I am applying for a second VA loan modification. The last one was just over a year ago and my wife and I both have had unexpected hospital stays in the last year; hence the second application. Our income (now both healthy) will show ~31%. Do I just roll with that number? Will they see that number favorably?
Wells Fargo Loan Modification
- Thread starter joker
- Start date
They typically will ask for financials to go with the application. My one tip is to NOT inflate your income (with a temporary part time job, small income job) thinking it will help. The final offer is always slightly higher than you want so don't give them a reason to inflate that. You do have a slight edge in that a lot of people will default on the second over the first and WF likely knows that. In my experience they might send more than one offer and this *may* be negotiable for a discount or reduction to meet income.
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Alan Bine
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Curious Indeed
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Thank you.
What do you mean by:
"You do have a slight edge in that a lot of people will default on the second over the first and WF likely knows that"?
Thanks for your input!
Okay, I misread that. I thought you were trying to modify the second.
I do not know if subsequent modifications require missed payments or not. (Some banks simply wont make reductions while you are current.) If you have missed payments, start saving them for any negotiation against the modification. It shows security as far as guaranteeing future performance and to my knowledge, at least under former HAMP, you could rebuild your savings and still qualify for the modification.
I am not sure what you mean by 31%. Are you stating that your payment is 31% of your income now? If so, you won't see much reduction, but you might get a "forbearance" instead which would spread out past due over a certain period of time. (An example would be to spread 3000 over 3 months at 1000/per month - or over 10 mo's at 300/mo) These are usually unaffordable, unless you have a certain amount of money in the bank (savings) that can reduce it.
I am not a VA expert but these are the typical options. The VA has certain rules and a denial usually can be appealed. A modification capitalizes the past due. (adds the 3000 past due to the principal) A forbearance does not. With Wells Fargo, always double-check the math.
Also, in today's environment it is unlikely to see more than a 10% reduction in a modification. Some have even gone to higher payment versus a reduction. If interest rates are more favorable you may get a break if you get one. You really won't know until you apply what they will offer.
I do not know if subsequent modifications require missed payments or not. (Some banks simply wont make reductions while you are current.) If you have missed payments, start saving them for any negotiation against the modification. It shows security as far as guaranteeing future performance and to my knowledge, at least under former HAMP, you could rebuild your savings and still qualify for the modification.
I am not sure what you mean by 31%. Are you stating that your payment is 31% of your income now? If so, you won't see much reduction, but you might get a "forbearance" instead which would spread out past due over a certain period of time. (An example would be to spread 3000 over 3 months at 1000/per month - or over 10 mo's at 300/mo) These are usually unaffordable, unless you have a certain amount of money in the bank (savings) that can reduce it.
I am not a VA expert but these are the typical options. The VA has certain rules and a denial usually can be appealed. A modification capitalizes the past due. (adds the 3000 past due to the principal) A forbearance does not. With Wells Fargo, always double-check the math.
Also, in today's environment it is unlikely to see more than a 10% reduction in a modification. Some have even gone to higher payment versus a reduction. If interest rates are more favorable you may get a break if you get one. You really won't know until you apply what they will offer.
According to this article, VA must explore all options and not foreclose until 120 days past due. I don't think they can foreclose while a modification application is pending as that would be dual tracking. Good info in this article.
www.nolo.com
Is a VA Loan Foreclosure Different Than Other Foreclosures?
If you have a VA-guaranteed loan, the foreclosure process is the same as for other types of loans. But under VA guidelines, the servicer has to give you every opportunity to avoid foreclosure.
www.nolo.com
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Joker123
Guest
I don't think there is any shame in trying. You never truly know. The only thing I can tell you, is some servicers will not allow more than Three modifications during the life of a loan.
Ok, here's what I don't get. What am I missing? Why do people want modifications if they are seriously past due? Wouldn't forbearance or Chapter 13 make more sense? There's probably a mathematical formula for this but if enough arrears have accrued then even with a lowered interest rate you'll be paying considerably more over the life of the loan while paying interest on interest. Maybe it just comes down to how far behind you are.
For me it would be the ability to pay the plan. Both Chpt 13 and forbearance require increased payments to catch up on past due. I'm on a fixed income, so it would be my preference to 'modify and reduce the payment,' even though I might be paying more overall. You are right though, 'interest on interest' is a bad thing and doesn't make financial sense. and costs more in the long haul. I just don't trust Wells Fargo but I think they have rules to follow and are more closely monitored. They should at least "process" the application and have to provide an answer. I don't think they can foreclose during this review period.