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Mortgage modification attempt - what is the right amount of income

[font color = red]7/11/16 - Edited to add: See "UPDATE - On May 31" halfway down[/font]

Mortgage modification attempt - what is the right amount of income
so that one is not "too rich" or hopelessly poor to be helped?

I don't know if the DU Lounge is the place for this. I tried a longer version in the Consumer Advice group about a month ago, and got only 1 reply. http://www.democraticunderground.com/1112278

A close friend of mine is in the process of trying again to get a mortgage modification (mortgagostomy). Through the Home Affordable Modification Program (HAMP). She isn't qualified for HARP because neither Fannie nor Freddie own or back the loan or whatever.

She failed with a mortgage modification attempt in 2010 -- basically too poor to be helped. As they said in their letter:

... "We are unable to offer you a Home Affordable Modification because we are unable to create an affordable payment equal to 31% of your reported monthly gross income without changing the terms of your Loan beyond the requirements of the program"

From what I read online,

They look at your "debt to income ratio" (DTI), i.e. DTI =

monthly debt payment (aka PITI)
monthly gross income

PITI = Principal + Interest + Property Taxes + Insurance

Monthly gross income is before-tax income

If your DTI is below 31%, then you are doing fine and you don't need help.

If your DTI is above X%, you are hopeless, i.e. her situation in 2010, where they won't change their terms drastically enough to bring the PITI down to where the DTI is 31%.

If your DTI is between 31% and X%, then they will change their terms (lower interest and maybe principal) to bring the PITI down to where the DTI is 31%.

I haven't been able to find out what "X%" is, and maybe (probably) it is situation - dependent. They talk about NPV - net present value calculations, but when I tried the long long NPV Calculator (more than once), it just Errored out.

It seems they don't consider a modification that would bring the DTI down to something larger than 31%, like say 35%. It seems like its 31% or bust. I don't know why that is.

Where she's at now, is that she has some housemates paying rent that amount to almost half her total income. And that makes her "too rich" (a DTI a bit below 31%).

But come February 1, the terms of her mortgage are that it stops being interest-only and she will have to pay principal on a 20-year amortization schedule. That will raise her payments by $600, resulting in a DTI of about 50% -- which might put her in the "hopelessly too poor" range.

Her mortgage is not that far under water -- per recent real estate agent comparables analysis.

I wish the mortgage company would be satisfied with just keeping it interest only for say another 5 years, by which time her house value will be above water and can be sold, and the mortgage company paid every dime of the balance.

(FWIW, Chase is the mortgage servicer, and is handling the mortgage modification process. Wells Fargo is the owner of the mortgage)

It will be a challenge enough handling interest only -- as it is an ARM whose interest rate is the 6 month LIBOR + 2.25%. And for every percentage point that the LIBOR goes up, her payment will rise by about $160/mo (if the loan remained interest-only)

She also has about a $20,000 balance on a Home Equity Line of Credit. Currently it only costs her about $70/month to service (interest only), but early next year is "year 10" on that too when they will require principal payments (I have no idea what they will require per month on that). I didn't include this loan in the PITI or DTI calculations above (should I have?).

Thanks for reading such a long and wonky post, and for any insights

[font color = blue]UPDATE - On May 31 she received a rejection letter from Chase[/font]. It turned out they didn't count as income the rent she received from her boarders (total $1000/mo) nor the $300/mo she has been receiving in child support from her daughter's father.

The reason given by the Chase representative is that there is no rental agreement and no proof that income was received since it was all on a cash basis (Actually some is paid by check). Despite both renters having written letters saying they were paying $500/month each in rent. So Chase is calling 3 people liars.

The reason given for rejecting the child support is that there is no court order requiring it, and no proof given of it being received. Despite the child support payer having written a letter saying he has been paying it every month for years. So basically Chase is calling 2 people liars. (Actually those payments are all paid by check, so there should be a paper trail available)

That's about half her income thrown out! Her remaining income leaves her too poor to qualify for help, according to HAMP guidelines (presumably because she is hopelessly poor and couldn't possibly afford even a reduced payment that still fit the HAMP guidelines. Despite making all her payments on-time in nearly 2 decades of home ownership).

Various HAMP program options were considered, and the reasons given were these --

{a} "We're not able to create an affordable payment equal to the required percentage of your reported monthly gross income without changing the terms of your mortgage beyond the modification program's requirements

{b} There is more equity in the property, which is the difference between what the home is worth and the amount owed, than the program allows

{c} We're not able to reduce your principal and interest payment by at least 10%.

{d} We're not able to calculate a proposed post-modification debt-to-income ratio that is within the range of 10% to 42%. Your debt-to-income ratio is your monthly housing expense, divided by your gross monthly income. Your monthly housing expense includes your mortgage principal and interest payment, plus any property taxes, hazard insurance, and homeowner's dues.

As for equity in her property - it is theoretically, per a from-the-street external appraisal, worth more than the mortgage (about $11,000 positive equity). But selling costs and fix-up costs to take care of issues that one doesn't see from the street would certainly put it back under water.

The only option she was given is to do a short sale, which would kill her almost perfect credit rating.

Another update is that her monthly payment goes up from $879 to $939 on August 1, primarily because of a rise in the 6-month LIBOR interest rate. That's a $60/month increase.

And as noted before, on February 1 her payment goes up by another $600/mo due to the interest-only period ending.

I also questioned Chase why they have not notified her of the huge $600/mo increase yet? The Chase representative checked and found they give no special notification for that, just the same 2-3 month advance notice as for any other upcoming payment amount change. (Actually she has been getting 1 1/2 month advance notifications of payment changes as measured by the due date. 2 months if one includes the 16 day grace period after the due date.)

I let them know how I felt about such inconsiderate heartlessness in giving her such a short notice of such a massive payment increase.

Krugman: Obama rolled back the Bush and Reagan tax cuts on the top 1%

According to the new tables ( https://www.irs.gov/uac/SOI-Tax-Stats-Individual-Statistical-Tables-by-Tax-Rate-and-Income-Percentile ), the average income tax rate for 99 percent of Americans barely changed from 2012 to 2013, but the tax rate for the top 1 percent rose by more than four percentage points. The tax rise was even bigger for very high incomes: 6.5 percentage points for the top 0.01 percent.

These numbers aren’t enough to give us a full picture of taxes at the top, which requires taking account of other taxes, especially taxes on corporate profits that indirectly affect the income of stockholders. But the available numbers are consistent with Congressional Budget Office projections of the effects of the 2013 tax increases (http://krugman.blogs.nytimes.com/2015/12/30/presidents-and-the-economy/ ) — projections which said that the effective federal tax rate on the 1 percent would rise roughly back to its pre-Reagan level. No, really: for top incomes, Mr. Obama has effectively rolled back not just the Bush tax cuts but Ronald Reagan’s as well.

Those higher rates on the 1 percent correspond to about $70 billion a year in revenue. This happens to be in the same ballpark as both food stamps and budget office estimates of this year’s net outlays on Obamacare. So we’re not talking about something trivial.

More: http://www.nytimes.com/2016/01/04/opinion/elections-have-consequences.html?_r=1

A DU thread on this: http://www.democraticunderground.com/10027496324

He also mentions a 17 million drop in the number of uninsured Americans between 2012 and the first half of 2015.

Anyway, I think a mention of this belongs in the Obama group. So many people are completely and totally unaware that he raised the top bracket marginal tax rate from 35% to 39.6% (back to the old Clinton rate). Add in the 0.9% Medicare surcharge on the top 2 tax brackets (a feature of the ACA legislation), and the top marginal tax rate actually rose to 40.5% (on earned income).

As for capital gains -- when the ACA's 3.8% Net Investment Income Tax (NIIT) on the top 2 brackets is included, the actual long term capital gains tax rate for the top tax bracket (which is about where the top 1 percentile begins), is 23.8%, even higher than under Clinton, and 23.8/15.0 = 1.59 times higher than under Bush.

Details: http://www.democraticunderground.com/?com=view_post&forum=1002&pid=6503186

You will sometimes encounter trolls posting on DU that Obama kept 82% of the Bush tax cuts -- implying he's almost as bad as Bush. What said trolls leave out is one big important detail - that he kept the Bush tax cuts for the bottom 98%, while raising taxes on the top 2%.

Japan, South Korea stick to coal despite global climate deal

Source: Reuters

Less than a week since signing the global climate deal in Paris, Japan and South Korea are pressing ahead with plans to open scores of new coal-fired power plants, casting doubt on the strength of their commitment to cutting CO2 emissions.

Asia's two most developed economies are burning more than ever and plan to add at least 60 new coal-fired power plants over the next 10 years.

Officials at both countries' energy ministries said those plans were unchanged.

Japan, in particular, has been criticized for its lack of ambition - its 18-percent target for emissions cuts from 1990 to 2030 is less than half of Europe's - and questions have been raised about its ability to deliver, since the target relies on atomic energy, which is very unpopular after the 2011 disaster at the Fukushima nuclear plant.

Read more: http://news.yahoo.com/japan-south-korea-stick-coal-despite-global-climate-031331032.html

Similar to some earlier reactions:

India, China, Saudi Arabia 'happy' with climate pact, AFP, 12/12/15

India says Paris climate deal won't affect plans to double coal output, Reuters 12/14/15

Trump criticizes Ben Carson, says he doesn't have 'energy'

Source: Associated Press

Trump, who has made a practice in public appearances and interviews of listing those he says have wronged him, told the crowd that he doesn't think Ben Carson could negotiate effectively with world leaders.

"I don't think Ben has the energy," Trump said. "Ben is a nice man, but when you're negotiating against China and you're negotiating against these Japanese guys that are going to come against you in waves, and they think we're all a bunch of jerks 'cause our leaders are so stupid and so incompetent and so inept, we need people that are really smart, that have tremendous deal-making skills and that have great, great energy."

Read more: http://news.yahoo.com/trump-bids-perry-adieu-race-takes-aim-rival-185930884--election.html

"when you're negotiating against China and you're negotiating against these Japanese guys that are going to come against you in waves,"

At least this time he left out the part about how they skip the small talk and just blurt out "we want deal!" http://thehill.com/blogs/ballot-box/gop-primaries/251969-trump-impersonates-asian-negotiators

"I don't think Ben has the energy, ... we need people that are really smart, that have tremendous deal-making skills and that have great, great energy."

Ben Carson, as probably all of you know, is African American, but just in case. So Trump has managed to add to the stereotypical insults of two races this time.

File your taxes, or you won't get ACA healthcare subsidies next year

^^--I made up the wording on the thread title, but I think it accurately describes what this article is saying. This post/article applies to people who got ACA healthcare subsidies in 2014:

Tax filing problems could jeopardize health law aid for 1.8M, AP, 8/4/15

...About 1.8 million households that got financial help for health insurance under President Barack Obama's law now have issues with their tax returns that could jeopardize their subsidies next year. Administration officials say those taxpayers will have to act quickly.

...Consumers who got health care tax credits are required to file tax returns that properly account for them, even if they are unaccustomed to filing because their incomes are low. {And as the article explains, your tax filing must include Form 8962 -Progree}. Unless they follow through, "they will not be able to receive tax credits to help lower the cost of their health insurance for 2016," Lodes explained.

...Judy Solomon of the Center on Budget and Policy Priorities: "They are getting an advance payment of a tax credit, and to finish the process they need to file a tax return. They have to look at it as a process that is a year long and has multiple steps."

Anyway the ones who are in jeopardy got subsidies in 2014 but haven't filed a tax return yet that includes the new Form 8962

"On working harder and longer, Jeb! meant all those part-timers (because of Obamacare)"

"who want full-time jobs"


[font color = blue]AM950Radio> Jeb Bush says that people need to start working longer and harder to improve the economy. What a statement from an heir of a family fortune! - [/font]

[font color = brown]R.W. Troll> ...try to be honest... He said those words, but it's pretty obvious that he meant more than the part time work they are doing now ( you know, the less than 30 hours a week because of Obamacare?)[/font]

[font color = blue]Carlos>
Under G.W. Bush, Part-time workers increased by 2,954,000
while full-time workers increased by 1,556,000

Under Obama, Part-time workers increased by 1,290,000
while full-time workers increased by 5,235,000

Seems like if anyone was the part-time president, it was G.W. Bush.

Since the bottom of the jobs market in February 2010 (coincidentally one month before Obamacare was passed and signed)

Part-time workers increased by 40,000 while full-time workers increased by 10,275,000

Source: Bureau of Labor Statistics
Using the BLS's Table A-9 part-time and full-time numbers http://www.bls.gov/news.release/empsit.t09.htm
Part-time workers: http://data.bls.gov/timeseries/LNS12600000
Full-time workers: http://data.bls.gov/timeseries/LNS12500000

Maybe Jeb! should talk to his big bro about what NOT to do.[/font]

AM950 is the only progressive talk radio station in Minnesota

By the way, the BLS's definition of full-time workers is 35 or more hours/week, while the Obamacare employer mandate for providing healthcare insurance is 30 hours/week. So if all that many employers were moving away from full-time to part-time jobs, it would show up in the above BLS statistics, but sure doesn't seem to. Also, involuntary part-timers has been falling for years.

Ouch! PBS Newshour's Politics Monday contrast Bernie's and Hillary's styles


SUSAN PAGE (USA Today): ... And, also, his (Bernie's) manner. She (Hillary) has got all kinds of problems in looking approachable and looking like she’s a fully-fledged human being. And he’s all — he’s just totally approachable. He’s 100 percent authentic, approachable Bernie Sanders. So I think the contrast is not helpful to her.


GWEN IFILL: Go ahead.

TAMARA KEITH: I was just going to say that when I talk to people out when I’m reporting, they say things like, gosh, Bernie Sanders is just so real.

And it creates that contrast with Hillary Clinton, who has been in public life for so long. She’s had her picture taken so many times that she has that smile down just right. And Bernie is just out there being Bernie. And so it does create sort of a stylistic contrast for people.

Bif, Pow, Ouch,

That link above has the video of this segment (lots of fun to watch), not just the transcript.
Oh, start at about 3:00. But the goody above starts at 3:42.

[font color = red]On Edit: Much thanks to tomm2thumbs, here is the YouTube video:[/font]

Memorial Day. And The Unknown Soldier. And The Known Soldier

U.S. House fails to pass Republican bill diluting Dodd-Frank reforms

Source: Reuters

WASHINGTON (Reuters) - Republicans in the U.S. House of Representatives failed on Wednesday to round up enough votes for a bill scaling back various financial reforms, a surprising defeat in an area conservatives hoped to prioritize this year.

... Before the vote on Wednesday, Democrats slammed the bill as a Republican effort to chip away at the 2010 Dodd-Frank financial law, including one provision that would have given banks extra time to comply with part of the Volcker rule.

... The most controversial aspect of the proposal was the section related to the Volcker rule, which bans banks from making risky trades with their own money and prohibits certain investments in financial products.

The bill gave banks more time to exit positions in collateralized loan obligations, or CLOs, which are essentially bundles of business loans. Banks had complained that they would have to quickly abandon those investments.

Read more: http://news.yahoo.com/u-house-fails-approve-bill-diluting-dodd-frank-204253008--sector.html

[font color = red]On Edit[/font] (thanks Sunseeker in #3) "The GOP used a procedure called a "suspension" that requires a 2/3 vote. So their majority was not enough. "


(The above doesn't explain why the GOP chose to do the above, sigh. One question leads to another. Maybe Boner can't count.)

Anyway, great news, although probably Dodd-Frank, as watered down as it already is, will be insufficient to prevent another derivatives meltdown.

[font color = red]More on Edit:[/font]
PoliticAverse in #5 has the rollcall link (35 Democrats voted for and 1 Republican voted against)
See: http://clerk.house.gov/evs/2015/roll009.xml

DCBob in #7 explains why the Repubs might have gone this route --

NYPD work slowdown will be dealt with ‘very forcefully,’ Bratton says

Source: Yahoo News

Commissioner investigating dramatic drops in arrests to determine whether the dip is a deliberate jab at NYC mayor

Any New York City police officers refusing to make arrests or issue traffic violations to express their dissatisfaction with Mayor Bill de Blasio will face forceful consequences, the department’s top cop said Monday.

New York Police Commissioner Bill Bratton said at a press conference that while he is not convinced the NYPD's rank-and-file is engaging in an organized work slowdown, he is actively investigating a dramatic drop in arrests in recent weeks and will deal swiftly with any intentional slacking off.

“We’re watching that very closely,” Bratton said Monday of the dip in summonses and arrests. He’s ordering a “comprehensive review of what has been happening,” drilling down to the precinct and squad car level to determine who is working and who may be dropping the ball.

The number of summonses in the city is down 90 percent for the week ending Sunday, according to the Daily News, while arrests are down 56 percent compared to the year before.

Read more: http://news.yahoo.com/nypd-work-slowdown-will-be-dealt-with--very-forcefully---bratton-says-230926632.html

and then there is some bilge about how this doesn't necessarily mean there is a work slowdown going on.

Black people shouldn't interrupt white people's dinner, according to some ( http://www.democraticunderground.com/1014980489 ), but I guess a 50-90% work slowdown is an OK form of protest.
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