We tried for a modification - sent the paperwork in last May. Denied this month because they say we didn't meet the 31% for mortgage, insurance, taxes. (We're at about 40% and creeping up as the ecomony stays sucky - I'm not sure what figures they are looking at.) Second reason for denial - credit scores too high and we're not considered risk of default because we're paying our bills on time. DH and I are at about 730 and until this month, i was a good (or stupid) little mortgage payer and paid it on or before the due date. I moved it back to within the grace period this month - I don't know if it will help, but it should be a consideration for anyone attempting a modification.

In their kindness, they offered a forebearence program. We'll make 1/2 of our payment for 3 months. They'll report lates (which will cause most of our CC to be closed) and then they'll do a 3 month trial modification. Sounds like they only want to work with people who are willing to destory their credit - i can't risk rate hikes since half my debt is on biz cards which isn't covered by the new law.

They said i can apply again - they are sending some more forms for me to fill out but I expect that to be denied also. The good news is she said this denial will only take 3 weeks.

They won't do refinances (what I really want but its slightly underwater so we can't get a conventional refi) only modifications.

Did you try and do this on your own? In almost every "do-it-yourself" case, it gets denied.

It's not in the lender's interest to deny a modification request.

Yes, we did it ourselves - aren't all the loan mod companies are scammers?

They definitely do not want to modify loans unless they think default is immenent - that's why they want do forebearances and destroy my credit to insure you really, really want it. (If i were going to destory my credit, i'd file BK and clear out much of my biz and personal debt.)

Toopoor: The denial reasons they provided you with are invalid per the HAMP guidelines. You need to find out what figures they are using to compute your income. Also, credit score should have no bearing. There is no requirement that you be late on your mortgage in order to qualify for a HAMP. There is no requirement that you be late on your credit cards to qualify for HAMP.

However, you do need to prove some form of financial hardship. You need to be able to prove a loss or reduction in income or an increase in expenses.

Do you know who your investor is (not your servicer)?

As for hiring a mod company, they're all mostly scams. There's nothing that they can do that you can't accomplish on your own. There is one non-profit organization that helps people with loan modifications called NACA. But, as of late, they've been overwhelmed.

Yeah, i know the mod co are scammers-as was the person who said it. I mentioned it for the benefit of others.

All i know about our loan is that it was through nat city's first franklin which is now owned by boa/merrill. I have no idea if the paper was sold -when we closed, they told us it would probably be sold but that was right before paper stopped selling in late 2006. We had high scores and solid income at the time, but with our income from selfemployment and DH quitting his job to move, our rates suck. My income is down a lot (about 50% YTD) - they asked for my personal bank statements and they showed just enough to pay bills. Since we don't have a fannie/freddie, they don't have to do anything for us, even if we'd stop paying. We can't even refi since its not fannie/freddie backed (which is what i really, really want to do).

If BofA holds the note, they are signed up as a participant in the Making Home Affordable program.

Have you checked to see if your note is Fannie or Freddie backed using the tools on the MHAP website? I wasn't aware that Fannie held my note until I checked.

You need to call back and get to a person in the home retention department that at least has a clue about what they're doing. This may take a couple of calls as many of their employees are rather clueless. You need to find out what they have showing for your income. They make mistakes ........ a lot.

Have you tried calling the Homeowners Hope line at the top of the MHAP website to get in touch with a HUD counselor to see if they can provide any assistance?

home loan services is the official servicer - merrill bought them from nat city in late 2006/early 2007 and they are on the list under their own name. i checked in the spring when the web site went live - its not fannie/freddie - if it were, i could refinance without much problem.

I called the hope hotline, spoke with very nice lady and after going over my budget, she called them with me on the line. The CSR first insisted i applied for the in-house program - until i read her the first part of the denial letter where it mentioned the federal program. The CSR then said i was denied because i wasn't late and that if denied they cannot ever reconsider - its one time consideration only, no exceptions. After a few min of arguing with us because we said the program did not require late payments, she said they never modify a mortgage that was not late. The hope lady sent them a packet and told me to call the lender's loss mitigation department late next week. We tried to talk to the person who denied it but the extension the CSR gave us was not correct.

The budget she came up with was almost identical to the one i sent in May and according to her, it clearly meets the requirements so she doesn't know why they denied. She also said they have meetings with treasury next week to go over problems such as this (not modifying mortgages not late).

It would be so much easier if the refi program was not limited to fannie/freddie only. <sigh>

I was just reading your post and just dealt with this situation this week ourselves.
We have the same lender as you. We are a fannie may backed loan and we also got denied a loan mod through the MHA program.
We got the same line that we did not show that default was imminent. We have no late payments on anything for the over 4 years. Mortgage is in DH name and his credit score is in the 630 range.
I asked how they determined that we were not eligible and they told me that they checked credit history, put all his income and expenses in a sheet "made by the MHA program to show eligibility". They said we didn't qualify. She mentioned that we didn't have any late payments on our credit. I asked if I did would we qualify if we had late payments and she said it would show that you were struggling. I,of course, said "so we never make a late payments and we pay things on time so that makes us not eligible" That is completely frustrating. We have had this house almost 3 years. For the first 2 years we paid on time every month. For the last year we have been paying 10 to 20 days after the due date(but within 30 days). I said to her look at our payment history. We had been paying on time and we are not able to do that anymore. Isn't that enough to show we are struggling? Nope, doesn't matter.
My income (which is not that much) didn't even come into play because I am not on the mortgage. We can barely pay our bills lately. It seems everything has increased and we keep cutting back on things but it doesn't help. We would just like to get a reasonable rate so that we may continue to keep up with everything. We are not able to refinance because our debt ratio is too high. Complete and total frustration. Pay your bills on time and get punished for it. Why is there not a program for homeowners who are paying on time and are struggling(but not paying thier bills late).

Did you talk to loss mitigation/ retention or a normal CSR? The CSRs are clueless about MHA program and insist you need to be late - which is not true. HUD told me to call HLS back later this week - HUD is sending them something on my behalf about the bogus denial and wanted me to wait until they had time to receive it - then

If you have not yet called the hope hotline, i recommend it. They are the frontline to the Treasury dept to report problems with lenders. I also recommend contacting your congressperson and senator about the lender's refusing to do anything since you are not late and miscalculating your income so they can deny.

toopooor,

First, you must decide what's more important to you, you credit score or a modification.

Hardship means you're in default or in imminent default. Imminent default means exactly that-you can no longer make your payments and will default by the next due date or the one after that.

But here's the catch 22... Even if you were current on your mortgage before the mod and were approved for a permanent mod, when they report that you are now on a reduced payment, your credit score will take an 80-90 point hit.

So there is no way to avoid a substantial decline in your Fico score, no matter whether you're current or not. Technically, you're not paying your mortgage during the trial period and if they deny you at the end of this period, they can report you late 90+ days or whatever the length of trial period was.

I'd rather do a straight refi - but can't because we're not fannie/freddie and we're about 8K underwater. I need credit to smooth out the ups and downs of my small business - all it takes is a slow payer or two to make it hard to pay routine monthly bills when you are cash only. BTDT, got lots of gray hairs trying to juggle payments. (Knock on wood, we only had one non-payer for $500 this yr.)

ETA: the refi plan doesn't require immiment default and i don't recall seeing anywhere on the MHA site where the modification program for people current says you need to be ready to default within 2 paymnts to qualify, only that your payment to income ratio be high due to lowered income.

Where are you getting your information that your credit file will take a 80-90 point hit?

Correct, the refi does not require imminent default, 31% ratio or even a hardship.

My reply to your post was in regards to a mod, which you were asking about, not a refi.

The MHA guidelines do specify an imminent default requirement for those who are current.

Although they do not specifically state 2 payments, imminent default means what it says, inability to pay in very short time from the time you applied. That is why they will deny a mod to those who have savings/investments that exceed 3 times their monthly mortgage payments.


From an actual credit report.

The problem is that they don't want to do mods on anyone who they think might pull through without a mod - its all about greed and fear the "investors" will throw a fit. That's why the feds need to pay them incentives to do mods.

It does not say imminent anywhere - just difficulty in paying and a high PI on the mortgage (which in itself is an imminent risk - when too much income goes to housing the borrower is at high risk of default) - this can be due to increased mortgage payment due to rate reset, lowered income, or hardship. Someone who is having difficulty paying can often go months "robbing peter to pay paul" before the crap hits the fan.

I don't know where you get your information or if you're just making up things as you go, but here is an actual quote form the Fannie Mae Home Affordable Modification Program guidelines:

Eligibility criteria include:

-Documented financial hardship... (Use HAMP Hardship Affidavit form,...)

-Borrower in default, at risk of imminent default or in foreclosure...

-etc.

So the program is very clear in requiring imminent default circumstances for those who are current on their payments.

High PI ratio is not enough of an indicator of imminent default?

Are you an underwriter dealing with mods?
A HUD counselor?
Or just someone who is in financial trouble and got a mod?

I don't know if this was covered here but I just did a modification through NACA. It was quick, it was painless and they are HUD approved. It cost me nothing. They have a website and the program you are looking for is HomeSave. They also do refi's.

I also did a mod through NACA. It was not quick though. lol. Took 10 months but my servicer is also First Franklin and they are VERY tough. I urge you to go through NACA as FF has a group of people who only deal with NACA mods. I really feel this is what got us approved. Also please check out loansafe.org for great FREE information. It's not a loan mod company just a message board.

I too went through NACA's Home Save event that occurred in the Bay Area a few weeks ago. They were able to help me to keep my home as well. My 10-year interest-only loan was reduced and am now paying PITI with a forebearance on the prinicipal.

do you really need to go thru the mortgage company you're already with to file modification? or is it better to file thru NACA? is there a link as well?

My grandson's brother use NACA and was happy with the service.

In my expierence NACA isn't any better at getting it approved. You either meet the qualifications or you don't.

I too am dealing with First Franklin and going through the mod process. The first app I sent in was answered with a second app to fill out and send which I did. I was told that being late would put me in a better position to get the mod so I became late. Not happy about it BUT had to make the decision based on business.

Like the other poster said - you have to decide which is more important - credit or your home - hubby and I chose our home and went over our bills and decided what we were going to pay and what we were going to just wait on and see what happens. For us our home is where we will be at for the next 10 years. And we have newer vehicles that we can drive for the next 7-8 years. What we could not do any longer was continue the down hill slide of credit cards so we let them go. It was a tough decision but a good "business" decision. We have already saved $3000 with Wells Fargo - we owed $5500 and they sent a letter to settle for $2500 over 6 months. I hate that we have to loose our credit BUT this is the system they set up.

It's true about the part about being late you have a better chance getting approved. I never recommend to borrowers to be late though, considering the HAMP mod is not a guarantee and you risk ruining your credit for a CHANCE at getting approved.