May 10, 2012 at 4:57 pm #463SlicedBreadParticipant
WF denied my first loan mod app because they overvalued my house.
In their NPV spreadsheet, they set the value of my house as $175,000 higher than the best offer we got when we ourselves, in our desperation, put it on the market in 2010. It seems they overvalued it. Their spreadsheet told them, naturally, that it was worth more to take the house from me than to work with me.
I learned all this in a phone conversation with the “Home Retention Specialist”. He told me to send in some updated documents and that I’d be reconsidered.
The terms he quoted did not include a principal reduction, only a 40-year loan taking 31% (not 25%) of my income into account, even though he said that (and I quote) “25 to 31% is available”.
I told him to document all his requests and our conversation in my NACA web file, because I know all communications are supposed to go through NACA. He promised he would, but neither he nor his upcoming replacement has done so. (He is scheduled to hand my case over to someone else). I did document it myself in my NACA webfile, but there is nothing officially from them.
I intend to submit for my NACA webfile a) the real estate flier advertising our house for sale and b) the written offer we got for much less, thus proving that the house is definitely NOT worth what WF claims it is.
The Specialist said that as part of my being reconsidered, they would send a property evaluator who works for them to look at the house and assess its value. I am afraid that this evaluator, whose loyalty lies with WF, will repeat the over-assessment and I will lose the house.
Naturally, I am unhappy that this is all happening behind NACA’s back.
Assuming it is wise to put them on the spot, how can I get NACA to step in and ask them to document what they’ve been telling me on the phone?
And, how can I advocate for more favorable terms, i.e. a principal reduction and for them to only ask for 25% of my income?
And, rather than being re-considered via a second app, is it more advantageous to get them to rework their NPV worksheet on the first app by entering a more realistic value for the house so that we don’t have to go through the rigamarole of a second application and I can get a favorable solution faster? If it is wise, can I ask that NACA advocate this for me?
I have emailed in my NACA id and a reference to this post so that NACA staff can look at my record.
However, I am OK if NACA wishes to reply to me here in public (while withholding personal information from the forum) so that others may benefit from the advice.May 11, 2012 at 11:26 am #469
First, let me address the general issue of principal reduction for everyone here. While principal reductions certainly do occur, there is a common misconception that a homeowner is due a principal reduction simply because the value of their home has declined and they now owe more than the home is worth. Nowhere in the mortgage contract does the lender take responsibility for the value of the house. If there were, then they would conversely be able to increase the principal balance on the loan if the value went up. It isn’t an issue of how much the home is worth. It’s about how much money you borrowed from them to buy the house.
Another way to look at it is, we have always been told that buying a home is “the largest investment most of us will ever make”. But we also commonly hear that “all investments have some element of risk”. We just don’t typically put the two together because a home has traditionally been the most stable investment we can make.
That having been said, principal reductions DO occur and NACA advocates for it whenever possible, and they are occurring more and more frequently these days. In fact, we are getting ready to announce a new program in cooperation with the California Housing Finance Authority next month that will help thousands of California homeowners get reductions of up to $100,000 on the balance of their loans. But we can never reasonably advocate from the standpoint that it is due simply because the value of the house went down.
By the same token, SlicedBread, anything documenting the decline in the value of the home, especially if it shows the home as significantly lower than the value they used to determine NPV, will be to your benefit. Not just offers to buy your home (since that could have just been from a con artist trying to steal your home), but what other similar homes in your neighborhood have sold for, the current assessed property tax value from the County Assessor’s Office, etc.
Specifically asking for a payment that equals 25% of your gross income is a strategy that simply will not work. Any new payment figure they will come up with will be based on affordability. If your cash flow shows that you can afford a payment that will equal the maximum percentage of gross income allowed by the investor guidelines, then that will be the offer. In a traditional (non-HAMP) modification, the investor’s top end could be 38% to 40% of gross income or even higher. A payment that equals 25% of gross income would be granted only if that is the maximum dollar amount of cash flow available and both the 25% figure and the interest rate corresponding to the proposed payment amount fall within the investor’s guidelines for modification. Even a HAMP modification will be based on 31% of the gross income and must equal an interest rate of at least 2%.
Once a modification request has been denied, the file is closed. There would have to be substantial irrefutable proof of an error on the servicer’s part to get a second review. It is far easier to create and submit a new proposal and introduce any new relevant information at that time.
Toward that end, I will be sending you an Action Plan which will list the documents we need to update to create the new proposal. Please submit the documents, plus any other you feel are relevant such as those mentioned above, into your NACA file as soon as possible. You will also need to log into your NACA file online and schedule a telephone appointment so the file can be updated and the new proposal created.
As for your servicer communicating with you directly and outside of the NACA file in violation of their contract with us, every time you talk to them you are allowing them to get away with it. Take a tougher stance, demand that they abide by the terms of their legally binding agreement with NACA and refuse to communicate with them otherwise.
Online Operations, NACA
firstname.lastname@example.orgMay 11, 2012 at 2:45 pm #472motheroftwoParticipant
Hi Tim, in your reply
“In fact, we are getting ready to announce a new program in cooperation with the California Housing Finance Authority next month that will help thousands of California homeowners get reductions of up to $100,000 on the balance of their loans.”
I’m wondering if homeowners who already received modification on their first can get benefit of this new program or since they’ve already received help the answer is no.
BofA sent me a notice threatening that they may take action for the $100K HELOC variable if I don’t start making payment, I sent them my financials many times last time I faxed from the local branch with confirmation fax cover by BofA still no word on modification but this notice I received. I know NACA can’t help with HELOC I wish they were because it seems to me that they are the only group know what they’re doing.
Thanks for all your efforts!May 11, 2012 at 2:53 pm #473
I was hesitant to even make mention of the new program because I knew that I would get premature questions about it. The final details are still being worked out, which is why we haven’t officially announced it yet. I suspect it will be in advance of a West Coast American Dream Tour schedule in July and/or August.
Until the details are worked out and the program formally announced, I really can’t say much of anything other than “stay tuned”…
Online Operations, NACA
email@example.comMay 11, 2012 at 2:55 pm #474
OOPS… Sorry, that should have read, “Hello motherof two,”
(Still getting used to this new forum myself!)May 11, 2012 at 4:25 pm #475SlicedBreadParticipant
Thanks for the informative response Tim, I appreciate it.
I apologize if it seemed I felt “entitled” to a principal reduction for any reason. I was hopeful and would be grateful to the point of tears, but that’s all.
I was hopeful because I have a “pick a pay” loan, which is now considered “predatory”, and I hoped NACA could use that point as a stick with which to beat Wells Fargo into the ground when it came time to negotiate on my behalf.
About speaking to them on the phone, it seems I have to sit there and educate these “specialists”, about what naca even *is*, before I tell them to talk to me through the NACA webfile system.
Sometimes we as borrowers can’t take too tough a stance because we are the ones in need – in need of knowing, for example, if my application really and truly was denied or not. I kept asking WF through my webfile until I was blue in the face but there was no response – I had to call.
That’s when the guy gave me all kinds of hope about having my case reviewed. Should I take it that everything he said was a pipe dream I should forget?
My compromise was to document everything they said on the phone, to give NACA ammunition if it was needed. For example, as far as I know they haven’t even notified NACA via webfile that my first application was denied, so NACA couldn’t even swing into action even though my sale date is approaching.
As for the home value, unfortunately, the house next to mine sold for *a lot* but that’s only because they renovated it to high heaven. It might make mine seem like it’s worth more than it actually is. I will take your advice on mitigating that.
I will follow the action plan so I can get back on the hopeful merry-go-round and hope, hope, hope for a loan mod.
Thanks again.May 11, 2012 at 5:16 pm #476motheroftwoParticipant
🙂 I will.
And best luck to you SlicedBread!May 14, 2012 at 8:44 am #491
There’s certainly no apologies necessary. Your pick-a-pay type loan is in fact one of the types that most frequently receives significant principal reduction, and I’m hopeful that you will receive a reduction. I just needed to clarify for everyone here that they are never automatic.
The bottom line here for you is to keep remembering to never give up. As long as you are willing to keep fighting for your home so are we.
Online Operations, NACA
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