Mortgage Loan Modification – Do It Yourself – DIY
Mortgage Loan Modification – Do It Yourself – DIY
If you organize all of the required paperwork and submit a complete package you can do your own mortgage loan modification.
The first step is to fill out your financial worksheet and monthly budget. You will also need to calculate your monthly income. Next you will use this information to pre-qualify yourself using the FDIC’s NPV (net present value) worksheet. You can download the worksheet at fdic.gov/consumers/loans/loanmod/NPV.xls . Fill in just the basic sections about your current loan terms and your income. The NPV worksheet will calculate your recommended modified terms. If you cannot figure out the spreadsheet then just use 31% to 38% of your gross monthly income before taxes and deductions to figure your new modified payment.
Now that you have an idea of what terms you will qualify for you can move on to preparing a hardship letter and cover sheet for your loan modification package. The hardship letter should briefly tell the lender why you cannot afford the present monthly payment and what you could afford to pay.
You will need an appraisal or Broker’s Price Opinion based on a quick sale value with three months marketing time. You can order this from a local appraiser or Real Estate Broker that knows your area.
Next you will want to prepare a coversheet that will make your case for a mortgage loan modification to your lender. The coversheet should include the current estimated value and your payoff balance. You should bold type any deficiency if you owe more than your house is worth. The requested new rate and term and a list of documents that you are including in the loan modification package. This is also a good place to summarize your market selling conditions and any shortcomings with your property.
Finally you will assemble your mortgage loan modification package and send it via certified mail to your lender’s loss mitigation department if you are behind. Otherwise send it to the correspondence address if you are current on payments but expect to fall behind within the next six months.
It is very important that you submit a complete loan modification package all at the same time. Do not send in part now and more later, even if that is how your lender asks for it.
If you do not qualify for a mortgage loan modification and are over financed on you home look into the Home Affordable Refinance Program. It does not offer the dramatic savings of a loan modification but could drop your rate a couple of points.
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Making Home Affordable Refinance Guidelines
For the most up to date information and case studies of recent closings on the HARP 2.0 Relief Refinance Program Click Here.
DU REFI PLUS TM 04/06/09)/A.: GENERAL INFORMATION (04/06/09)
A.: GENERAL INFORMATION (04/06/09)[ad#ad-3]
Purpose
DU Refi Plus TM is a refinance of an existing Fannie Mae loan that is re-sold to Fannie Mae.
DU Refi Plus leverages DU to provide new functionality that systematically identifies existing Fannie Mae loans and extends underwriting flexibilities and documentation efficiencies to eligible loans.
Program Benefits
The program benefits borrowers who have demonstrated an acceptable payment history on their mortgage and need an expanded LTV or potential relief from Mortgage Insurance requirements.
The refinance should result in a:
• Reduced Mortgage payment, or
• More Stable loan product
If the existing loan is a fixed rate product the new loan cannot be an adjustable rate mortgage product.
The following conforming products are allowed with DU Refi Plus:
• 40, 30, 20, 15 Year Fixed Rate products ( Section 109 and Section 111)
• 5/1, 7/1,10/1 ARM ( Section 104, Section 105 and Section 106)
DU REFI PLUS TM (04/06/09)/B.: PROGRAM ELIGIBILITY REQUIREMENTS (04/06/09)
B.: PROGRAM ELIGIBILITY REQUIREMENTS (04/06/09)
Investor Requirements
• Original investor must be Fannie Mae
• No restriction on the servicer of the borrower’s existing loan
Transaction Type
Rate/Term Refinance only.
Amortization
Fully Amortizing only; the Interest-Only payment feature is not allowed.
Temporary Buydown:
Not allowed.
Assumptions
Not allowed.
Prepayment Penalty
None
Ineligible Existing Mortgages/Programs/Loans
DU will identify the loans that are ineligible.
• FHA
• VA
• Reverse
• Second Mortgages
• Loans subject to lender paid mortgage insurance
• High Balance Conforming Loans (any loan above the conforming loan limits)
Maximum Loan Amount
Conforming Loan Limit
The new loan amount is limited to:
• The actual payoff amount of the first mortgage balance, including accrued interest
• Actual closing costs, financing costs, pre-paids and escrows
The borrower may not receive any cash at closing.
Subordinate Financing
• New or replacement subordinate financing not allowed.
• Existing subordinate financing must be re-subordinated or paid off with borrower’s own funds.
• Affordable seconds are eligible to be re-subordinated.
Seasoning Requirements
• There is no seasoning requirement.
• The requirements for loans seasoned less than 12 months or seasoned less than 6 months do not apply.
Traditional Broker
Allowed
Enhanced Broker
Not allowed.
DU REFI PLUS TM (04/06/09)/C.: BORROWER – GENERAL ELIGIBILITY (04/06/09)
C.: BORROWER – GENERAL ELIGIBILITY (04/06/09)
Eligible Borrowers
The following are eligible borrowers:
• U.S. citizens
• Permanent resident aliens (Green Card holders)
• Non-permanent resident aliens
Borrower Changes
• Borrowers cannot be removed from the original loan.
• New borrowers may be added to the loan as long as the existing borrowers remain on the loan.
Co-Borrowers
Non-occupant co-borrowers are allowed on primary residences if the existing loan has non-occupant co-borrowers.
Title in Trust
Allowed, if title on the exiting loan is in a trust.
• Living (inter vivos) trusts are allowed
• Illinois Land Trusts are allowed only with a Home Equity loan
Multiple Financed Properties
The policy for maximum number of financed properties owned by the borrower does not apply.
DU REFI PLUS TM (04/06/09)/D.: UNDERWRITING REQUIREMENTS (04/06/09)
D.: UNDERWRITING REQUIREMENTS (04/06/09)
DU Response Recommendations
Loan must receive an Approve/Eligible response from DU.
DU will issue the following message when a loan is eligible for DU Refi Plus:
This loan casefile was underwritten according to the DU Refi Plus expanded eligibility guidelines offered on certain limited cash-out refinance loan casefiles where the borrower’s existing loan is identified by DU as a Fannie Mae loan. This loan casefile must be delivered with Special Feature Code 147.
If a loan receives the following message, it is ineligible for DU Refi Plus:
The borrower(s) existing loan has been identified as a Fannie Mae loan. The loan casefile was not underwritten according to the DU Refi Plus expanded eligibility guidelines because the loan does not meet the eligibility criteria required for DU Refi Plus.
Reserves
Reserves are not required.
Minimum Loan Score
DU will determine the minimum acceptable Loan Score.
Derogatory Credit
In addition to the requirements in the DU underwriting feedback certification, the borrower must meet the requirements below.
Bankruptcy/Foreclosure
Eligibility is determined by DU.
Collections/Judgments
Collections or judgments over $1,000 must be paid off prior to or at closing.
Mortgage Delinquency
Mortgage history on the loan being refinanced must reflect 0 X 60 in the last 12 months.
Wells Fargo Adverse Credit Policy
If the loan is not serviced by Wells Fargo Home Mortgage, confirm that the borrower does not have a bankruptcy, foreclosure, collection, charge off or repossession with Wells Fargo or Wachovia.
Qualifying Ratios
DU will determine maximum allowable ratios.
Maximum Payment Increase
DU will determine maximum allowable payment increase.
DU REFI PLUS TM (04/06/09)/E.: DOCUMENTATION (04/06/09)
E.: DOCUMENTATION (04/06/09)
Employment and Income
• Salaried borrowers: Most recent paystub.
• Commissioned or self-employed borrowers: Most recent one year of complete federal tax returns.
• Income from sources other than a salary: Most recent one year of complete federal tax returns.
Assets
Assets must be verified when the following exists:
• Payoff or pay down of subordinate financing
• Pay down first mortgage balance
• Payoff other debts
4506 -T
A fully executed 4506-T must be signed at application and closing.
DU Certificate
All documentation requirements on the final DU feedback certificate must be met.
DU REFI PLUS TM (04/06/09)/F.: PROPERTY TYPE – GENERAL INFORMATION (04/06/09)
F.: PROPERTY TYPE – GENERAL INFORMATION (04/06/09)
Geographic Location
• Allowed in 50 states and Washington D.C.
• See Section 435 for all Texas property transactions; loans subject to Texas Equity 50 (a) (6) requirements are not allowed.
Market Classification
Market classification policy does not apply.
Property Type/Occupancy
The following property and occupancy types are acceptable:
Property Type
Primary
.
Second/ Vacation
Investment3
1. Requirements for including number of bedrooms and verified rental income on the loan application must be met.
2. 3-4 units not allowed with 40-year loan term.
3. Rent Loss Insurance is not required on investment properties.
Leasehold
Allowed
Condominium and Cooperative Project Approval Requirements
Wells Fargo will determine project eligibility.
Cooperative financial statements are not required.
Appraisal Requirements
DU will determine required appraisal product or PIW Eligibility.
When no appraisal is obtained, a signed affidavit is required from the borrower indicating how long they have owned the property and that the property is currently not listed for sale.
DU REFI PLUS TM (04/06/09)/G.: MORTGAGE INSURANCE (04/06/09)
G.: MORTGAGE INSURANCE (04/06/09)
• If the existing loan does not have MI coverage, then no MI is required for the new loan.
• If the existing loan has LPMI, it will be excluded from the eligible population by DU.
• If the existing loan has BPMI, it is currently not eligible to be refinanced under this program.
DU REFI PLUS TM (04/06/09)/H.: LTV MATRIX (04/06/09)
H.: LTV MATRIX (04/06/09)
Maximum Loan to Value
DU will determine the maximum LTV/TLTV/CLTV.
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- This limited cash-out loan casefile was not underwritten according to the DU Refi Plus expanded eligibility guidelines because the subject property was not identified as a Fannie Mae loan that is eligible to be refinanced with DU Refi Plus Refer to the Se
- subject property was not identified as a Fannie Mae loan that is eligible to be refinanced with DU Refi Plus