Will a loan modification lower my credit score & Wells Fargo questions?

[seebs]

so it looks like I was offered a HAMP program. they told me i will go through 3 phases.

phase 1 is at 1316/mo for 3 months (current payment at 1700)
phase 2 is at 1404/mo for 6 months
phase 3 is when it all goes final

but they did tell me a couple things that I did not know.

I have been current on my payments this whole time. If I go through with the HAMP, WF will report to my credit agency as Delinquent until the HAMP is final? this will obviously hurt my credit (which it is right now, practically perfect). is this the norm? while it is definately better than what could have been, i was hoping that my credit would stay intact, being that i would be probably be current throughout the trial period.

also, what numbers do they use to derive at 31% of gross income. is it mortgage only being 31% of gross income, or mortgage + taxes/insur/PMI being 31%? the payments of 1316 and 1404 are not at 31% of my gross income (they told me I was at 31.1%). but then on the phone, i asked, and the person said she was pretty sure it was mortgage+taxes/ins/pmi. and then the numbers doesn't add up. they said they was going to get ahold of the negotiator to look at the numbers again in the meantime, but i wanted to see if anyone knew for sure? I only make 40k a year + ~2k in bonuses a year. so gross, i am only making $3500, so my payments should only be around ~1085/mo ?

anyone know?

[Moe Bedard]

Sorry for the late reply. The forum was down yesterday and this post and a few other got buried.

Lets see if I can help.

I have been current on my payments this whole time. If I go through with the HAMP, WF will report to my credit agency as Delinquent until the HAMP is final? this will obviously hurt my credit (which it is right now, practically perfect). is this the norm?

Many other homeowners have experienced this also. Many lenders are reported this as a late and I am not sure what the laws are and what they can and cannot do.

Modifying loans creates credit mess, not relief | LoanWorkout.org

Loan modification can hurt your credit

http://www.sun-sentinel.com/business...,514033.column

Starting in September, there's a new guideline for how lenders can report a loan modification to credit bureaus. They can classify it as a "partial payment" of your mortgage. And that can be a big negative mark on your credit report.

Depending upon what else is in your credit history, this partial payment status "can lower somebody's FICO score by over 50 points," said Craig Watts, spokesman for FICO, formerly known as Fair Isaac Corp. and the developer of the most widely used credit score.

The "partial payment" status can stay on your credit report for seven years, says John Ulzheimer, president of educational services at Credit.com. "You have to make a decision, because modifying your loan is going to hit your credit," he said. FICO scores are the most widely used credit scores. Lenders do use a variety of other credit scores and each one may react differently to a loan modification.

also, what numbers do they use to derive at 31% of gross income. is it mortgage only being 31% of gross income, or mortgage + taxes/insur/PMI being 31%?

PITI.

I only make 40k a year + ~2k in bonuses a year. so gross, i am only making $3500, so my payments should only be around ~1085/mo ?

Yes, but they can do what they please. A loan modification is what they consider a privilege. You may get one at 50% with PITI and that is not against any law or program since this is all voluntary.

[mistressindistress]

That's great. Congratulations. Please keep us updated on the credit aspect; as I am very nervous about this too.. How long have you been trying for a modification?

[current123]

Moe

What if I am current on my payment and the modification I was approved of by Wells Fargo does not have a trial period and will start Oct 1st and they will collect the 1 months interest & taxes in advance (Sept) from me. So in this case they cannot report a partial pay since there will be no missed payment, right? Therefore, my credit score wil not be affected right?

My investor is BOA and approved me a 3.5% for 480 months loan with no trial period rather than a HAMP. I was told verbally. When they start ordering docs the negotiator was told today BOA had change guidelines and negotiator has to have my request re-approved. What a bummer!!!

If the new approval came out with higher monthly payment than what I was initially approve of, what can I do to protest this?

Thanks!
Current 123

[seebs]

thank you moe.

i can only hope they decide to look at the numbers and change it. when i was on the phone, it did sound like they came up with the numbers based on me making more money for some reason.

it sucks that the loan modification will take a hit for a year. i have had perfect credit, and i wonder how bad this will affect me for the next few years.

after reading those 2 articles, i am wondering if the money saved here would be lost in the consequences of my credit getting hurt. I know in the next couple years, I will need to get another car, so it will hit me there also. especially since it may turn out that my modification could possibly not be changed to 31% terms. and i think alot of the reason my mortgage payment went up so high was because of the first year taxes estimation that was severely off, so i am having to make up that money this year in my payment. but it may go down next year once i made up the money, so the savings is probably even less?

mistress, i first turned in the paperwork in the end of may/beginning of June

[seebs]

mistress, also it was also the first time i applied, so no prior rejections. my mortgage is with wells fargo (i dont know who the investor is?). i have been current this whole time, and i have been with wells fargo in general for 10 years now.

[nathanb]

Does anyone know what would happen if you were approved for the HAMP trial and still made your regular (pre-mod) payment? I am in the same boat (not late and perfect credit). <?xml:namespace prefix = o ns = "urn:schemas-microsoft-comfficeffice" /><o></o>

[nathanb]

Did not mean to make that simile…this thing is possessed.