Well Fargo Hamp Offer...My story

[andy a]

Wells Fargo ... A Little history. My original loan was with Wachovia and I was granted a modification back in 2009, I was told by Wells Fargo that the Modification expired this June. I started asking for some consideration for a modification in early April 2012. We are not or have not been past due . We were just getting by with the Wachovia Modification. My current 1st has a 6.63% and my second is 9.59%
My story ….we were given a single point of contact to work with at Wells Fargo and was supplying information as requested when asked. There always seemed to be one more piece of information needed and it just seemed like they were dragging the process out. Then on May 10th 2012 I was informed that I had a new single point of contact (so much for single point of contact).I was told that I qualified for the Hamp program and that we would have a offer no later than 30 days but most likely sooner. I again provided the requested information most of it already supplied to the 1st single point of contact and again there always was this call that they needed another piece of information or the underwriters needed some answers of some questions. I was told that all looked good and all the need documents were sent to be reviewed and we should here something soon! Needless to say the 30 days passed and I received a call informing me that the Hamp program was experiencing a delay but we should know something soon. Well on 7/20/2012 I received the phone call...Quote" the goverment approved a 3/8 Of one percent reduction on my cuuent 1st mortgage" This equates to less than $100.00 a month.....We waited over three months for this kind of offer!... and the offer is 6.25% on my 1st and absolutely nothing on the second and this is their best offer? At the rates the government is loaning money to the Wells doesn’t 6.25% seem high.
There is a $1400.00 increase difference in the new monthly payment vs the Modified Wachovia payment. Our financial situation has not changed, If anything it has become tighter with now with two kids attending college. Our home is 50k underwater. I don’t get it! Why would Wells Fargo not want to make it affordable for us to continue to make payments and stay in the house? I am being forced to make a decision to walk away!
Any suggestions? ..best way to make our exit?

[Cat Damiano]

HI andy,


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


The HAMP modification is designed to get the payment to within 31 percent of your gross income using a series of waterfall steps. What percentage of gross income is the payment at?

This is the way the waterfall steps work for HAMP;


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 Forbearance

If 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.

[andy a]

Thanks Cat,
I received our paper work and see that they used the formula you described. Unfortunately for us this small amount of interest rate deduction and the equal small amount of payment reduction will not put this monthly payment within our reach. I understand that they figure the 31% off the gross income…not really realistic in my opinion, do they think we can just not pay the Federal taxes and S.S. fees.
I am most disturbed with Wells Fargo delay in getting us this number. They are aware of what we were paying monthly and to what it will be now. The New payment will be too much of a stretch for us to pay over and long period of time. We would fast exhaust any of the small emergency funds we may have and be in the same boat in 6 months.
I was told from my first single point of contact after 6 weeks that the Hamp program that we qualified for would be better than what Wells Fargo could offer. Really? I think that pretty much says it all, Wells Fargo is not willing to help us themselves. Going Interest rates around 3.5% and We get a 6.255 % rate offer…And we were not past due on our payments and paying down.
I feel backed into a corner now and our new single point of contact is pressuring us to make a decision on to accept the Hamp program or not.
Would we be better off just saying no to the Hamp that it won’t help us survive and stop paying and walk???

andy a

[Cat Damiano]

What state are you located in?

Unfortunately, that is considered very affordable to have a mortgage payment at 31 percent of gross income. When you apply for a new FHA loan the parameters can go from 34-nearly 50 percent of your gross income, the latter, barring any other back end debt. That is why it is felt that 31 percent is affordable for a front end debt load, if it is not, then it would be deemed that the back end debt, ie, credit, and revolving loans would be taking up the income and not the mortgage. In that case counseling would be recommended to help with that.

[andy a]

Cat,
I live in Virginia.
And yes I do have some back end debt. About 20k in cards and student loans, a 2^nd mortgage ( which Wells did nothing to help on ), Two kids in college and the regular house hold expenses. We were able to make all the payments on the Wachovia modified program they gave us three years ago and pay down some debt with any extra. I know that at the current payment plan we will not be able to keep up the payments for any extended length of time. So it seems to me we would be better walking with some start up money instead of using it up trying to make payments and have nothing when we will be booted latter.


There are not many 350k homes in our area selling right now and this is 50k underwater. Don’t see the logic in Wells decision. Just seems like they really are not interested in helping.


I guess I need to know the best way to walk and when.
Should I sign the Hamp documents knowing that I am going to walk?
Any help appreciated

andy a

[Cat Damiano]

Here are some threads of members from VA that have decided to walk so that you can see where they are in the process and how they are doing and go from there, it isn't an easy decision to make. If the modification isn't going to help, then you may not want to accept it, but again, only you can decide that.

Walking away in Virginia.

Walking in virginia

Walking Away in Virginia

Had enough Going to walk in Virginia!! will banks come after me for diff Va is recourse state