that sense. Of course the final step is passing the NPV test.

    From HAMP guidelines:
    1. Capitalize accrued interest and other eligible expenses to determine the modified loan amount.
    2. Reduce the interest rate to reach the 31% target housing debt-to-income ratio in increments of 0.125% subject to an interest rate floor of 2%.
    3. If the 31% target housing ratio has not been reached, extend the term of the loan up to a maximum of 40 years.
    4. If the 31% target housing ratio has not been reached, then reduce the principal through an agreement between the borrower and the servicer. This agreement (forbearance agreement) would require that the amount of principal reduction be set as a balloon payment at the end of the loan term or when the loan is otherwise paid off
    HAMP & Non-GSE-Insured Loans
  17. hope67

    hope67 LoanSafe Member

    davephx, I researched it further, it is not really clear to me whether or not step 4 (forbear principal) is optional:

    from the treasury site:

    <TABLE dir=ltr borderColor=#000000 cellSpacing=2 cellPadding=7 width=546 border=1><TBODY><TR><TD vAlign=top height=65>
    Step 6: If the Front-End DTI Target has not been reached, forbear principal. If there is a principal forbearance amount, a balloon payment of that forbearance amount is due on the maturity date, upon sale of the property, or upon payoff of the interest bearing balance. If the modification does not pass the NPV Test and the servicer chooses to modify the loan, the modified balance must be no lower than the current property value. ​
    </TD></TR></TBODY></TABLE>

    Then this:

    <TABLE dir=ltr borderColor=#000000 cellSpacing=2 cellPadding=7 width=711 border=1><TBODY><TR><TD vAlign=top height=28>
    There is no requirement to use principal reduction under the Home Affordable Modification program; however, servicers may forgive principal to achieve the Front-End DTI Target. ​
    </TD></TR></TBODY></TABLE>

    According to the waterfall explanation, they should set up principal forbearance as a balloon payment, so it is not principal forgiveness. So what I'm thinking, that it's the principal FORGIVENESS that is optional.

    What do you think?
  18. hope67

    hope67 LoanSafe Member

    To add to my previous post:

    I'm really thinking that principal forbearance set up as a balloon payment is mandatory if need be, I think there is a distinction between principal forgiveness (optional) VS principal forbearance agreement set up as a balloon payment (mandatory).

    Here are the guidelines from :
    https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0901.pdf

    Step 4:
    If necessary, the servicer must provide for principal forbearance to achieve the target monthly mortgage payment ratio. The principal forbearance amount is non-interest bearing and non-amortizing. The amount of principal forbearance will result in a balloon payment fully due and payable upon the earliest of the borrower’s transfer of the property, payoff of the interest bearing unpaid principal balance, or maturity of the mortgage loan. The modified interest bearing balance (i.e., the unpaid principal balance excluding the deferred principal balloon amount) must create a current mark-to-market LTV (current LTV based upon the new valuation) greater than or equal to 100 percent if the result of the NPV test is negative and the servicer elects to perform the modification.
    There is no requirement to forgive principal under the HAMP. However, servicers may forgive principal to achieve the target monthly mortgage payment ratio on a standalone basis or before any step in the standard waterfall process set forth above. If principal is forgiven, subsequent steps in the standard waterfall may not be skipped. If principal is forgiven and the interest rate is not reduced, the existing rate will be fixed and treated as the modified rate for the purposes of the Interest Rate Cap.
  19. davephx

    davephx LoanSafe Member

    Hope67

    Hmmmm....
    On the MGIC site, shows its required but than refers back to LTV limits agency requirements but doesn't explain.

    Your link and quote from hmpadmin is the oldest Directive 09-01 of April 6, 2009. Later directives from MHA and financial stabilty say "may"

    I agree we are talking about forbearance where the amount results in a back end balloon payment vs forgiveness which is never required under HAMP.

    I do see where there is a glimmer of hope on the forbearance but seems limited to Fannie?

    10/14/09 Fannie Mae Checklist for HAMP on page 4 of 17 does not have "may" but seems to require forbearance if the NPV test is positive. If negative only if loan-to-value under 100% which not likely to happen much.

    But the latest July 16, 2009 MHA stuff has "may". For example The Borrower FAQ at
    Making Home Affordable - FAQs says:

    10 What happens if that is not enough to get to an affordable payment?

    If a 2 percent interest rate does not result in a payment that is affordable (no more than 31 percent of your gross monthly income), your servicer may:

    * First try to extend your payment term. At the servicer's option the term of the loan could be extended up to 40 years.

    * If that is still not sufficient, your servicer may defer a portion of the principal amount you owe until the maturity of the loan. This is called a principal forbearance. However please note that with a forbearance, you will still owe the principal; but repayment is deferred until a later date.

    * A portion of the principal could be also be forgiven. This is optional on the part of the servicer. However there is no requirement for principal forgiveness and there is no guarantee that your servicer will offer principal forgiveness.

    Same thing at www.financialstability.gov/docs/borrower_qa.pdf

    NO wonder servicers are confused :( They may be using the "may" versions but obviously Treasury needs to clarify, although Fannie/Fredeie/other investors can it seems to either since only Fannie seems to have it required vs latest guidelines of the overall program as quoted above.

    Geeeze, it should not be so confusing on such an important issue as forbearace which could get a lot more folks qualified under HAMP.
  20. hope67

    hope67 LoanSafe Member

    I totally agree with you davephx, they should be very precise on this issue! Step 4 "Forbear principal" could really get more homeowners qualified for HAMP!

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