loan mod worse then my old payments

[mikejkd]

Before we applied for the mod are payment was 1350 now after we get approved for the mod the payment is 1900 and change. It is through chase and am really fed up with them right now. After doing the run around with them for over a year they come back with this. Is there any steps that I can go through to make this make sense to these people. How can they expect us to make payments that are higher if we where asking for help with the lower payment?

[nononsense]

How much is the mortgage, what is the value of the house and how far behind were you before loan mod was approved?

[cinderella]

It happens alot.

 

Several reasons for this, could be any or a combination:

 

1) converted to PI loan vs an I/O only loan

2) escrow is now included - no longer are taxes and HOI paid separately, but now are in the mortgage (this alone is not really an increase in payment)

3) The income intitially provided, often verbal, is very different upon documentation, higher upon documentation than the initial prequal income. Very common income is understated upon a non-documented pre-qual. People give net income vs. gross, people give gross income vs. true gross (I've seen folks subtract out $3,000 for monthly contribution to 401k's and it will be added back in to monthly gross in underwriting) - people leave out income - in many different ways. One type of example that is common is business owners - Looking at homeowners finacials that had initially claimed about $2k in rental income, and then reviewing the tax returns and schedules, turns out they expensed out $120,000 a year in depreciation of their rental properties- that is not an out of pocket expense, it is added back on - but it a HUGE addition to monthly income.

 

# 3 is probably the number one reason with # 2 coming right behind. For the most part, when a pymnt goes up, it is because the borrower was already under 31% on the pre-qual, but based on the information, often verbal, on the pre-qual showed they were above 31% and trial was extended based on the verbal being documented. Except when it is documented, the income was understated on the prequal.

Edited August 17, 2010 by cinderella

[mikejkd]

The mortgage is for $365,000 the home at the corner of my street at equal size and build date just sold for $250,000. Is there any way to do a principal reduction with Chase?

[Mayor]

The mortgage is for $365,000 the home at the corner of my street at equal size and build date just sold for $250,000. Is there any way to do a principal reduction with Chase?

If they didn't give it to you already -- no.

 

You have to understand prinicipal reduction is something the lender will do VERY VERY last

[mikejkd]

If they dont know what the house is worth how would they know I owe way more then its worth? I never had an appraisal done for the modification paperwork. Is it worth them taken the home instead of lowering principal to what the current value is?

[Mayor]

If they dont know what the house is worth how would they know I owe way more then its worth? I never had an appraisal done for the modification paperwork. Is it worth them taken the home instead of lowering principal to what the current value is?

 

The lender trust me already bordered an appriasal (they will probably not tell you what the amount is, you would pay for your own one)

 

If the investor participates in HAMP prinicpal reduction is a TOOL (and the LAST TOOL) used to get your pymts to 31% of gross income. Meaning -- they will create ballon pymts, extend term, etc before they do prinicipal reduction. In MOST cases they can create enough balloon pymts to get it to that point without doing prinicipal reduction to get it to that point.

 

I have yet to see a prinicipal reduction modifiation -- it's not in the best interest of the lender to WANT to do one.

[cinderella]

The mortgage is for $365,000 the home at the corner of my street at equal size and build date just sold for $250,000. Is there any way to do a principal reduction with Chase?

 

I've never seen a principal discharge on a first. And I have probably seen well over 1000 modifications.

 

A deferral yes, never a discharge on a first.

 

Three things I always look for with an upset borrower unhappy w/ their loan mod and has made their way to me -

 

1) pre-qual income - vs. documented income

2) was escrow added to the mod (this confuses some homeowners who don't realize their payment did not really increase

3) value of home/state (I see Florida and I'm thinking this borrower is significantly upside down and wants a "principal reduction")

 

I pull up the last appraisal/bpo/avm and check it against the principal owing on a mod. Just to get a feel for the borrower and their intent on calling - is the issue they are 200K upside down, is the issue they are not receiving their trial payment - do they not understand escrow?

 

People don't always tell you it a principal reduction they are seeking, they tell you they can't afford the payment, they tell you their tpp was lower, they tell you they were told something else.

 

I spoke with a homeowner recently that had their P and I payment reduced by 60% and was very hostile saying things like "I see how fast you were to take the TARP MONEY AND YOU DO NOTHING FOR HOMEOWNERS!!!" Crazy a homeowner has their p and i reduced by 60% and is on a tirade.

 

They were also 150K upside down, the issue wasn't they had an affordable payment nor that they actually received a great mod. The issue was they were enraged their home was upside down $150k and they wanted a reduction.

 

It is a hardship program based on inability to pay. Not based on restoring a bad investment. The HAMP guidelines do not restore bad investments. Now while servicers and lenders may not have perfected systems and mistakes and bottlenecks happen, from what I see, they will follow the guidelines to a T on modifications. There is no negotation, there is no judgment.

 

If an underwater homeowner is upset over the value of their home, the only negotiations I've seen on this end were not under modifications, but under deed in lieu's and short sales.

 

Eventually the converstation usually turns to a homeowner being upside down and that is the real issue w/ the homeowner. Not affordability, but as an investment.

 

For the most part, I understand their frustration. Sometimes they are being unrealistic and greedy. A homeowner $1ok upside wants their principal reduced, but they went from a 8 to a 2 percent interest rate for five years with a lifetime cap of 4.5 percent. And they are taking the worse time in the real estate market and demanding the lender reduce to their opinion of value when they have a significant reduction in their payment based on HAMP. They would never be able to qualify for these terms elsewhere and are pushing it, I tell these people they are welcome to decline their modification and refinance or sell their house for better terms - or they can take an amazing term and wait out the relatively small amount they are upside down knowing in four years, they will still be at 2 percent.

 

For the ones significantly upside down, I understand if they want to walk. For the ones signifcantly upside down, there is very little point in telling them the market will turn in a few years and they can wait it out - 200k upside probably isn't coming back next year. But the only reduction in principal will be on a short sale/dil or foreclosure. I don't make the rules............but I know them.