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Help with Loan MOdification Terms (HARP)

skincarekathy said:
I cannot stress enough that throughout the modification/short sale/DIL process it is your responsibility to continue to pay your assessments and property taxes, and you must carry insurance. Those expenses are outside your mortgage, and were escrowed for you only for your convenience in the first place. They were never "included" in your mortgage.
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We just got done with our trial period on our modification and they are adding the delinquent escrow amount on to our loan. So it may not be the norm, but it is not impossible.

Is this the best thing financially, not really but it gets us back on track.
 
And I have to say after reading the OP again that the "word" in the foreclosure world is that BoA is one of the most (if not THE most) predatory lenders vis a vis modifying mortgage loans. BoA acquired Countrywide and was left holding the CW ****bag and they still do not-nice things to try to get right (on their books, not in the best interests of homeowners).

Chase (whom I love as a bank) also acted in a predatory manner for a while several years ago (2008-2010). I did mobile signings for refi's at that time, and Chase was offering their mortagees sweet loans at low percentage rates (though it reset the mortgage at 30 years, most owners didn't care because their payment was less). They didn't do this to avoid foreclosures or to be nice and consumer-friendly, they did it because their loans has been so packaged, chopped up, re-packaged, and sold into the derivative market that Chase could not prove they owned the notes and therefore could not in many cases foreclose. They refi'd thousands of mortgages for people so Chase could show they now owned the notes. BoA also did this, so did Wells.

Many mortgage (by no means all) companies still operate in a predatory manner. However, they do it with the full cooperation of the people who are borrowing money from them. The loan modification industry right now reminds me of when car leasing started - people don't care if they ever actually own anything, neither does the bank. People just care if they can afford the payment, and the bank only cares that they pay.

That was when I got out of the mobile notary game :lol:
 
Clars said:
We just got done with our trial period on our modification and they are adding the delinquent escrow amount on to our loan. So it may not be the norm, but it is not impossible.

Is this the best thing financially, not really but it gets us back on track.
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I think it really depends on the period of time, and HOA is much more dangerous than deferring property taxes.

If HOA go too far into the red/too noncompliant, then properties can't sell because no lender will write a mortgage in a noncompliant HOA. Condos anymore foreclose as soon as they legally are able, to try to salvage the owners who are still there and paying.

Can fight off and negotiate with the property tax people longer. But if it goes beyond a year (and it depends on where you live), sheriff sales are becoming much more common, and more quickly.

I'm so glad you're getting a mod! It can make financial sense to do it, if you want to stay where you are and you can afford it with some help.
 
skincarekathy said:
And I have to say after reading the OP again that the "word" in the foreclosure world is that BoA is one of the most (if not THE most) predatory lenders vis a vis modifying mortgage loans. BoA acquired Countrywide and was left holding the CW ****bag and they still do not-nice things to try to get right (on their books, not in the best interests of homeowners).

Chase (whom I love as a bank) also acted in a predatory manner for a while several years ago (2008-2010). I did mobile signings for refi's at that time, and Chase was offering their mortagees sweet loans at low percentage rates (though it reset the mortgage at 30 years, most owners didn't care because their payment was less). They didn't do this to avoid foreclosures or to be nice and consumer-friendly, they did it because their loans has been so packaged, chopped up, re-packaged, and sold into the derivative market that Chase could not prove they owned the notes. They refi'd thousands of mortgages for people so Chase could show they now owned the notes. BoA also did this, so did Wells.

Many mortgage (by no means all) companies still operate in a predatory manner. However, they do it with the full cooperation of the people who are borrowing money from them. The loan modification industry right now reminds me of when car leasing started - people don't care if they ever actually own anything, neither does the bank. People just care if they can afford the payment, and the bank only cares that they pay.

That was when I got out of the mobile notary game :lol:
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I have heard so many horror stories about BOA. They hold our mortgage so I was really concerned about how the modification process was going to work. I don't have anything bad to say about them. They lowered our interest rate and got us out of the hole. Resetting our loan to 30 yr will set us back by 2-3 years, but I can live with that.
 
skincarekathy said:
I think it really depends on the period of time, and HOA is much more dangerous than deferring property taxes.

If HOA go too far into the red/too noncompliant, then properties can't sell because no lender will write a mortgage in a noncompliant HOA. Condos anymore foreclose as soon as they legally are able, to try to salvage the owners who are still there and paying.

Can fight off and negotiate with the property tax people longer. But if it goes beyond a year (and it depends on where you live), sheriff sales are becoming much more common, and more quickly.

I'm so glad you're getting a mod! It can make financial sense to do it, if you want to stay where you are and you can afford it with some help.
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No HOA for us. I am shipping off the final docs today so the mod will be done. It makes financial sense for us to do it. We are in a better place financially today than we were a year ago and we are building savings to help deal with unexpected costs. We had $13000 in car costs in 2011/2012 that put us so far in the hole we just couldn't get out. It just wiped us out.
 
skincarekathy said:
The HOA and taxes and insurance (escrow) are your problem to deal with. Modifying your mortgage will only deal with your principal & interest (P&I). It is effectively impossible to get a mod if you are on an interest-only loan (don't know if you are, but if you are, there it is).

Any loan modification process will require income.

Taking funds from retirement when you are not of retirement age will subject you to taxes at your current rate and a 10pct penalty against what you take out, and doing so is almost always simply draining your retirement savings to only, at best, delay the inevitable.

If you are single with no kids and can live simply in an apartment, you could let your place go and be back to mortgage-ready (at least on your credit rating, income notwithstanding) in 3 years + however long it takes for the home to actually not be yours any more (the duration of the foreclosure).

The "high" on the ratio these days on new files is 31pct spent on housing (that includes escrow items), and for that you must have excellent credit and a hefty down payment. There effectively is no more no-doc or low-doc, you must show an extended ability to pay. W2 income.

You just have to work the numbers. But if you do not have sufficient income to show ability to pay, you will not get a mod. They might pretend to put you through the process but it will ultimately be denied. Then you will be directed to short sale. Then deed-in-lieu. You have to decide whether your residence is affordable to you in the long term (length of the mortgage) and decide based on that whether it makes sense to stay and pay at your current terms, or to let it default now.
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Draining retirement is not an ideal option. fyi, it originated as 401k->IRA->Roth IRA Conversion. Therefore I owe no income taxes and from what I have researched as long as the conversions happened > 5yrs ago, they are treated as contributions and have no 10% penalty for withdrawal. Of course, the whole original point was to get it somewhere I leave it build tax free til retirement and taking it out negates that. If you are aware of another gotcha let me know?

Only my taxes have ever been escrowed, so you are saying the 31% would only need to include the taxes and mortgage and not my ($900/mo) monthly assessment? ie the assessment would not go into their ratio calculations?

And be extended ability to pay W-2 income, would they require a full year on a W-2 to get going or if I get a job that is W-2 a few months might be enough?
 
For ability to pay, it depends on the lender. They all have different (yet similar) requirements, depending on if your mod is through any of the federal programs.

Assessments are included in DTI ratios, whether or not they are escrowed with your lender. They are part of your housing cost.

This explains early withdrawals from Roth better than I can. In any case, even if you don't owe a penalty (unlikely), you may still have to pay ordinary income tax on the withdrawal, based on the rules of FIFO and whether what you're withdrawing are earnings (investment increase) or simple deposits. You also have to hold funds in Roth for a minimum period (5 years I think). It's complicated.
 
What a mess with that 31% figure, it does not take into account different situations. Once I get a job, because I an frugal in my non-housing expenses 50%+ would be doable. :gah:One would think these programs would help those put into stretched mortgages rather than lock them out of help. fyi, not on interest only though they offered me that too. Just frustrating.

fyi, I looked at your info and I fall into example 4 and have discussed it with my brokers retirement department, waiting on old tax forms to verify dates.

Just a shot in the dark and no idea if they would be willing, is there such a thing as a co-signer on a modification? (assuming that person had plenty of income to back it up).
 
And the DTI ratios are there to protect consumers. Although you say you can easily afford 50pct DTI for housing, that completely contradicts your current situation in which you have no income and no liquid funds, so your DTI affordability at this time (and by your own admittance for an extended period of time into the recent past) is $zero.

Your (for lack of a better word) immature attitude on the subject makes me quite sure you would be better off, and happier, as a renter.
 
Yes, I recognize the ratios are there in theory to protect consumers. At the moment, whatever dti of no income is not enough. Depending on what income level 50 dti ends up being as well as someones other costs, has a big influence on whether its realistic for someone. I have run the numbers in my situation. For most consumers 50 dti would be too high since they still want their fancy cars/toys, have credit card debt, auto debt etc. I do not have credit/car debt and do not spent like crazy.

My point was by tightening up on the ratios without exception especially for government programs designed to help existing struggling homeowners when buyers were approved at much higher ratios, leaves quite a few folks out including those who have been paying on time for years successfully at those high ratios. I have paid this mortgage ontime for 7.5 years so far. On an original mortgage, IMHO the ratios should be more restrictive than in a program designed to help those either put in unrealistic mortgage or having a drop in income who are struggling.

I am not sure about being happier as a renter in general, but given how the real estate market has gone in 20/20 hindsight (like alot of people) yeah it would have been better to stay renting in those years. Renting does of course give one much more flexibility on the cost side of the living equation.

I appreciate the info.
 
chgobob33 said:
Any idea do you know if they need to stay 10 more years or 10 years total? Looks like 10 more years, but from your doc link:
"Is the assistance provided by the Illinois Hardest Hit Program a loan?
Yes. Hardest Hit assistance is provided as a 10 year forgivable loan. A lien will be filed against the
property. This assistance is forgiven over the last five years of the 10 year loan term. All borrowers
approved for the program will complete a full set of loan documents. Funds may have to be repaid to
IHDA if you sell your home at a profit or refinance during the 10 year loan term."

Thanks so much, if I sell at a profit in the next 10 years it would be a miracle and then fine pay it back! And it looks likely I might qualify if I can get all the documentation together.
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ten MORE years...
 
Don't forget that Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo are all under consent orders and have to prove to the OCC / FRB (their regulator) that they have corrected their foreclosure process, this includes the requirement that they work with the customer prior to foreclosing.

http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47.html
http://www.federalreserve.gov/newsevents/press/enforcement/20110413a.htm

If you feel that you are being mistreated or not getting a response to your application for modification, deed in lieu, short sale submit a complaint with the CFPB, those are taken seriously by the banks.

http://www.consumerfinance.gov/complaint/
 
If you are not behind payment but want lower interest, can you just tell your current mortgage holder to lower the interest, if not you would want to refinance with another bank?

I was able to do that in Malaysia. When I inquired at the branch, the manager told me he wasn't aware there's such policy. So I sent the request to the mortgage department in HQ, and got an offer to continue the mortgage for 2% lower interest rate with the condition of 5 years lock-in period (means can't payoff in 5 years).
 
http://www.occ.gov/news-issuances/speeches/2013/pub-speech-2013-28.pdf

parts of the Consent Orders have numerous and significant requirements addressing loss mitigation and foreclosure prevention activities. These items require servicers to achieve and maintain effective loss mitigation and foreclosure prevention activities, and we will ensure that objective is met.
 
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