Making Home Affordable - Loan Modification Examples
Summary of Guidelines | Examples | FAQs
The following are examples of ways the Home Affordable Modification Plan can help make your mortgage affordable. These are examples and are not intended to indicate the exact results you can expect if you qualify for this plan.
GMI = Gross Monthly Income
PITIA = Principal, Interest, Taxes, Insurance and Association Fees
DTI = Debt to Income Ratio
| Example 1: Rate reduction to achieve 31% DTI | ||
| GMI | $ 4000.00 | |
| 31% GMI (Target Monthly Payment) | $ 1240.00 | |
| Loan $200,000 @ 7.5% 30 years | $ 1398.43/month | |
| Taxes and Insurance | $ 250.00/month | |
| PITIA | $ 1698.43/month | |
| Modify rate to 4% to achieve a DTI of appx 31% | ||
| Modified Rate to 4%: | $ 954.83/month | |
| Taxes and Insurance: | $ 250.00/month | |
| New Payment | $ 1204.83/month | |
| Savings | $ 493.60/month | |
| Example 2: Rate reduction and extending term of loan to 35 years to achieve 31% DTI | ||
| GMI | $ 3000.00 | |
| 31% GMI (Target Monthly Payment) | $ 930.00 | |
| Loan $200,000 @ 7.5% 30 years | $ 1398.43/month | |
| Taxes and Insurance | $ 250.00/month | |
| PITIA | $ 1698.43/month | |
| Modify rate to 2%. Modify term to 35 years to achieve a DTI of appx 31% | ||
| Modified Rate to 4%: | $ 662.53/month | |
| Taxes and Insurance: | $ 250.00/month | |
| New Payment | $ 912.53/month | |
| Savings | $ 785.90/month | |
| Example 3: Rate reduction, term extension and principal forbearance to achieve 31% DTI | ||
| GMI | $ 4500.00 | |
| 31% GMI (Target Monthly Payment) | $ 1395.00 | |
| Loan $450,000 @ 9.0% 30 years | $ 3620.80/month | |
| Taxes and Insurance | $ 250.00/month | |
| PITIA | $ 3870.80/month | |
| Modify rate to 2%. Modify term to 40 years | ||
| Modified Rate to 2% for 40 years: | $ 1362.72/month | |
| Taxes and Insurance: | $ 250.00/month | |
| New Payment | $ 1612.72/month | |
| Because lowering the rate to the maximum floor of 2% and extending the terms of the loan to 40 years still does not achieve the desired DTI of 31%, the lender, at its discretion can elect to forgive or forebear a portio of the principal to achieve the 31% DTI. In this example the lender elects to forbear $75,000 of the principal which would be due as a balloon payment at the end of the term of the loan or if the home were to be sold. This is not expected to be a common practice and would most likely be used in an instance where the borrowers suffered a loss of income and the home suffered a sharp decrease in value. | ||
| Modified Rate to 2% for 40 years on calculated on $370,000 | $ 1135.60/month | |
| Taxes and Insurance: | $ 250.00/month | |
| New Payment | $ 1385.60/month | |
| Savings | $ 2485.10/month | |
Morrison Law Center, PLLC is a law firm. In contrast, "attorney based" or "attorney-backed" loan modification companies are not. As such, when you discuss the details of your mortgage with an "attorney-based" or "attorney-backed" company, there is no attorney-client privilege. Any conversation you have with a non-law firm loan modification company is likely discoverable by a state or federal agency and not protected by attorney-client privilege and therefore not confidential. Prosecuting agencies are becoming more aggressive recently in bringing prosecutions for mortgage fraud based on overly optimistic or inflated representations regarding income or monetary reserves at the time of qualifying for the loan. Therefore, if you are concerned that statements you made on your mortgage loan application could be construed as false or misleading, and you are at risk for foreclosure, please contact Morrison Law Center, PLLC immediately.
Do not discuss this issue with anyone other than a licensed attorney.
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