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.

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!

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!

As far as the PMI, this is what the guidelines say:

If your existing loan has private mortgage insurance, you will need the same amount of insurance coverage for the refinanced loan. If your existing loan does not have private mortgage insurance it will not be required as part of the Home Affordable Refinance.

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.

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.

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.

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.

thank you,

take Care,

sincerely,

Philip

If you have more questions after reading through that, please post a comment there.

Best wishes.

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.

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!!!

Maybe I can find a stand in for the actual filming???

BTW – YOU SHOULD TRY BROADCASTING YOURSELF ON “YOU TUBE”

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.

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!

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.

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

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.

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.

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.

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