This is our third post on President Obama’s Homeowner Affordability and Stability Plan. Our first post was about the plan’s basics. The second post exposed what no one in the media is telling you.
This post lets you know what you can do now while you wait for the March 4th start date.
Initially, the first question you have to get answered to figure out whether you’re eligible or not is whether you have a Fannie Mae or Freddie Mac mortgage. The only way to figure this out is to call your lender or servicer.
Most articles I’ve read recommend waiting until March 4th to call your servicer. I say go ahead and call now. They won’t have any implementation guidance and won’t be able to discuss what programs you’ll be eligible for (if any), but they should be able to tell you whether you have a Fannie or Freddie-owned note.
Maybe by calling now, you can miss a little of the rush and save yourself some time on the phone later. If they tell you your loan qualifies, follow up by asking if they plan to have a special number for you to call back after March 4 or if you should use the same number.
If they say your loan isn’t owned by Fannie or Freddie, you’ll have to call back after March 4 to ask them if your loan will be eligible or not. There’s a good chance it will be, but give them a few days to figure out how they’re going to implement the new plan.
Here’s how it works…the Treasury Department will release their guidance to lenders and servicers on March 4. Once they do, your lender/servicer will have to review it and see how they’re going to implement the guidance. This will take a few days even though most of the major lenders already have a pretty good idea of what Treasury’s guidance will look like.
What Can You Do to Prepare?
Get the information you know you’re going to need together…even if you’ve already submitted it before. Regardless of what the implementation guidance looks like, you know you’ll need:
- Proof of gross monthly income for all borrowers
- Your 2008 income tax return (you could use 2007’s, but 2008’s will be much more helpful)
- Mortgage statements for an second mortgage or home equity loans or lines of credit
- Your monthly consumer debt payments…include credit card bills, student loans, personal loans, car payments, and any other debt payments you make every month.
- If you’ve submitted a hardship package in the past, have that handy too
Why do they need all this info?
This is all needed because of how the relief plan is structured. It’s based on your debt to income ratios know as your front end and back end ratios.
The President’s goal is to get your mortgage debt (front end ratio) down to no more than 31% of your gross monthly income. In addition, your debt from all sources (back end ratio) must be no more than 55% of your gross monthly income.
For example, if your gross income is $5,000/month,
The plan would make your first mortgage payment no more than $1,550/month (principle and interest only). Any escrow, insurance, second mortgages, or home equity loan payments would be on top of this $1,550.
In addition, if your total debt payments (including cars, credit cards, personal loans, and all mortgages) are more than $2,750 (55% of gross income) you will be required to attend HUD financial counseling to participate in the program.
What do I do if I have a foreclosure sale date?
Most lenders have agreed to a foreclosure moratorium until March 4. If you have a foreclosure sale date already and your lender hasn’t notified you that they’ve postponed it, you need to contact them now. Don’t wait…get confirmation from them in writing.
If you can’t get any info from your loss mitigator or your servicer’s general info phone number, try calling their legal department.
You can also talk to a HUD Housing Counselor or, as a last resort, contact a local real estate lawyer (try the National Association of Consumer Advocates web site if you don’t know of a lawyer in your area).
Update: Go to our Home Affordable Modification Info page to see if you qualify
Tags: fannie mae, freddie mac, government regulation, Home Affordable Modification, Home Affordable Refinance, refinance, workout
February 27th, 2009 at 9:02 am
The refinances that awill be available if you are no more than 105% LTV, will they be an FHA loan or conventional? Will they also have mortgage insurrance added to the payment? Does all of that have to be 31% dti?
Reply
Todd Temaat Reply:
February 27th, 2009 at 2:29 pm
Thanks for commenting…
No, the loans will not be FHA. They will be new loans from Fannie Mae and Freddie Mac. Remember, though, they MUST be conforming, which means under $417,000.
We haven’t been able to find anything specific about PMI. I would expect to have to pay PMI, though. There is mention of insurance in some of the documentation from Treasury, it’s just not clear whether it’s paid for by the government, the homeowner, or some mix. We’ll have to wait until March 4 to find out for sure.
As far as the ratio goes, that only applies to the modification part of the plan. To be eligible to refinance, you’ll have to go through the underwriting process again, but as long as you’ve got sufficient income you should be OK. The 31% debt to income ratio is considered for those that can’t refinance and have to modify. As far as I can tell, it’s only concerned with the mortgage payment itself (principle and interest) and not the PMI or escrow, but we’ll have to wait for March 4 to be sure.
And be aware that the modified interest rate will only last for 5 years before it starts stepping up to get back to a ‘normal’ rate.
Reply
February 27th, 2009 at 2:33 pm
Thanks for the info you’ve been sharing.
I just called my lender GMAC-Homecoming Financial and asked them who my loan is supplied by and they said “Residential Funding Corporation” – who the heck is that? Do you know anything about them? Does this mean I’m not going to get any help?
Reply
Todd Temaat Reply:
February 27th, 2009 at 2:37 pm
Glad to see you’re taking action!
Residential Funding Corporation is an arm of GMAC that securitizes mortgages. Here’s how it works. GMAC deals directly with homeowners, providing funding for purchases and servicing the loans. Then RFC takes groups of those loans, packages them together, and sells them as securities. It’s no different than what Fannie Mae and Freddie Mac do for other banks.
What is different, though, is RFC is not government controlled like Fannie and Freddie are. So, no there’s no guarantee they will participate in this plan. However, there’s a good chance they will because if they want to receive any money from the Treasury Department’s Financial Stability Plan (formerly known as TARP), they will have to participate.
Reply
February 27th, 2009 at 4:58 pm
my brother got his primary house,he is my co-borrower in my house (his second house)
me and wife pay the mortgage, can we get help.
Reply
Todd Temaat Reply:
February 27th, 2009 at 5:02 pm
If you have a Freddie Mac or Fannie Mae mortgage and have enough income to support the new loan, you should be able to according to everything I’ve read. As long as your wife and you are on the current mortgage, I think you’ll be fine. Call your servicer and let us know what they say.
Thanks for asking.
Reply
Andy Reply:
February 27th, 2009 at 8:56 pm
Here is my situation:
I have a loan with RBC bank, who have sold it out to Fannie Mae.
I bough a $360K house in April 2008 with 5% down on 10/30 fixed interets only loan at 6%. With escrow it comes to about $2500/mo.
value as per zillow is 342K, but it can be appraised easily for $360K or slightly more.
My Salary is 66K….about $5000 gross monthly. I also pay my wife’s student loan of about 250/mo. and that is it…no other loans.
so as per 31% debt-to-income, i certainly qualify. just from the looks of my financial situation it is more than 45% debt to income.
Do I really qualify and can get help? What if RBC does not participate or take too much time being a Canadian Bank… should i try contacting other Banks? Thank you.
Reply
Todd Temaat Reply:
February 27th, 2009 at 9:28 pm
Everything I’ve read so far (and its been a lot)…including docs straight from the Treasury Department and the White House say if your loan is owned or guaranteed by Fannie or Freddie, it will qualify. Check out the Treasury Department’s site for more info.
According to your figures above, I’m guessing your interest-only payment is about $2,000/month divided by $5,500/month ($66,000/year) = 36.7% DTI. Your other debts don’t matter in this calculation…just the first mortgage debt.
One of the big questions I have is whether you have a first and a second or only one mortgage. The President’s plan only covers first mortgages.
Anyway, according to the plan, since you’re already below 38% DTI, you lender would partner with Treasury to bring your payment down to 31%. They would do this by lowering your interest rate to approx 4.3%, which would give you a payment of approx $1700/month for the next 5 years.
Of course all this assumes you still owe approx $342,000 on the mortgage.
You present an interesting case and the only way to know for sure whether I’m right or not will be to talk to your servicer (I assume that’s still RBC?) after March 4th. But from everything I’ve seen, it appears you should qualify.
Thanks for asking
February 27th, 2009 at 11:32 pm
First off, i want to THANK YOU for such a quick response and an awesome advise, which are hard to come by these days…also to post on your blog is so easy too!!…i encourage others to try it out.
ok now answering back your questions -
1. I only have a first mortgage.
2. and RBC is still the servicer.
I would be happy with 4.3% interest rate but what would be the interest rate after 5 years? will that be decided at the time of loan modification or after 5 years?
would i be better off just doing a regular refinance instead of Obama plan? or would it make sense to do obama plan as I get $5000 cash back after being current on my mortgage, which i intend to anyways?
how much remodification fee should i be expecting? I believe it is cheaper than refinancing, correct?
should i take a cash out to make my debt to income ratio even more which can work to my advantage? (probably not a good idea, right?)
sorry for the questions, but i promise I would advertise your blog at my work place…they all need help
Reply
Todd Temaat Reply:
February 28th, 2009 at 10:29 am
Thanks for the kind words and for posting. It’s comments and questions that make the site lively…and hopefully more helpful to homeowners.
1. Since you only have one mortgage, the plan should help you out.
2. If you refinance through the President’s plan, you’ll keep whatever fixed interest rate you receive now…it won’t change. If your loan is modified to bring the interest rate down, after 5 years, your lender can gradually step up the interest rate to the current Fannie/Freddie conforming rate at the time the loan was modified.
It’s uncertain whether your loan would be modified to a non-interest-only loan or left as is and just have the interest rate reduced. My guess would be that it would be modified to a normal loan, but we’ll have to wait until March 4 to find out.
3. The incentive payments to homeowners only apply to loan modifications, not to refinancing.
4. The refinancing will not allow any cash out, I don’t believe, but I wouldn’t recommend trying to “game” the system.
Oh…I also noticed the link in my post above was messed up…I’ll correct immediately.
Nest wishes
Reply
February 28th, 2009 at 7:33 am
Good morning,
i checked the exact figures from my pay stub and mortgage lenderss -
interest and principal are $1706.
gross is $5221 (including epo and dmo) and true gross is $5500
will they use gross or true gross? (so far i have used true gross figures for the calculations)
so i used your calculation method $1706 divided by $5500 comes to about 31% debt to income ratio.
but everything changes if they include tax, isurance, and PMI, that all makes my mortgage 2500 and that makes 45% debt to income ratio.
I really hope they include tax, ins, pmi or this is not going to work for me or many as I imagine.
Reply
Todd Temaat Reply:
February 28th, 2009 at 10:38 am
I’m not familiar with ‘epo’ or ‘dmo’. The guidance so far just says ‘gross income’ so I don’t know. Hopefully that will come out on March 4, but I expect that level of detail will be left to the individual servicers.
The big difference through the program for you is that if you refinance, you will be going into a mortgage that allows you to pay down principle but costs you the same every month.
Once the final plan comes out, we’ll see what’s included in the ‘monthly payment’ figure. My opinion is that taxes and insurance fluctuate way too much to be included. It’s possible PMI would be included because it’s usually more standardized.
Hope it helps and thanks again for commenting.
Reply
andy Reply:
February 28th, 2009 at 12:01 pm
That is it, you have nailed it on the head for me. It all depends when the details are revelaed 4th March, and what they decide to be included in “Monthly payment”. And as you mentioned including PMI makes the most sense along with Interest and Principal.
I know one thing for myself, I would be benifited with or without President’s Plan by changing my loan from the Interest only to a conventioanl 30 year fixed at a lower interest rate than my current interest-only loan at 6% (I am shooting to get higher 4’s or much lower 5’s).
but if President’s Plan does allow me to have lower interest rate, lower PMI, and added 5000 incentives to remain current on my mortgage, I’ll take it now gladly.
I can’t wait till March 4th, and if RBC takes too much time in catching up, I’ll go with any other bank that is willing to work with me because I’m losing my sleep over it.
just in your opinion, would I be getting a better deal from my exisiting bank or from other competitors? Please keep us informed for the best Bank to go through which is honest and reputable and pro Obama Plan.
Once again, Thank you very very much.
BTW this house is in NJ.
Reply
Todd Temaat Reply:
February 28th, 2009 at 1:56 pm
One of the stated goals of the President’s plan is to make all lenders use the same set of rules to modify loans. So which bank you go with shouldn’t matter too much.
The thing to look at will be the fine print in the contracts…lenders will be looking to make up money some of the money they’re ‘losing’ on these deals.
Listen to the call Brent Lane and I did on Fast Track Modifications for more info.
March 4th, 2009 at 9:50 am
Hello there!!! Help Help!!
So we waited for the details and hooray!!! should i open the bottle tonigh? or am i missing something?
“—The monthly payment includes principal, interest, taxes, insurance, flood insurance, homeowner’s association and/or condominium fees. Monthly income includes wages, salary, overtime, fees, commissions, tips, social security, pensions, and all other income.”
Reading my above situation, Does this mean my 45% debt to income will be reduced to 31% as it includes principal, interest, taxes, insurance, flood insurance, homeowner’s association and/or condominium fees.
Thanks
Reply
Todd Temaat Reply:
March 4th, 2009 at 2:27 pm
Well, you’ve almost got it right.
While to mortgage payment will include insurance payments, they mean homeowners insurance, not PMI. PMI is not included in the calculation of DTI. Check the program guidelines out for yourself. It’s on pg 3 in the Underwriting Analysis section.
Based on their guidance, they’ll divide your mortgage payment (not including PMI) by your gross income of $5,500.
Then they’ll reduce your interest rate until you get to 31% DTI. I’m putting together my analysis post right now…you’ll want to read it to see what happens if reducing your principle isn’t enough to get you to 31%.
Also, if your loan is modified and you pay on time (no more than 30 days late), the Treasury will pay your lender a $1,000 payment that will go straight to your principle. These payments will continue for 5 years as long as you’re not late.
Your one gotcha might be whether or not you’ve got a hardship. They say several times that this isn’t meant to help people that can afford to pay their mortgage now. It’s only meant to help people in default or in danger of going into default if something isn’t done.
Reply
March 4th, 2009 at 4:00 pm
Thanks for clarifying that PMI is not included. However, I’m happy that tax and house inusrance are included.. That makes a big chuck of my mortgage too (550/mo precisely)
As far as hardship, my company didnot give me any raise and bonus this year. would that be concidered a hardship? (certainly would be concidered as pissing me off though).
also I called RBC bank (the guy who did our mortgage is my wife’s cousin), and he said he hasn’t gotten any info yet but will let us know.
what is the realistic time frame to expect these banks to start on this program, what are my options if RBC doesn’t do this program…Can i go to any other bank or one can only apply through the current servicing bank only?
Please dont’t stop bloggin this – it is the best free advise one can get with no obligations!! Excellent work!
Reply
Todd Temaat Reply:
March 4th, 2009 at 5:40 pm
Not getting a raise would not be a hardship. But if other expenses have went up enough…? I can’t be the judge…RBC will have to do that, which is why you have to turn in tax returns, proof of income, etc. Although the initial qualification will be over the phone and then you’ll have to submit documentation by fax or mail.
The Treasury Department and White House are pushing really hard it’s getting a lot of press so I’d expect the banks to act pretty quickly…maybe by the end of this week or start of next. Their first priority will be people already in the foreclosure process, people in default, and people that contact them who are in imminent danger of going into default.
That’s what the initial phone conversation with RBC will probably be. When you call, they’ll probably have a standardized checklist of questions to ask you. At least that’s my guess.
As far as I know, your servicer is the only one that can modify your loan. Although you” probably be eligible for the refinancing part of this plan if you don’t qualify for the modification part.
I’ll be writing more on this…I’m still getting my thoughts together after wading through all the reading.
BTW…thanks for the kind words. I’m glad you find this helpful.
Reply
March 4th, 2009 at 9:35 pm
other expenses are going up – 2 kids are going to school and just had a car accident so we had to buy a car…i’m sure if RBC finds a way to cash on this proposition themselves, they will find a away to help us out too
If they dont modify, I’ll refi on a heart beat considering the future job security in current times..
BTW – YOU SHOULD TRY BROADCASTING YOURSELF ON “YOU TUBE”
Reply
Todd Temaat Reply:
March 4th, 2009 at 9:53 pm
Thanks, but I’ve got a face for radio if you know what I mean
Actually, it’s in the plan at some point…just not there yet.
Maybe I can find a stand in for the actual filming???
Reply
March 5th, 2009 at 11:28 am
Documentory with Michael Moore would be nice!!!
I listend to your radio links above and I can’t believe I am actually writing to the author of the above book.
This is a great service you are providing to save us from the preditory lending which got us here in the first place.
Now I really have a true friend in the mortgage business!!!
Reply
March 5th, 2009 at 1:43 pm
Hi Todd,
First off, your information has been very valuable and i enjoy reading your posts.
My situation:
My wife bought the house before we were married (11/2006).
She has a DTI of 39% and hence would qualify for this plan.
However, if my gross income is included, then our DTI is 25% and would not qualify.
I am NOT on the deed, but we did file our taxes jointly this year (just married 9/08).
Question is: Am i included in all of this? Becuase if i am, then i am wasting my time.
Reply
Todd Temaat Reply:
March 5th, 2009 at 2:04 pm
Most likely you would be included because servicers will probably consider household income, not an individual’s income.
If all of your finances are co-mingled and you’re married in every other aspect of your life, I can’t see why they would consider your incomes separately.
In addition, if you’re not having trouble making your payments, you wouldn’t qualify for a loan mod anyway. You would probably qualify for the refinance, though…if you have a Fannie or Freddie loan.
The refinance could save you money every month and will almost definitely save you big money long-term. I’m gonna write about that tomorrow, so check it out.
You are signed up for our site updates, aren’t you?
Thanks for your compliment and for commenting.
Reply
April 1st, 2009 at 8:43 am
Has anyone heard about an update as to when the lenders will implement these programs? My single mortgage is owned by Freddie, I have a small amount of equity, and in all ways fit the President’s program requirements, but my lender keeps telling me no programs are yet in place. I want to lower my rate while rates are low, and worry that my lender has no incentive to help me get a lower rate. I have not seen anything written anywhere about the issue of lenders not moving to implement the President’s program at all. People need help right now, not 6-12 months from now, right?
Reply
Todd Temaat Reply:
April 1st, 2009 at 5:01 pm
Thanks for asking…actually, I just wrote a post on that yesterday. You can see it here.
If you have more questions after reading through that, please post a comment there.
Best wishes.
Reply
April 13th, 2009 at 6:08 pm
Nice site and I really enjoyed all your great information. I have a first that I’ve tried to modified for over one year but the servicer is having trouble with the investors plus I have a second but since I’m upside down on my first and my second I understand I can file Chapter 13 and have it stripped away canceled by the courts and then I would be in a good position to get me first modified. Do you think they will have a plan to address the 2nd mortgages and will they approve the cram down bill in the senate to help people like me in very bad markets that had there propery drop 50% and have owned homes for 30 years and had 50 maorgages and never late paymetn until now!
thank you,
take Care,
sincerely,
Philip
Reply
Todd Temaat Reply:
April 14th, 2009 at 8:37 pm
I can’t begin to guess what the government is going to do. What I do know is that if you qualify for a Home Affordable loan mod, your bank will be able to modify it without regard to the investors. Of course, you’ll also still have the second mortgage and be way under water overall.
I’m not an expert in bankruptcy laws. I’d recommend talking to an experienced bankruptcy lawyer. If you need a referral, please try the National Association of Consumer Advocates.
Reply
April 29th, 2009 at 5:21 am
Hi Todd,
Thanks for all the great information. I have a question regarding my situation and whether or not I could benefit from the new plan.
I have a Wells Fargo 7-year ARM at 6.5%. There are 4 more years left before the interest rates become variable. The balance is around 520K and I have a HELOC at 61K. The appraisal value of the home is now 580K.
My wife and I were recently married in April of this year but she lost her job last year in November of 2008. Just recently her severance pay has ended and it looks like we are going to have some trouble making the payments. She contributes to the monthly mortgage payments and the maintenance fees for our condo.
I own my own business and have a set monthly take home of $5600/month after taxes. However, with the economy, the business is in rough shape and there is possibility of us shutting down. With the combo of my wife not being able to find a job and the outlook for my business is there any way we can reduce our payments on a monthly basis? Both of our 2008 tax returns were very good but the situation is totally different now. We have not missed a payment yet.
I appreciate any advice you can give us. Thanks so much.
Reply
Todd Temaat Reply:
May 3rd, 2009 at 8:03 pm
Thanks for being proactive and asking. If you meet the qualifications for the Home Affordable modification, you should call your lender and ask to have your eligibility evaluated. The mods are actually meant to help people in imminent danger of foreclosure; which sounds like you if your wife can’t find employment soon.
If your business goes under and you can’t find enough money to pay the mortgage, you will lose the house eventually. You may be able to get forbearance or be able to short sell the home, but no mortgage servicer will let you refinance or modify a loan if you don’t have the income to pay the new mortgage.
Finally, I’d recommend continuing to be proactive. Sit down with your wife and discuss what you will do if she can’t find work and your business goes under. Not that I think that will happen…I definitely hope it doesn’t. But you and she need to have a plan in case it does. Too many people hang their hopes on being able to stay in their home and then have to move out in a hurry with no plan. Plan for the worst scenario and hope for the best.
Thanks again for commenting and let me know if I didn’t answer your question.
Reply
May 5th, 2009 at 8:19 am
My current mortgage company is GMAC. They so suck. All I initially wanted was to use the Obama Housing plan to lower my house payment because I’m at 90% LTV. First they put me through a grueling Mortgage modification process, which I didn’t want. After being declined for that, I was then told that I wouldn’t qualify for the part of the plan that does refinances with 80-105% LTV because I already have PMI, and that the guideline state if you already have PMI that you are automatically ineligible. What kind of crock of crap is that?” I requested a copy of the guidelines that state that and they refused to provide a copy to prove what they where saying…I smell a rat.
Reply
Todd Temaat Reply:
May 10th, 2009 at 8:01 pm
First of all, your loan must be secured by Freddie Mac or Fannie Mae to qualify for the refinance. Is it?
As far as the PMI, this is what the guidelines say:
You can find this in the answer to Question 14 in the Home Affordable Borrower’s FAQ. You can find links to all the official program documents in our Obama Foreclosure Relief Plan Details post.
Reply
May 12th, 2009 at 1:35 pm
Hi! I’m a Certified Financial Planner who has been assisting my sister in getting her loan modified. Wachovia now Wells Fargo, has been stalling her for months. We’ve found out that NY/Mellon Bank is the investor on the loan. I was told the only program available, beside tacking on the past due payments to the end of the loan, is the 40-Year Loan Program, which I’ve found very little information about. For example, we’re told it is interest only for the first 10-years, but nothing about the rate.
NY/Mellon Bank has taken money from the government’s bailout package. I’m confused as to why they don’t have to offer the 2% financing as described in Obama’s plan. When I called the Hope Now line, I’m told that this legislation has only passed the congress, not the senate and that the president still needs to sign the bill.
I also can find very little information (other than a very technical calculation) that explains the investors loss potential as a criteria for agreeing to modify your loan or not. A representative at Wells told me that NY/Mellon, so far, is only approving about 4 out of every 10,000 modification requests. What is that about? Is there any oversight of these banks that took money and how they are helping homeowners? Where in the government can I call to get answers? When I asked the Hope Now representative, he said he’d heard of a phone number, but didn’t have it to give out.
And to add insult to injury, last June Wachovia told my sister that they only way she could get assistance was to get two months behind on her mortgage, which of course, has affected her credit negatively. Now, most of her credit cards (she only has a few) have reduced her credit line. Can we make Wachovia/Wells take off the negative past due payments that they are providing to the credit reporting agencies?
My sister is disables and we believe that her loan application was altered by the bank’s mortgage employee. If she gets a modification agreement can she simply strike the verbiage about releasing them from any liability for predatory lending or other fraud?
I know this is several questions, but I can’t tell you how frustrating this has been. Every time I try to get my sister to call the bank or even talk to her about it, she gets sick. She’s already permanently disabled at 43 and was at the time they sold her this very bad loan.
Thanks!
Reply
Todd Temaat Reply:
May 12th, 2009 at 7:54 pm
Thanks for writing…I can feel your frustration and have experienced it myself. It can be tough to persist. Did you know you can act on behalf of your sister if she wants you to? All you have to do is fill out a statement that says that’s what she wants and fax it to her servicer. If you’d like a copy of the one we used for our clients, drop me an e-mail.
1. The 40-year loan works just like the 30-year loan…just 10 years longer. In normal cases, if lowering the interest to 2% doesn’t get you to 31% DTI, they will extend you back to 30 years. If that doesn’t work, they can extend either the amortization and/or the loan period out to 40 years (or however many years beyond 30 it takes to get the payment to 31% DTI.
2. Your sister’s loan is controlled by a pooling and servicing agreement. The President’s plan doesn’t change that. And while there are bills going through Congress to give servicers protection if they modify loans against investors’ wishes, right now they can’t do that. So if NY/Mellon doesn’t want to modify their loans, they don’t have to and your servicer is still in compliance with the program.
3. Getting credit history changed is next to impossible without a court order. The fact is she fell 2 months behind…even if it was on the (then correct) advice of her servicer. While it’s not necessary to be behind now, a year ago the story was different.
4. If you think your sister was taken advantage of by the mortgage broker, you should pursue that now rather than waiting. First of all, if you can prove it, you can use it as leverage to make them negotiate/modify the loan…it gives you bargaining power. Second, it will be very hard (if not impossible) to get them to take that clause out of the modification agreement. They’re in the power position and have no reason to take it out. Check out the National Association for Consumer Advocates and talk to a lawyer now rather than later.
Hope it helps!
Reply
June 20th, 2009 at 12:43 pm
Todd ! I’m back. and guess what I have finally lost my job this month. hoooray
you know my history so I’ll come straight to the point with you and those who don’t please refer to my comments above…ok here it is…I had started the process with RBC when i was employed and they were like so slow in response but as soon as I informed that I have lost my job I got their attention. I sent them my updated hardship letter of course…but now the biggest question of all….will they calculate the 31% DTI based on my unemployment income (NY=405/WEEK or 1600/mo)…already got the letter of payment which is good for a year. first she said, we can do forbearance, but then i said how good is that and its not going to help me…and since my loan is fannie mae why cant you do obama’s plan…she was like we dont do obama plan…i said even if it is fannie mae and she was like “oh you are on fannie mae”…hold on…came back after 5 mins and said send your unemployment letter stating how much and for how long i will get the UI and also if i will be getting any food stamps…i said hell yeah already applied for that 
…i also read that if unemployment is more than 9 months then it qualifies for income….now c’mon give me something i want to hear, Todd…please!!!! cant wait to fax the UI letter on monday!!
Reply
Todd Temaat Reply:
June 20th, 2009 at 3:26 pm
Honestly, I don’t know what they’ll do. It’s my guess that they won’t put you in a Home Affordable mod based on your unemployment income, though. I could see them offering you some kind of forbearance until you get a job and then working a mod based on your permanent income.
Reality check: Go to a mortgage website like Bankrate.com or something and put in how much you owe on your home and how much you estimate 31% of your “income” to be. Then find out if a mortgage payment of that amount every month will EVER pay off a loan of that amount.
If the answer’s no then your lender will foreclose. This program isn’t about shafting the lenders or giving people a deal that’s too good to be true. It has to make sense for both the lenders and the homeowners in the long term. If you can’t afford to pay a monthly payment that will pay off your loan in 30 – 40 years, they’re going to foreclose.
Best of luck and thanks for checking back in with us. I’m sorry to hear about you job and pray you can get another one quickly.
Reply