Consumer complaint received 2017-03-06
Company: NATIONSTAR MORTGAGE LLC
State: FL
Product: Mortgage
Sub-product: Conventional adjustable mortgage (ARM)
Issue: Loan modification,collection,foreclosure

Complaint:
I applied for modification due to my interest-only loan becoming fully amortizing and interest rate increasing which resulted in an unaffordable payment. This complaint is due to Nationstar 's determined income being significantly beyond our available income and ability to repay. It appears their model for determining income does not support QM or ATR requirements. 
Nationstar uses a gross income average from XXXX paystubs and annualizes this income as stable qualifying income. This is without regard to the source of income. In our circumstance, their method of determination significantly overstated both my spouse 's and my incomes. Their approach negligently disregards the continuance of all income sources and is not in agreement with both QM and ATR requirements. 
For example, my income determination used overtime that was not supported with YTD earnings. It was not considered if this income was supported or expected to continue. My modification application intentionally excluded overtime as monthly income since this was not stable or expected to continue. Per the documentation provided, my most recent paystubs have bi-weekly overtime of {$1200.00} and {$1300.00}. Nationstar calculated total gross income as an average of {$4300.00}, annualized to $ XXXX = or {$9500.00} mo. Considering base income per paystub of $ XXXX {$6600.00}, Nationstar considered {$2800.00} as stable overtime income for qualification. Check ending date of XXXX/XXXX/XXXX and pay ending date of XXXX/XXXX/XXXX does not support this as stable income. YTD overtime average per last paystub is {$1300.00} monthly ( {$11000.00} XXXX ). This evidences that this is potentially not a stable income source and would require additional analysis for consideration. In reality, this overtime is not stable and resulted from significant mortgage volume resulting from the lowest interest rates in history ( XXXX XXXX ). Any significant overtime is not currently or expected to be available. Overtime at this amount was not supported by the XXXX XXXX or YTD income. This is why this income was not included on the modification application. In summary total income was determined at {$120000.00} ( Annual bonus plus Nationstar determined income ) rather than base salary of {$79000.00} plus bonus of {$9300.00}, or {$89000.00}. Based on the documentation and the above analysis, this is a {$34000.00} overstatement of annual income. It should be noted, my modification request did indicate my base income at {$84000.00} due to an expected increase which is supported on my supplemental paystubs with base of {$83000.00}. Effectively this would reduce this overstatement to {$30000.00}. 
For my spouse 's income, she is a XXXX and her salary is listed on the paystub. The base salary was not considered and Nationstar used the gross income which included a {$170.00} one-time income earnings adjustment to take advantage of a paid pre-planning event. Since this is not a stable income source it should not be considered as part of stable qualifying income. Again, stability of income was disregarded by Nationstar and they determined her income to be {$43000.00} rather than her actual income of {$41000.00} as indicated on her paystub. 
Ultimately, I appealed their income determination and this was rejected. Their rejection is on the basis that the supplemental documentation provided is considered new information. None of the supplement documentation was new information. The original income documentation provided did not support the income Nationstar used to qualify and the continuance of all income sources was not addressed by Nationstar. Based upon the response by Nationstar, this appears to be a systemically negligent policy and has likely negatively impacted many people requesting modification.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation