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Wells Fargo Hamp Trial Mod Outrageously High Should I accept???

Discussion in 'Wells Fargo Home Mortgage' started by MISSINFORMED, Sep 27, 2012.

  1. MISSINFORMED

    MISSINFORMED LoanSafe Member

    First and foremost, THANK YOU FOR THIS SITE. We are panicked and desperately need direction. Here's our story with our dilemma following:

    MISSISSIPPI 11/2006: HOME PURCHASE @ 179,900
    WELLS FARGO 1ST: 144,000 @ 8.125% = 1085
    HOMEWARD 2ND: 35,000 @ 14.150% = 430


    WELLS FARGO HAS STATED THAT WE ARE NON FANNIE & NON FREDDIE - OUR INVESTOR IS AURORA?
    HOMEWARD WAS ORIGINALLY OPTION 1 MORTGAGE CO. THEN AMERICAN HOME MORTGAGE SERVICING INC

    We had a previous bankruptcy years 2001 due to medical issues and my husband lost his job. After that we worked hard while renting and when purchasing our Mississippi home in 2006 Wells Fargo said it would be NO PROBLEM to refinance and consolidate the 1st and 2nd in a few years. The first attempt to refi and consolidate the two loans went nowhere in 2009. During that time, both my husband and I had our hours reduced significantly. He works for Coca Cola and I am a manicurist. We suffered several deaths in the family, medical issues and rising costs with this economy. We were able to pull through by the skin of our teeth.

    As the housing crash began and our situation worsened we hopped on the modification nightmare trying to save our house as homes in the area were being foreclosed and sold at or around $100,000. We have never been late or missed a payment on either the 1st or 2nd until June 2012 when Wells Fargo told us to stop making payments to qualify for the HAMP program and that our monthly payment, if we qualified for HAMP, would be around $500 based on our current income and expenses. We are now 4 mos behind with Wells Fargo ($4650) which doesn't seem like much but it is and going further it will be just as difficult. My work is always fluctuating. After 3 years and 2 HAMP denials, we were notified that we indeed qualified for HAMP and that a trial plan would arrive shortly. Having not been on this website and navigating Wells Fargo lies for years I should have been prepared for their trial modification offer:

    WELLS FARGO OFFERS TO DECREASE OUR INTEREST RATE FROM 8.125% TO 7.5%!
    INCREASING OUR CURRENT $1085 MONTHLY PAYMENT TO $1218
    (THIS INCLUDES INSURANCE & TAXES NOT PREVIOUSLY ESCROWED)
    ARE THEY TACKING ON THE $4635 OUTSTANDING TO THE END OF THE LOAN?
    ARE THEY EXTENDING THE TERM OF THE LOAN?
    WILL A PERMANENT MODIFICATION EVER MATERIALIZE?
    ISN'T HAMP DESIGNED TO KEEP ME IN MY HOME WITH REDUCED INTEREST RELEVANT TO THE CURRENT MARKET RATES?

    These trial period terms arrived last week with the first trial payment due on Oct 1st. Our calls to Wells Fargo (cold woman!) and the HOPE line ended with there's nothing we can do. Your next step is foreclosure. And I'm frightened they will arrive tomorrow.

    Our dilemma is if we accept this trial modification to stop the foreclosure process is there any hope for us reducing the interest rate on the loan in the future?
    If we accept this trial to stop the foreclosure process, should we stop paying the 2nd to better afford the 1st?
    Should we sell everything to bring the 1st current to stop the foreclosure and look at other avenues?
    If we decline the trial, continue to not pay, how much time will we have before foreclosure?
    Is it worth a phonecall or email to the Attorney General and is there really anything they can do?f
    Would a real estate attorney have any suggestions (if I can even find one)
    And last, is what Wells Fargo doing with HAMP legal?

    Any and all suggestions are welcomed! Thank you for your time. I hope the above info is sufficient to give an opinion as I have been at the mercy of Wells Fargo and certainly MISSINFORMED
  2. Evan Bedard

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

    First off, I definitely understand your frustrations and I would be extremely upset if they sent myself such an offer! A 7.5 percent interest rate is just ridiculous and frankly unheard of when it comes to HAMP, for most people their interest rate will start out at 2 percent for the first 5-years, and slowly work up to a fixed rate of approximately 4 percent for the life of the loan. I'[m glad you have found the forum because you will learn EVERYTHING you need to know about modifications and the foreclosure process.

    If you accept the trial period at this payment arrangement, if you do receive a permanent modification it will likely come with the same exact terms and will be a complete waste of your time. Be aware that if you accept and sign a permanent mod agreement, for most you will be prohibited from applying for another mod for at least a 12 months period from when you signed the docs..

    Since you are underwater, if you stop paying on your 2nd they are in no position to pursue foreclosure on your home and you may even be able to settle the account later for as little as 5-20 percent of the balance. You can check out the first post in the following thread for more info on this topic.

    http://www.loansafe.org/forum/debt-settlement/37996-strategy-settling-your-2nd.html

    NO, that is the last thing I would recommend as you will be in the SAME position you are in now except you will have much less belongings..

    If you have not made a payment since July they are not going to apply a payment to your account if you send one in. Once you fall 90+ days behind on your mortgage, your lender will not accept a payment unless it is for the entire past due amount along with any late/attorneys fees they have tacked on. If you send in a single payment or portion of this amount it will be held in a suspense account and will not help delay the foreclosure process..

    Your state AG may not be able to do much, but it is definitely a good idea to contact as many people as you can to bring attention to your case.. Unfortunately, there are virtually no laws that pertain to loan modifications so these lenders can basically do whatever they please. Personally, I would not accept this offer and continue fighting for something better, your rep sounds extremely unprofessional and could be the reason why you have been offered such terrible terms. Here are some contacts you can use to make a complaint to and I would request that they assign your account to someone else that will better review your account and help you achieve much better terms..

    Wells Fargo Home Mortgage
    MAC X2302-02J
    1 Home Campus
    Des Moines, IA 50328
    PH: 515.324.5925
    PH: 800.853.8516, ext. 45925
    FX: 866.972.0924
    Jennifer.N.Booth@Wellsfargo.com

    cara.k.heiden@wellsfargo.com; CEO, Co-President WFHM

    mike.heid@wellsfargo.com; Co-President WFHM

    jerald.banwart@wellsfargo.com; SVP WFHM

    mary.coffin@wellsfargo.com; VP WFHM
  3. MISSINFORMED

    MISSINFORMED LoanSafe Member

    Thank you Evan. Truly thank you for reading and replying. We did not know that by accepting this ridiculous loan mod offer would prohibit us from applying to any other modification or assistance programs for 12 months. So this information is very helpful. Additionally, thank you for providing contacts to help us further. We will update our progress on the forum and appreciate yours and other members advice! Keep it coming!
  4. Evan Bedard

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

    You are very welcome and I'm glad the info i provided was able to help. Most people are not aware that by accepting a modification this will prevent them for applying for another mod or better terms for 12 months. You will find everything you need to know about this process right here in the forums and I/others will be more than happy to help you throughout your journey.

    Good luck!
  5. MISSINFORMED

    MISSINFORMED LoanSafe Member

    Dear Evan or Cat: I was hoping you could take a few minutes to critique the request for escalation letter to the exec team @ Wells Fargo. Its taken me 3 days to get it together and I fear I've said too much or not enough. Give it to me straight, I'm a tough gal...

    Will be addressed to exec team @ WF with subject: HAMP Loan ********?


    We are writing to you with regard to our current acceptance into the trial phase of HAMP. Recent attempts to obtain information about the trial payments and permanent modification have been unsuccessful and we simply do not know where to turn. In a nutshell, our monthly payments have been decreased by $14.56! And the interest rate of 8.125% was only reduced to 7.5%. We respectfully request that our case be escalated and perhaps reviewed by a different representative to provide the help we desperately need.

    In 2006, our realtor led us to Wells Fargo for lending. We were encouraged by Wells Fargo to consolidate and refinance after a few years of on-time payments. Confident that our incomes would allow us to, despite such high interest rates on both the 1st (8.5%) and 2nd mortage(14%), we worked hard to make each and every payment on-time and lived within our budget to keep our credit in good standing.

    Like many others, the road to receiving acceptance into a modification program has been very difficult to say the least. Hardships occurred (hours reduced at work following hurricane Katrina, rising cost of living, chronic illness diagnosis, mounting medical bills, caring for a dying parent, etc.) and we scrimped by depleting what little savings we had and having to turn to family for help. We began seeking additional employment while asking for help in modifying our loan. The process of doing so was no easy task with contradictions and run arounds. Detailing our hardships and dotting every "i" and crossing every "t" to comply with every request while documents were lost and not received time after time. Imagine our relief when, after 3 long years, we were notified that we had been accepted into the trial phase of HAMP and were to receive our trial packet soon. The trial packet arrives and ourmortgage payment was reduced from $1232.42 to a mere $1217.86. The interest rate was reduced from 8.125 to 7.5%. We were confused and crushed, our understanding of HAMP is that for most people the interest rate will start out at 2 percent for the first 5-years, and slowly work up to a fixed rate of approximately 4 percent for the life of the loan. Terms similiar to those would make the difference between making timely payments vs. foreclosure. We also believe the 31% calculation is inaccurate considering the 2nd mortgage cannot be dealt with until the 1st is resolved. I respectfully ask where is the help in this 'modification'?

    We phoned our Home Preservation Specialist, Marsha Porter, numerous times (5) since receiving the trial package to no avail. We truly tried to resolve this and at the very least, seek to understand how this application went so awry. Ms. Porter herself, during those first calls in which she explained the current HAMP program and its changes stated our trial payments would be approximately $500 per month. More seriously, in previous attempts to get to the trial phase was the suggestion to stop making payments to get into the program. After much consideration, we took this advice four months ago only to later learn that halting payments was not required and simply, terrible advice. This step has damaged our credit and limited our options tremendously. Furthermore, Ms. Porter, and other representatives, state that's all Wells Fargo can do. Foreclosure is next. Game over. The trial period documents state "don't despair, other programs are available. Call and explore them". We have contacted the HOPE hotline once again and that call resulted in the same answer. Foreclosure. Now our backs are up against a wall. If we fail to send in the 2nd trial payment, which we cannot afford, we're kicked out and foreclosure occurs. If we get to permanent modification and accept this unaffordable option, we are unable to apply for another program for 12 months. All roads leading to default and that's what we do not want.

    In closing, please accept our appreciation for your time and hope you'll help us to remain in our home with an affordable mortgage.

    Sincerely,


    Last edited by a moderator: Oct 3, 2012
  6. Cat Damiano

    Cat Damiano Mortgage Wars

    Hi MISINFORMED,


    I have a question first in regards to the HAMP trial that you received. Below I have outlined how the payments are calculated and the steps that are taken to get there. Also keep in mind that an escrow account will be established when there wasn't one to begin with as a part of the modification process. My question being, what is the percentage of the trial payment to gross income based on the following;

    Monthly Mortgage Payment:

    The monthly mortgage payment used in calculating any monthly mortgage payment ratio in either HAMP Tier 1 or HAMP Tier 2 includes the monthly payment of principal, interest, property taxes, hazard insurance, flood insurance, condominium association fees and homeowner’s association fees, as applicable, regardless of whether these expenses are included in the borrower’s current mortgage payment. It also includes any escrow payment shortage amounts that are subject to a repayment plan.

    The monthly mortgage payment does not include mortgage insurance premium payments or payments due to holders of subordinate liens.



    Here is how they arrive at that payment, so not all modifications will be dropped down to the floor threshold of a 2 percent interest rate if it is not necessary in order to get the payment to the 31 percent, which is the sole goal of the program;


    Step 1: Capitalization

    In the first step, the servicer capitalizes accrued interest, out-of-pocket escrow advances to third parties, and any required escrow advances that will be paid to third parties by the servicer during the TPP.

    Step 2: Interest Rate Reduction

    In the second step, the servicer reduces the starting interest rate in increments of 0.125 percent to get as close as possible to the target monthly mortgage payment ratio. The interest rate floor is 2.0 percent. The initial interest rate would be fixed for the first five years then increase by 1 percent in year 6 and another 1 percent in year 7. For the remainder of the term the rate will be fixed at the prime market rate at the inception of the permanent loan modification.

    Step 3: Term Extension

    If necessary, in the third step the servicer extends the term and re-amortizes the mortgage loan by up to 480 months from the Modification Effective Date to achieve the target monthly mortgage payment ratio.

    Step 4: Principal ForbearanceIf necessary, the servicer will 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 UPB, or at maturity of the mortgage loan.

    There is no requirement to forgive principal under HAMP.



  7. MISSINFORMED

    MISSINFORMED LoanSafe Member

    Cat: Thank you for posting the formula. The calculation was pretty much right at 31 %. Carrying the 2nd is part of the challenge here. I think my heart sank when I realized that according to the formula, there wasn't more that could be done with this first mortgage. What's discouraging is the outright lies Wells Fargo has told us; stop paying to qualify, $500 trial payments (ridiculous) and the run around. My husband has been handling these applications and I have just jumped in. I have much more respect for him having got us this far with HAMP. We met with a very helpful foreclosure attorney today. We'll soon choose to either fight or walk. Loansafe's forums and members are such valuable resources and we certainly don't feel alone.
  8. Cat Damiano

    Cat Damiano Mortgage Wars

    How did it go with the attorney today, have you decided which route to take?

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