Citi Bank Said I Qualify For Loan Modification, Can I Ask For Reduced Interest Rate?
by Bob
Citi Bank has the mortgage on my home. The value of the property is about $400,000 and the balance is about $216,000.
I missed the last payment only and will make a partial payment in a few days so I will be late for the first time on the balance of the payment.
I will be able to make $1,000 of a $2,816 payment. That is what I will likely be able to afford from here on out.
The loan is a 15 year loan and is about 3 years into the loan. I always paid 400 to 600 extra each month for over 2 years.
The loan started at $274,000. I would like to reduce the interest 1% from 5.625% to 4.625% and make the loan a 30 year loan with payments close to $1,000 per month. I believe that way the bank will still make money from my loan and I will be able to make the payments.
My income changed from about $7,000 per month as of May of 2009 to about $3,500 per month. I have been making the payments work with savings up until now. I am almost flat on savings now. My job seems to be secure and the income will likely continue in that amount for the foreseeable future.
Do I have a specific course I should follow or are there any bumps in the road you may be able to warn me of?
Mortgage Loan Modification Answer:
by Loan Modification Expert - Dan North
First hold onto the $1,000 partial payment as they will only want a full payment. Don't spend the money but hold onto it so you can make your modified payment once arranged.
My first advice is find out if your mortgage with Citi Bank is a Government owned or guaranteed loan:
Is your Mortgage owned or guaranteed by Freddie MacIs your Mortgage owned or guaranteed by Fannie MaeIf you have an FHA or VA loan you most likely would know that information but if you are not sure the easiest way to find out is ask Citi Bank by calling the number on your mortgage statement.
If your loan is Government owned or guaranteed they have little choice in following the Making Home Affordable Guidelines.
Here Is What You Will Qualify For Under The Making Home Affordable Modification Program
Yes you do qualify for HAMP with the information you provided. A 50% reduction in income is a valid hardship. The HAMP program targets reducing your mortgage payment to 31% of your gross monthly income. Which would be $1085 with a $3500 gross monthly income.
The Citi Bank will first lower the interest rate to 2% then extending the length of the loan to lower your mortgage payment to $1085. If you do not already have escrow payments for property tax and home owner's insurance that will be set up. The $1085 monthly payment will also include the escrow payment in that amount.
Following the guidelines your interest rate will be 2% for 5 years then increasing 1% a year to about 5% currently. You can ask your Loss Mitigation Officer to modify the loan outside of the HAMP Program on the terms you said you wanted as above and yes Citi Bank would make more money on that arrangement. They may just approve that arrangement without doing the Making Home Affordable Program. Citi Bank may have policy on only doing HAMP Modifications so you will have to specifically ask them to not do the HAMP Program to just reduce the interest rate 1% and extend the loan to 30 years.
Here Is What You Pay Reducing The Interest 1% and Extending The Loan To 30 Years
That would make your monthly mortgage payment about $1,400 if your monthly insurance payment is $58 and monthly property tax is $166.67 your Principal and Interest payment would be $1,168.51 figuring 27 more years to pay off the loan. (I am guessing about $2,000 a year in property tax and $700 a year in home owner's insurance)
To hit the $1,000 payment you will need to do the Making Home Affordable Modification Program. Even extending the loan to 40 years will only bring down the payment to about $1,200
Here is a mortgage payment calculator so you can play with numbers to see what you would have to ask for.
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