Impac PSA Modification Clause - HAMP Possible?

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jaymack

LoanSafe Member
Oct 25, 2009
15
0
0
Hello Folks,

I just searched Edgar and found my PSA agreement. I have ASC as a servicer and I'm trying to qualify for a HAMP modification, but I'm concerned that the language contained in their Modification clause will prevent me from extending my remaining term so that I qualify.

The below seems to be the PSA mod language they include in 2006 and priors:

"Modifications


In instances in which a mortgage loan is in default or if default is reasonably foreseeable, and if determined by the Master Servicer to be in the best interest of the certificateholders, the Master Servicer or Subservicer may permit servicing modifications of the mortgage loan rather than proceeding with foreclosure. However, the Master Servicer’s and the Subservicer’s ability to perform servicing modifications will be subject to some limitations, including but not limited to the following. Advances and other amounts may be added to the outstanding principal balance of a mortgage loan only once during the life of a mortgage loan. Any amounts added to the principal balance of the mortgage loan, or capitalized amounts added to the mortgage loan, will be required to be fully amortized over the remaining term of the mortgage loan. All capitalizations are to be implemented in accordance with the Sponsor’s standards and may be implemented only by servicers that have been approved by the Master Servicer for that purpose. The final maturity of any mortgage loan shall not be extended beyond the assumed final distribution date. No servicing modification with respect to a mortgage loan will have the effect of reducing the mortgage rate below one half of the mortgage rate as in effect on the cut off date, but not less than the servicing fee rate. Further, the aggregate current principal balance of all mortgage loans subject to modifications can be no more than five percent (5%) of the aggregate principal balance of the mortgage loans as of the cut off date, but this limit may increase from time to time with the consent of the rating agencies.

Any Advances made on any mortgage loan will be reduced to reflect any related servicing modifications previously made. The mortgage rate and Net Mortgage Rate as to any mortgage loan will be deemed not reduced by any servicing modification, so that the calculation of accrued certificate interest (as defined in the prospectus supplement) payable on the offered securities will not be affected by the servicing modification."

:huh:

Any keen legal minds out there that can help me parse this and determine what it implies for my situation?

Your help is very, very much appreciated! Thank you in advance!
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
85
48
SF Bay Area CA
jaymack

Thanks for your post. According to the PSA, loan modification is allowed by your servicer, ASC. FYI, ASC is a subsidiary / affiliate of WF.
 

jaymack

LoanSafe Member
Oct 25, 2009
15
0
0
Hi Tom-

Thanks for your reply and that is certainly great news! My concern is that 2 of the conditions mentioned may preclude my qualifying: If the term can't be extended and the rate can't be cut below half of my fixed rate of 6.25, the new P&I payment would actually be slightly higher than my current payment if a straight amortization is calculated on the 21 years I have remaining on my term. The new payment would put me at about 40 front end ratio and, even though I could pass the NPV test in terms of income, my fear is that I'd be disqualified based on my new payment which would be higher than my current interest only payment and above 31%.

I should mention that I'm currently in year 9 of a 30 year, 10 year interest only, so even a slightly higher P&I payment would be better considering my payment will go up drastically once the io period ends and I have to start paying back principal in a year.

Am I reading the clause correct that I can't extend term or drop interest rate below half of my current rate (3.125;))? If I can't drop my front end ratio to 31; or if my current payment doesn't drop will I be disqualified from HAMP?

Thanks again!
 
Last edited:

jaymack

LoanSafe Member
Oct 25, 2009
15
0
0
"..... The final maturity of any mortgage loan shall not be extended beyond the assumed final distribution date. No servicing modification with respect to a mortgage loan will have the effect of reducing the mortgage rate below one half of the mortgage rate as in effect on the cut off date, but not less than the servicing fee rate...."


 

jaymack

LoanSafe Member
Oct 25, 2009
15
0
0
More from the PSA:

Final Scheduled Distribution Dates

The final scheduled distribution date with respect to the Offered Certificates will be the distribution date in May 2036 with respect to Loan Group 1 and May 2036 with respect to Loan Group 2, which is the distribution date in the month following the month of the last possible scheduled monthly payment of a mortgage loan in the related Loan Group. Due to losses and prepayments on the mortgage loans, the final scheduled distribution date on each class of certificates may be substantially earlier. In addition, the actual final distribution date may be later than the final scheduled distribution date.

OK. So, if I am understanding this correctly, it appears as if any modification done by ASC cannot extend the term beyond 05/36. Is this correct?

Even though my current rate is fixed at 6.25, my IO period ends next year. Specifically, my new/proposed payment at 3.125 (half of my current rate) amortized over 22.5 years would be about $200 more than my current interest only payment, but $800 less than my full P&I payment scheduled to begin next year on my current loan. Will HAMP consider the future benefit of the $800/mo savings on my new/proposed P&I relative to the P&I I'd have if I continue on my current loan?