Sunday, May 2, 2010

Our Home, Saved By HAMP

Step 9

We are acting as though we have reached the end of the Trail of Mortgage Modification Hell.  We hope so.  We are happy now, we can stay in our home.  We have no equity of course.  We purchased the home for $245,000.00 and still owe, after missed interest payments, attorney fees, penalties, etc., etc. about $220,000.00.  According to an appraisal arranged by Chase Bank our home is now worth only $154,000.00.   Is it wise to stay?  Well, we couldn't rent a place like this for what we're paying now.  This is our retirement home.  As long as my wife can still work.   When we purchased out home it was our retirement plan to sell the home after 6 years, take the equity and buy a retirement home which would have no mortgage.  Well, we know that didn't happen.  Thank you God for your blessings, including President Obama, and for letting us live somewhere nice, and afordable, for a while longer. 

Step 8

Out of frustration we called the "HOME OWNERS HELP HOT LINE: 1-888-995-4673".  We called Chase Bank in a 3 party conference cll to ask why we were expected to pay 55.67% of our monthly income for our house payment.  We were transferred to the Loss Mitigation Department because they thought we were already in foreclosure.  We told them that no foreclosure proceedings had yet been initiated.  After a minute Pam of Chase Bank's Loss Mitigation Department came on the line and said, "Your are qualified for the Obama Plan at a rate of 31% of your combined monthly income, which will be $1,100.00 a month.  We will send out the agreement by FedEx and you will get the paperwork soon.  If you don't get it in a couple of weeks call us every two weeks until you get it."  I asked Pam again to verify that we qualified for the Obama Plan and our monthly payment of $1,100.00 and she did.  The HOME OWNERS HELP HOT LINE Counselor was also on the line and made notes.
According to other people I 've talked to, they send in their payments, but don't get any documents at the end of 3 months.  And every month, when we make our payment by certified check,  sent by certified return receipt requested, we will also send another complete Financial Information Packet, updated to the latest full month. 

Step 7

Our Housing Counselor called the bank's lawyer set up a rescheduled meeting for May 10th because the bank said, "Time is of the Essence".  Meaning that they were scheduled to start foreclosure on May 31st.   However, no foreclosure process can be initiated by a bank while an application for an Obama Plan mortgage modification is pending. In our case we were still in the process of figuring out what the hell was going on and why we weren't getting the 31% payment rate.  Had the bank initiated foreclosure while we were still demanding the 31% monthly house payment they would be violating the law.
We sent a letter to the bank's lawyer demanding information about how they came up with such a high mortgage payment of $1,620.00 which they KNEW was unsustainable and which they KNEW was setting us up for failure and which they KNEW would deny us any possibility of having money to buy food or pay for heat and lights.  We could not sustain that high of a house payment, even if we could sell assets to make the payments for the three month trial period.  By the way, the 3 month trial period, if you've talked to anyone going through this process, keeps getting extended by banks into 6 months, 9 months, 12 months... After the 3 month trial period the house payment is supposed to be made permanent with both you and the bank signing a "Modification Agreement".

Step 6

Then, things really started to get stressful, if not downright wierd.  A meeting was set up in Muskegon for our convenience for April 16th at 4PM.  Our Housing Counselor did not show up as required.  Then, the bank's lawyer said she was surprised to see us for the meeting because we had filed for Bankruptcy.  We did not.  They could not readily say why they thought so but later explained:  their secretary was working on a split monitor screen with our names on one side and some bankruptcy stuff on the other side.  Well,  its an explanation.
As a result of thinking that we had called off the meeting, they did not have our file with them.  They still invited us in to a room anyway and called the bank.  A Brenda, of the bank, did have our file right in front of her as she had "just gotten" our Financial Information Packet (sent two weeks earlier).  Brenda the bank said, over the speaker phone:
1.  That we did indeed qualify for the Obama Plan.
2.  That we had the 'required two hundred ($200.00) dollar cushion'.  This bank requirement is not required for the Obama Plan.
3. That the monthly house payment, "calculated 'under' HAMP" would be $1,620.00.  By the way, HAMP is an acrynom for Home Affordability Mortgage Program.  HAMP is the Obama Plan.  Banks don't like to use that term, the Obama Plan, so they say HAMP. 
When we asked the Brenda to explain how she came up with that figure she said that she put "all the figures into the computer and pressed 'Enter'.  I asked her why we were getting a monthly payment equal to 55.67% of our monthly income instead of the 31% of the Obama Plan.  Brenda the bank said that the 31% was "merely a target".  This target which is "merely the target", can be reached by 90% of all Obama Plan applicants.  Don't let that statement of the bank, "the 31% is merely the target" fool you.  If your Housing Counselor says that you meet the qualifications for being in the Obama Plan, stick to the 31%.

Step 5

Mail the completed Financial Information by FedEx or UPS (up to $40.00) overnight.  It is incredibly important that you have proof that you mailed the stuff.  They often deny receiving information.  They are very large companies and things do get lost.  You must be able to track it and prove that they received it. 
We sent the first package, as directed, to the lawyer, by FedEx overnight with tracking and so on.  Soon, we received a letter from Chase Bank telling us that our application for a mortgage modification under the HAMP (Obama Plan) was declined 'because we failed to send in the required documentation and information'.  There was a phone number in the notice so I called it.  The bank then said that they did get the information and documents (anyway, we had a proof of mailing) and:
1.  We did not qualify for the Obama Plan,
2.  That we did qualify for the "Special" Chase Bank Mortgage Modification Plan,
3.  That our monthly house payment would be 55.67% of our income, that is, $1,620.00
That same day, I also received notice from the bank's lawyer that my information was incomplete (we mailed in exactly what the lawyer told us to send in) but that if we did it all over again it would be okay.  This time they wanted 4 months of bank statements (not two).   We now know that the bank can only require two months of bank statements, but at the time we didn't know it and it was no big deal anyway.  But, it was stressful because the bank made us send everything is all over again,   The next day we sent out everything for the second time.  This time I sent out two packets, one to the bank and one to its lawyer.  Of course, everything was sent out overnight, this time by UPS, at some expense with all the tracking I could pay for.

Step 4

This is the step where things start to get a little more frustrating, confusing, and where the bank gets intimidating (perhaps not on purpose) and get stressful.  At first the bank's blank "Financial Information Package" seems simple enough.  Simply fill it out and send in what it wants.
However, the bank gives you a short time limit to return the financial information.  In our case we had to send in the documents and the information within ten (10) after the date of the letter.  It was mailed to us on a Friday.  We received it the next Monday.  That gave us only five (5) business days to get everything together.  We sent everything out by overnight mail on Friday afternoon in order for it to get to the attorney's office on the 10th day, the next Monday.  Time is short and it is stressful.
My wife is self employed so she had to make up a quarterly Profit and Loss Statement and have a bookkeeper "verify" that it accurately reflects the figures you gave to the bookkeeper.  The Obama Plan expressly forbids the banks from demanding audited Profit and Loss Statements.  At the time we didn't know that.  We were so busy getting all the documents and information together that the last thing we had time to look at were law books.  That was the first Profit and Loss Statement that she ever did.

Step 3

Chase Home Finance, LLC (Chase Bank) had their lawyers, Trott & Trott out of the Detroit area, send us an "Acceleration" letter in March, 2010.  An "Acceleration" letter says, "Pay us everything you owe us, not just the back payments, Now!".  By the time we received our letter we were five (5) months behind in our mortgage payments.  Did we save the mortgage payment money that we didn't send to Chase?  No. We didn't have it to save.  Trott & Trott sent us a Finanacial Information Packet to fill out.  You will need verification of income, last two years of US tax returns, proof that you are paying utilities for the home, two months of bank statements and a list monthly expenses and debt.

Step 2

After running out of money, especially Uncle Sam's tax money, and assets to sell we simply quit making our $2,000.00 per month mortgage payment in November, 2009.  By the way, we purchased our home in May, 2003, and never missed a payment until we quit paying last November.  It took awhile to recognize the truth...we were going to lose our home.  Alright, we paid $250,000 for it and it's now worth $154,000.  It didn't mak financial sense to keep it, but if we lost it, we'd have to move into a trailer part, but wait...they wouldn't let us in because of our low credit rating.  Neither would any apartment landlord.  Where would we live?  So, we filled out an Application for the Obama Plan in early March, 2010.  A copy of an Application that you should fill out can be found, for free, at

Step 1

We lowered our monthly mortgage payment on our home nine hundred ($900.00) dollars! Our new monthly house payment dropped from $2,000.00 (65% of our income) to $1,100.00 (31% of our income)


Along the "Trail To Mortgage Modification Hell" you will run into NEGOTIATON over how much your mortgage payment will be. The Banks don't always make it clear that their PROPOSED mortgage modification is NOT a take-it-or-leave-it proposal. Tell the Bank that you insist on the Obama Plan mortgage modification with a monthly house payment of 31% of your total household monthly income. Also, your "certified" Housing Counselor does not know that you can insist on the 31% figure. They are ignorant of that fact. They will agree with the Bank that 31% in "merely" a "target" figure "calculated under HAMP". HAMP is just another name for the Obama Plan. Through this blog you now know that the 31% figure is NOT just a target fugure.

This blog will tell you what we did and how we did it. Knowledge is power! Read the nine steps we went through, start with Step 1.

The first step is, are you qualified?  All you have to do is have an income reduction.  For example, you were layed off, you retired, a medical condition caused a decrease in your income.  In our case I was ill for most of the past few years and saw a dwindling of income to the point where we were not paying our taxes in order to pay for the mortgage, we ran out of savings, we had to sell my pick-up truck (sob!).  Also, your principle home must be worth less than $700,000 or so and purchased before 2008. 


You will find the Application for the Home Affordability Mortgage Program, HAMP, at: 
There are two other forms for HAMP, commonly known as the Obama Plan, found at LawThing so print them out too.  The Financial Information Packet that you have to fill out will come directly from the mortgage company or bank and you will have a limited time to fill it out and send it in.  In advance, or right now, get your last 2 years of your US tax returns together, 2 months or all your bank statements (if you can't located them go to your bank and get copies).  Also, the bank will want proof that you live in the home and that it is your principle home.  They will accept utility bills.  Get all car, trailer and RV titles to prove that you own the vehicle(s), make out a monthly budget to show what your monthly expenses are and then verify your income.  Income can be verified by W-2 forms that you fill out for your employer, or pay stubs.  If you are self-employed make up a Profit and Loss Statement for the last quarter.  If you don't know how to make one you'll have to pay a community college teacher or bookkeeper.  If you are on Social Security copy the Award Letter. 
When everything is collected take 31% of your household income.  Multiply your monthly income by point three one.  That is,   .31    That will give you the amount of your Obama Plan huse payment.
The 31% payment is what the banks call the "hypothetical" house payment.
Make out a "hypothetical" Budget.  Again, if necessary, seek help to make out a household budget.
IF all your monthly household bills plus the "hypothetical" house payment is LESS than your monthly household income, you will be okay.  If all of your household bills including the hypothetical house payment is MORE than your household income you are not okay.  Here is what you have to do, pare down your monthly expenses.  For example, make arrangements with your credit card companies and other creditors for lower monthly payments.  Sell assests to pay off bills.  Lower your cable costs, drive less, eat less, go to movies and restaurants less, don't worry about buying new clothes or shoes or having vacations.  The point is this, you must have a household budget that is LESS than your monthly expenses.  You can do it, you MUST do it!