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NPV and debt to income ratio

Discussion in 'Bank of America Mortgage Help' started by chachagal, Mar 8, 2011.

  1. chachagal

    chachagal LoanSafe Member

    Can anyone shed light on how the debt to income ratio is determined in the NPV rating? I was just told by BOA negotiator that I "may be denied" for HAMP due to my debt to income ratio. Divorce is my hardship and of course I would have higher expenses and debt now reduced to one income. Precisely the reason why I am applying for the program.
  2. bnrbnsn

    bnrbnsn LoanSafe Member

    Laymen explenation is how much you make verses how much goes out of your pocket. In bankers thinking I guess that means do you have enough $$ to pay your mortage and bills, and still give the bank the profit they want. They might forclose on you if they find you cant afford yur mortage and start falling behind.

    Have herd good things about the rest report, it is the npv test that bank uses so you can determind for yourself if they are correct, and you to know where yous stand . Or you can trust there very human very multiple errors they seem to make. Good luck.
  3. capote203

    capote203 LoanSafe Member

    Hi chachagirl - DTI ratio is in two parts Front end and Back end. Front end DTI includes the following monthly pymts - 1st Mortgage pymt, Property Tax, Insurance (on house), HOA dues (if any). Add those monthly payments together then divide them by your monthly GROSS income EG -

    Monthly Gross Income - $6000

    Monthly Pymts (Front End)

    $2000 - 1st Mortage (P&I)
    $500 - Property Tax
    $200 - Insurance
    $100 - HOA dues

    $2800 - Total

    $2800 / $6000 = 47% (This is your front end DT)

    Back-End DTI includes the above, plus any other items that show up on your credit report (monthly minimum credit card payments, car loan/lease, personal loan...) EG.

    Monthly Gross Income - $6000

    Monthly Pymts (Back End)
    $2000 - 1st Mortage (P&I)
    $500 - Property Tax
    $200 - Insurance
    $100 - HOA dues
    $500 - 2nd mortgage
    $100 - Credit card 1
    $200 - Credit card 2
    $500 - Car loan

    $4100 - Total

    $4100 / $6000 = 68% Back End DTI
  4. jenks540

    jenks540 LoanSafe Member

    Which one is used when BofA is evaluating a HAMP mod - Front or Back end?

    I have heard conficting information. I have been told not to worry about factoring in credit card payments and a second mortgage if you are not making payments on them, and I have been told that BofA will run your credit and factor in revolving credit even if you are not making the payments or the items are charged off.

    Thanks in advance
  5. davephx

    davephx LoanSafe Member

    Both.

    But if the back end DTI is over 50% all it means under HAMP is you have to agree to credit counseling. It is not a basis for rejection at least under regular HAMP. However the banks make their own rules and often ignore the HAMP directives.

    I was rejected because of high DTI until Fannie stepped in and got rejection reversed.
  6. Hallvalla

    Hallvalla LoanSafe Member

    Thanks, I've been looking for this info. However, I recently read that the back-end is NPV calculated with NET, not GROSS? Gross is only used for the front-end, at least according to somebody on this board:

    post #5
    http://www.loansafe.org/forum/loan-modification/35082-debt-income-calculation.html

    Dti

    Both, but the emphasis is on gross income, not net.

    The "front end" calculation of your 31% housing ratio is calculated using gross income, the "back end" calculation used in NPV test is calculated using net income.

    Hope this helps!


  7. davephx

    davephx LoanSafe Member

    According to latest official notice I find FHA-HAMP front and back end is still based on GROSS, not net.

    http://www.hud.gov/offices/hsg/sfh/nsc/rep/hampfact.pdf

    Is very important for FHA of course since it is a absolute denial factor vs regular HAMP where its not and only means you agree to debt counseling but not a reason to deny.
  8. Hallvalla

    Hallvalla LoanSafe Member

    Interesting, thanks dave.

    I'm trying to figure out a way to get my back-end to under 55% for a FHA-HAMP - but that isn't really necessary? Is there a target % not to exceed for an automatic denial - say 65%? This will be through BofA.
  9. davephx

    davephx LoanSafe Member

    55 percent is the auto denial level for FHA-HAMP.
  10. Hallvalla

    Hallvalla LoanSafe Member

    Ah, sorry, read your post wrong.

    So, regular HAMP = over 55 = debt counseling and possible approval
    FHA HAMP = over 55% = denial
  11. davephx

    davephx LoanSafe Member

    Yep that sadly is the difference. And no 2%/40 years with FHA about about 5%/30 with a partial deferral of principal which can be better or worse than regular HAMP.
  12. azloan

    azloan LoanSafe Member

    Dear davephx, I have read your post of 3/26/11 that stated "I was rejected because of a high DTI until Fannie stepped in and got rejection reversed." I too was rejected for the regular HAMP by B of A based on a high back end DTI When I received the rejection B of A did not list the reason for the rejection which I understand is a requirement of the regular HAMP program. I literally spoke to 8 people in B of A (each one said "not my job" and just transferred me or referred me to another) before I found one person that was knowledgeable enough to tell me it was back end DTI that was the issue. MY QUESTION IS: How do I go about getting Fannie involved like you did to get my rejection reversed? Thanks so much in advance. Your posts and others have helped me tremendously!
  13. davephx

    davephx LoanSafe Member

    Unfortunately my Fannie help was gosh 1.5 years ago now. I was working with Citi Exe Response person who was trying to be very helpful and one point of contact late in my long battle.

    I called the Fannie number (don't have any more) and somehow was lucky enough to wind up with a very high level person who I later found runs a Fannie LA home-ownership office and Phoenix previously and listed as a Fannie VP and often was quoted in the media as a Fannie spokesperson. I don't think she is still there and normal doubt if helping random callers is normal for her.

    She heard my story and said if I wanted her to intervene she would as I was trying to decide to wait for the review I was under for inhouse or try and get Fannie involved. She even said she would esculate it within Fannie if she needed to. Obviously I was lucky and elated. And since I also needed HAMP for 2MP I had her do her thing and like magic within a few days my rejection turned into approval.

    But that may not help folks now but it is worth a try and just don't have any helpful contact info now.
  14. azloan

    azloan LoanSafe Member

    Thanks for responding. Your story gives me hope. I am like a pit bull when it comes to matters like this. If I know I am right and have something to fight for, I will sink my teeth in and not let B of A out of my grip! I will find someone that is knows enough to help me. I thank you again for sharing your experience. It is a shame that homeowners are sometimes left to their own resolve to battle the "bailed-out ... too big to fail ... mega banks" all by themselves. At least there are resources like this website to help us in what seems like a lost cause.

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