Do monthly distributions from retirement funds qualify as gross monthly income (GMI) in applying for a HAMP/MFA modification? And does non-borrower income qualify as well?
Well now I'm getting personal. I've been working on my own load mod for the past 11 months. Over the past six months GMAC had told me again and again that annuity and IRA distributions DO count towards GMI when GMAC gets written proof of amount and frequency of distributions from fund providers.
But when I gave GMAC precisely this proof in December, two fairly senior guys there shot down my application, reversing GMAC'S earlier position and claiming now that HAMP guidelines DISALLOW such distributions. In a letter about my situation written at the request of the Illinois Department of Financial and Professional Regulation, GMAC even put its denial in writing: "IRA funds are not allowed, within program guidelines, to be used in income calculations." When I insisted on seeing the HAMP guideline they were referring to, GMAC would not direct me to it. So I had to dig deeper.
Last week I found and spoke with an individual at Treasury who absolutely and positively confirmed that IRA distributions DO count towards GMI, who said that GMAC is "torn" in its positions on this point, and who promised to intercede on my behalf with a super senior GMAC individual he said he knows. He told me I should be hearing from GMAC this week.
Always, GMAC has been unable or unwilling to direct me to the relevant HAMP guidelines. Funny thing is, no one else could, either. Frustrating. Took me six months to find them and here they are. Out of the blue a friend sent them to me yesterday. All eleven of the Supplementary Directives to the original March 4 2009 HAMP guidelines are at the Treasury Department's site for Loan Servicers.
The language below is from one of the Directives. It's crystal clear. It confirms the eligibility of retirement assets AND non-borrower income (e.g. from relatives or friends), when properly documented. No two ways about it!
Supplemental Directive 09-07 October 8, 2009
Home Affordable Modification Program – Streamlined Borrower Evaluation Process
Monthly Gross Income
The borrower’s "monthly gross income" is the borrower’s income amount before any payroll deductions and includes wages and salaries, overtime pay, commissions, fees, tips, bonuses, housing allowances, other compensation for personal services, Social Security payments, including Social Security and adoption subsidies received by adults on behalf of minors or by minors intended for their own support, and monthly income from annuities, insurance policies, retirement funds, pensions, disability or death benefits, unemployment benefits, rental income and other income. If only net income is available, the servicer must multiply the net income amount by 1.25 to estimate the monthly gross income. All non-taxed income, including non- taxed social security income, is considered net income.
Servicers should include non-borrower household income in monthly gross income if it is voluntarily provided by the borrower and if there is documentary evidence that the income has been, and reasonably can continue to be, relied upon to support the mortgage payment. All non- borrower household income included in monthly gross income must be documented and verified by the servicer using the same standards for verifying a borrower’s income.
The servicer may not require a borrower to make an up-front cash contribution (other than the first trial period payment) for the borrower to be considered for HAMP.
PS My story is a bit more complicated than this. Several days after GMAC had told me that IRA distributions are NOT allowable, they called me to say they ARE allowable, but now GMAC demanded not just AMOUNT and FREQUENCY of distribution but DURATION as well, all confirmed in new letters from my providers. This, a banker friend of mine tells me, is a legitimate request, but it's NOT one that GMAC had made previously.
If I do get a modification, it will be because my Congressman, Mark Kirk, got my State Department of Financial/Professional Regulation involved in my situation. GMAC does respond to their inquiries. GMAC now knows it's under scrutiny, which I hope this diary enhances a little bit.
PPS The HAMP/MFA message boards at the Loan Modification Forum at LoanSafe.org are may be helpful.