2MP and 31% DTI Test

by Mary
(Miami, FL)

Under the 2MP program, do the banks take into consideration your new modified 1st mtg payment in order to stay with in the 31% DTI?

Mortgage Loan Modification Answer:

Second mortgage lien holders participating in the 2MP program, are required to adhere to the set guidelines, but they also have some leeway as to how much to decrease your 2nd mortgage payments, to extinguish a portion of it altogether.

However, since the HAMP modification you received on your 1st mortgage was required to reduce your 1st mortgage down to as low as 31% of your total monthly gross income, that is already set. The 2MP modified payments will be additional to the 1st mortgage payments, making your debt-to-income (DTI) ratio higher than 31%.

Your 2nd mortgage servicer, in accordance to current regulations, should reduce your interest rate to 1% if fully amortized, or down to 2% if interest only. After 5 years, the rate will reset to the then-current interest rate on the HAMP-modified 1st mortgage.

The 2nd mortgage servicer may, at any time and at their own discretion, offer a lower interest rate than the HAMP-modified 1st lien.

Hope that helps.

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