BK and the "Obama Plan"?

[IBroke]

Ok, I get what you're about. Read through a few of your old posts and see that your mom took out $400k in home equity loans and spent a little on the house and in your own words, pocketed/spent the rest. You even said you hope the bank will write down the balances so that in a few years you can sell for a huge profit and pocket that too. I'm laughing all the way to the bank on that one.

Yeah, you're so smart. You are unemployed, bankrupt, and live with your mommy. Incomes always go up? Real estate values always go up? Hahahahahahahahaha. That's the funniest thing I've heard all day.

How many repos have you had? How many judgements for unpaid credit card balances? I think I read something about a few hundred grand in unsecured debt from a few years ago. Incurred during the financial boom, but go ahead and blame your money problems on the economy. You're a real financial guru, let me tell you.

You just went "bankrupt" as well by getting personal and off-topic...

[2Bshinyandnew]

Ok, I get what you're about. Read through a few of your old posts and see that your mom took out $400k in home equity loans and spent a little on the house and in your own words, pocketed/spent the rest. You even said you hope the bank will write down the balances so that in a few years you can sell for a huge profit and pocket that too. I'm laughing all the way to the bank on that one.

Yeah, you're so smart. You are unemployed, bankrupt, and live with your mommy. Incomes always go up? Real estate values always go up? Hahahahahahahahaha. That's the funniest thing I've heard all day.

How many repos have you had? How many judgements for unpaid credit card balances? I think I read something about a few hundred grand in unsecured debt from a few years ago. Incurred during the financial boom, but go ahead and blame your money problems on the economy. You're a real financial guru, let me tell you.

None of the above post has anything to do with HAMP, the HAMP guidelines or servicing policies.

The guidelines can be found here:

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0905.pdf

hereforinfo, what exactly were you trying to accomplish, learn, or contribute to this thread? If HAMP guidelines don't apply to you, great! No reason to start picking on another poster's personal situation after they tried to explain the guidelines to you. What exactly does your last post have to do with the HAMP guidelines?

[Calthius]

Our Lender has brought our house current through a loan modification they did for us during the bankruptcy. We were unsure if we wanted the house and stopped making payments about a month after we filed.

Our lender wanted us to stay in the house so they contacted our lawyer and sent reaffirmation papers with a loan mod attached to it. They dropped our interest rate to 5%. They also told us they we won't have to be concerned about arrears because they are going to bring the mortgage current and our payments will start again in a month or so.

[hereforinfo]

Ok, I get what you're about. Read through a few of your old posts and see that your mom took out $400k in home equity loans and spent a little on the house and in your own words, pocketed/spent the rest. You even said you hope the bank will write down the balances so that in a few years you can sell for a huge profit and pocket that too. I'm laughing all the way to the bank on that one.

Yeah, you're so smart. You are unemployed, bankrupt, and live with your mommy. Incomes always go up? Real estate values always go up? Hahahahahahahahaha. That's the funniest thing I've heard all day.

How many repos have you had? How many judgements for unpaid credit card balances? I think I read something about a few hundred grand in unsecured debt from a few years ago. Incurred during the financial boom, but go ahead and blame your money problems on the economy. You're a real financial guru, let me tell you.

[IBroke]

The guidelines don't apply to me because I have no problem paying my mortgage or any of my bills for that matter.

Well, if they don't apply to you, it doesn't surprise me that you aren't aware of any details. I'm just curious: What you are doing on a BK-forum? You don't seem to have any financial difficulties (according to your statement) and you're obviously not an attorney (lack of knowledge).

And $1500/month is a high payment for an income of only $4k. That's over 37%! Doesn't leave much room for maintenance, especially since you seem to plan on her keeping the house for many years. A home is going to need a lot of maintenance and repairs in that time..

Over 37%? Oh, so you are using the mortgage-amount ($1,500) which won't be due prior to 2012 with the CURRENT income? That's an economical "no-go"! Why? See "inflation" below!

Over the last 5 months, she paid $2,560/month to the mortgage-company as forbearance payment. Yes, that was difficult but we made it. And $1,500 will be a relief...and leaves enough room for repairs (so far, we spent $300 on repairs over the last 6 years).

I don't care how low the payments are, at some point the full balance will come due. Plus the cost of insurance and property taxes will rise too. You said "they will probably offer..." That's a lot of wishful thinking on your part. HAMP doesn't work for everyone, and if it doesn't make sense or seem sustainable long term, the investor isn't going to go for it. Plus there's that pesky 2nd mortgage on the house.

I never said HAMP would work for everybody. That's just as stupid as stating the opposite.

What do you mean by "at some point"? In 30, probably 40 years? I can't take you seriously on that. NOBODY can plan that far ahead. Cost of insurance and taxes go up on ANY property but I got news for you: SO DOES INCOME and in the future, PROPERTY-VALUE!
Ever heard of inflation? Do you think a $4K income will stay the same over 40 years? Do you honestly believe that all costs go up but income stays the same? That hurts...ouch!

Check out the median income statistics from today and compare them to the last year, 3, 5, 10, 15 and 20 years ago. Now go figure...The mortgage - fixed at 5% for 30/40 years - will actually go down from a %-value of the income. Those are basic economics - totally ignored by you - again.

In our case (and in many, many other cases), the investor "is going for it" because a foreclosure is the last thing the lender desires. You are aware of the housing-market, aren't you? There is no "wishful thinking" involved - all numbers are coming from the lender and as I said before, so does the HAMP-offer itself. Why should THEY offer US something they wouldn't approve in the first place?

Again, I kindly ask you to READ what I posted before. The 2nd mortgage will be stripped. Erased. Gone. Completely.

Her original income doesn't necessarily have much to do with HAMP. It just doesn't make sense that someone making even $120k/year could afford a house that was in the $700k range. And obviously she couldn't.

Excuse me, but what do YOU know?
First of all, she bought the house for $370K and - in case you missed that part - values went through the roof. We added a new $45K kitchen, a $45K pool and many other upgrades through a second mortgage and a modified first.

My mother NEVER had ANY problems paying for the house - until her German employer stopped offering services in the US because the entire nation went broke. Now, she's self-employed but VERY HAPPY. She is making far less but - unless you are self-employed as well or working for the Government - probably has a safer job than you.

There is no need for arrogant comments - not on a BK-forum where many people are able to identify themselves with a similar story like my mother experienced and especially not in combination with so many statements that lack or totally ignore economical basics/facts. Did you ever ask yourself how long it could take somebody to get his/her own house again if they don't take adavntage of HAMP although they qualify but don't apply because of users like you? Users who aren't involved AND post wrong or misleading information? That's just a shame!

See, in our days, I consider a fixed mortgage for 40 years and a balloon-payment to be more desirable AND predictable than an ordinary job. Maybe you will lose your job tomorrow? Or next week, month, year, in 5 years, in 10 years? Right now, 240,000 people/month are losing their job. But I guess that's news to you as well.

PS: Check the two statements of you I marked in bold and read one directly after the other...

[IBroke]

How long did you MOD take to processed? I desperately need to file chapter 7 but also get a modification before I file so i can bring my house current. That is the only way I can see myself bringing my house current since I am in arrears $3300.

That depends on your lender. Some are unprepared and mess up the documentation (heard bad stories about BoA). The trial-period is always 3 months. as soon as your application starts and the lender is considering your loan for modification, the lender will put a hold on any foreclosure-action.

[cinderella]

How long did you MOD take to processed? I desperately need to file chapter 7 but also get a modification before I file so i can bring my house current. That is the only way I can see myself bringing my house current since I am in arrears $3300.

[hereforinfo]

The guidelines don't apply to me because I have no problem paying my mortgage or any of my bills for that matter.

And $1500/month is a high payment for an income of only $4k. That's over 37%! Doesn't leave much room for maintenance, especially since you seem to plan on her keeping the house for many years. A home is going to need a lot of maintenance and repairs in that time. I don't care how low the payments are, at some point the full balance will come due. Plus the cost of insurance and property taxes will rise too. You said "they will probably offer..." That's a lot of wishful thinking on your part. HAMP doesn't work for everyone, and if it doesn't make sense or seem sustainable long term, the investor isn't going to go for it. Plus there's that pesky 2nd mortgage on the house.

Her original income doesn't necessarily have much to do with HAMP. It just doesn't make sense that someone making even $120k/year could afford a house that was in the $700k range. And obviously she couldn't.

[IBroke]

Ibroke, how long is the interest rate going to be at 2%, and what will it be in the future? How will she afford the higher payments once the rate resets? How will she afford the balloon payment? I just don't see how someone with a yearly income of $50k can afford a $500k mortgage long term. Like HHM said, it's just delaying the inevitable. But I suppose if she can maintain the payments long enough for the market to recover, when she eventually defaults the bank may get a better price than they would today.

What was her income like when she got this loan in the first place?

I'm sorry that you are unaware of the program-guidelines.

First, you should know that the monthly payment under the HAMP depends on the income, NOT on the mortgage-balance. Even if the mortgage would be $720K, her payment would be the same. I assume you also didn't know that any amount financed that can't be paid off under the term of the loan using 31% of her Gross income WILL BE INTEREST-FREE UNTIL IT BECOMES DUE - either in 30 or 40 years. So with this mortgage, the 2,3,4 and 5% interest ONLY APPLIES to the loan that will be paid of during the length of the loan, NOT to the amount of the balloon-payment.

The interest rate will stay at 2% for the first year and will increase 1% each year until it reaches the 5%. The first adjustment will increase the monthly payment by about $80/month, the second by about $90 and so on...just like a regular adjustment of income.

The monthly payment will NEVER exceeed $1500/month - not even after the final adjustment.

So I DON'T see how $4,000/month does NOT afford such a mortgage.

I recommend to anybody to read the guidelines of this mortgage program before complaining about it.

Why should I even care about a balloon-payment due in 40 years? I'm 29 now and once the balloon-payment is due, I could even turn the mortgage into a reverse-mortgage. And as I said before: The balance won't be $500K - it's negotiable!

This is not an ordinary mortgage, so it makes no sense to apply ordinary numbers and standards.

BTW, her income was $120K/year. What has this to do with the HAMP?

[hereforinfo]

Ibroke, how long is the interest rate going to be at 2%, and what will it be in the future? How will she afford the higher payments once the rate resets? How will she afford the balloon payment? I just don't see how someone with a yearly income of $50k can afford a $500k mortgage long term. Like HHM said, it's just delaying the inevitable. But I suppose if she can maintain the payments long enough for the market to recover, when she eventually defaults the bank may get a better price than they would today.

What was her income like when she got this loan in the first place?

[IBroke]

I heard the plan only applies to first mortgages. Not second and third.

Yes and no.

Once you are approved for the plan, your second mortgage will be modified in the same way as your first - or your lender can request a lump-sum and the mortgage will be "erased". This is a new addition to the Obama-plan because they figured out that the modification of the first mortgage can "attract" the second mortgage company to foreclose on you - especially after a principal-reduction that puts equity in your home.

Keep in mind, however, that that only applies to the second mortgage and that your lender has to take part in that plan.

In our case, the second mortgage company (SLS - a pain to deal with) is NOT participating so they will end up empty handed through a Chapter 13 lien strip.

EDIT: Here's a link to that topic: http://www.funding-loans.com/Latest/...tion-plan.html

[flnybk]

I heard the plan only applies to first mortgages. Not second and third.

[IBroke]

Looks like your mother may be one of the "few" lucky ones.

Realize, even if she completes the trial program, they can still deny the modification.

I am merely pointing out that actually getting a modification is the exception, not the rule.

But, is your mother significantly upside down in the home (even if you got rid of the 2nd mortgage). If so, a 40 year mortgage, even at those terms, is not that great, long term. Hopefully it works out.

Our lender (SPS) is very helpful and I highly doubt they will deny the modification. Why should they since we didn't request it in the first place. THEY informed us about the plan and told us we should apply. We already provided them with all required documents and forms BEFORE they mailed us this agreement.

Currently, we are already in a forbearance agreement with them and were paying $2,560/month for the last 5 months. In addition, they also told us that a principal reduction is negotiable under this plan.

Right now, we currently owe about $500K on that mortgage and six months ago, they offered us a modification to a pricipal balance of $350,000 or a pay-off of $290,000.

The current value of the home is still above $300K and we will be trying to negotiate the principal balance to be about 50K higher than that (we will be getting a professional appraisal). If they offered a principal reduction before outside the plan, I don't see a reason why they shouldn't offer that within the plan.

A payment of $1,317.50/month isn't bad - considering that $700 is already used for escrow. Using the waterfall-method and considering escrow, they will probably set up a loan that pays off about $150,000 over the 40-year term and puts the rest into a balloon-payment. Any amount in that balloon-payment will be interest-free, which isn't bad either.

I'n the long run (I'm 29), I'm 100% positive that I can take advantage of this offer and once the economy improves, I can also pay more every month to bring the balance down.

And 'til then, this program simply is a great opportunity to make living affordable - IF you qualify. As I said before: You can't rent anything like that for less...

[HHM]

Looks like your mother may be one of the "few" lucky ones.

Realize, even if she completes the trial program, they can still deny the modification.

I am merely pointing out that actually getting a modification is the exception, not the rule.

But, is your mother significantly upside down in the home (even if you got rid of the 2nd mortgage). If so, a 40 year mortgage, even at those terms, is not that great, long term. How old is she? Hopefully it works out.

[IBroke]

Not to be pessimistic, but these programs are getting too many peoples "hopes"
up and only delaying the inevitable. Realize, the banks still control who gets a mode. Right now, there are 8.4MM homeowners with mortgages that are unemployed. Over 7% of mortgages (nationwhide) are in default and nearly 40% of subprimem mortgages are in the default. There is simply not enouth money to cure this problem. In June, the banks did about 18,000 modifications, nationwide. At the same time, they did over 275,000 foreclosures.

If you have negative equity in your home, or if you are in some exoctic mortgage (interest only etc), there really is no modification that is going to help you long term. Just walk and be done with it.

I have to disagree in regards to that GENERAL comment. In some cases it is, in other cases, this program can change the quality of your life.

After the trial-period, my mother will be filing Chapter 13 and strip the 2nd mortgage. Right now, we would have to pay $3,700 on the first and $1,200 on the second mortgage. That's a total of $4,900/month. After the modification and filing of Chapter 13, this amount will be reduced to $1,300/month.
Why on earth should we walk away from a 40-year fixed mortgage with a beginning interest-rate of 2% and government-incentives of $1,000/year for the first 5 years? Would anybody else offer such a loan with a Fico-score below 500? I have my doubts. In addition to that, we would avoid foreclosure.

When you walk away, you won't be living for free, either.

Finding a former model-home in the Tampa Bay area built in 2002, on a conservation-lot with a screened pool and more than 3,700 sq/ft. for less than $1,300/month is impossible - no matter if you are buying or renting.

So yes, there are situations where a modification under this plan won't help much. But for us, it does a lot and we are VERY THANKFUL for it!