I need Loan Modification Help and Advice?

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Hello – My husband and I applied for a Loan Modification in May. Supplying paperwork, bills, pay stubs all along the way. We recently (6 months later) found out that we were denied for the HEMP Program. So,they are looking into other options, in house modifications. After kicking and screaming, they are reconsidering us for HEMP (or Hamp?) but most likely will be denied again. Here is my situation, I make $ 56,000 a year, we owe $ 198,000 on our mortgage. My husband is a union carpenter, he made out really well when we first moved here and even when work is steady. However, within the last year work for him has been completely dead (due to the economy) and he is getting by on unemployment which isn’t much. We aren’t compulsive spenders, our mortgage and utilities are priority. But we are just about making it now. We were denied because we are told we aren’t terminly ill, divorced or dead. But I always get a different story when I call. Now I’m being told my husband’s unemployment doesn’t count as income and they are just going off of mine. Well, dugh, wouldn’t we be approved then? Even with his unemployment! They keep telling me to send them paystubs and bank statements (not much in the bank either). I guess what I’m getting at is what exactly do you need to be considered for this? If two people are steadily working and making good money, they are the ones that get a modification? I would assume they do modifications to avoid forclosure (in which they loose out also). So what am I doing wrong here, am I missing something? Can someone who has been through this shed some light? Thanks in advance!
Thank you for your response! We are not late on our mortgage (and this only because we are using everything we have to pay it). Putting other bills on hold or paying them late. I’m afraid if we default, our credit will be ruined or we will go into foreclousure. And how do you catch up when you are behind on a payment. Also, my husband works a week here and there. Would they still consider us based on his portion of the income? With or without unemployment? Thanks.
Our mortgage is through PHH.

2 Comments
  1. Reply
    maria
    February 17, 2011 at 12:10 pm

    The HAMP(Home Affordable Modification Program) was put in place by the Federal Government to try to help keep some people in their homes. Here is how it works:

    If you qualify for the Making Home Affordable plan it will lower your mortgage payment to 31% of your gross income. You must show a financial hardship to qualify. If you are current on your mortgage it is harder to qualify. With your husband being unemployed, you do show a hardship, but it is considered temporary. This can cause a denial if you are current.

    To lower the payment the bank has several options. First, they will lower the interest rate, it can be taken down to 2% but it is a step rate. After five years it will start increasing by 1% per year each year until it gets to the current market rate.

    Depending on the investor that owns your loan, they may consider extending your term out to a maximum of 40 years. Some investors do not allow term extensions, so they will amortize the loan out to 40 years but keep the same maturity date. This results in a balloon payment due on the maturity date.

    The last step considered is a principal deferment. Part of the principal is deferred, with no interest being charged. Again, this results in a balloon payment being due upon maturity.

    If you sell or refinance at any time, the entire amount, including any deferments, are due in full.

    With this program, you can earn $ 1000 per year for the first five years as a principal reduction, if you stay current.

    This is a good program if you qualify. You will have to complete a 3 month trial at the new payment amount before the modification becomes permanent.

    The Treasury Department sets the rules for this program. They did allow unemployment to be used as income at the beginning of the program but the rules changed and it is no longer considered.

    As with any modification program, you must be able to afford the new payment. If after the mod, using all the steps available in the waterfall, e.g. lower interest rate, extended terms, the payment is still too high, then the mod will be denied.

    With more information such as are you current or behind, who is your investor, and who is your servicer, I might be able to help more.

    PHH is your servicer, but they may not actually own your loan. Do you have a conventional loan? You should find out who is the investor.

    If your husband is working, even sporadically, that can be used as income. They will probably use his year to date and average it as a monthly amount.

    You are correct to worry about getting behind, if you do not qualify for a mod you will be responsible for catching up on your own. The only problem with that is it is harder to qualify for a mod if you are current. The reasoning is if you are making the payment you can continue to make them. Also, as I stated in my first response, unemployment is considered a temporary hardship.

    Maybe your husband could find full-time employment, even if it is out of his field and at a lower rate of pay, just to help you get qualified.

    There are several non-profit counseling services that might be able to help. Do not pay for this service, the companies that charge are out to take your money, not help you.

    Are you underwater in your home? Do you owe more than it is now worth? If not, you may be able to qualify for a refinance, interest rates are so low this can save you hundreds monthly. Freddie Mac, one of the biggest investors, has a refinance program to help even if you are underwater. This is why you need to know who your investor is.

    Good luck and I hope I have helped a bit!

  2. Reply
    Donna Keller
    February 17, 2011 at 12:23 pm

    maria said it all. in case you wanna look at hardship letter samples, go here:

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