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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
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Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Question Is CitiMortgage allowed to gross up by 25% the porti&#

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Question: Is CitiMortgage allowed to gross up by 25% the portion of your social security that is taxable?

CitiMortgage just approved me for the HAMP. However, in calculating my new payment using the ratio of 31% mortgage payment to gross income, they have grossed up my taxable portion of my social security by 25%, which has increased my gross income by $475 per month. I fully understand that Citi is allowed to gross up any non-taxable income and I accept that.

My Federal 1040 for tax year 2009 reflects on line 20a my gross social security of $26,848 and on line 20b Taxable amount of $22,821. (I pay taxes against 85% of my gross SS, which is the maximum amount). My SS is augmented by two other sources of income; One a non-taxable disability income from Lockheed Martin which I fully understand needs to be grossed up by 1.25. My other income is a Government Annuitant which I pay taxes against, therefore CitiMortgage is not applying the 1.25 factor. My only concern is that Citi is grossing up the total amount of my social security, not just the non-taxed portion.

I have reviewed the MHA Handbook (for Servicers and Non-GSE Mortgages), Version 3, dtd December 2, 2010, HAMP Section 6.1.1 states that social security is considered gross income, however any non-taxable social security must be grossed up by 1.25.

If I'm wrong I will accept that, however Citi is unwilling to even take a look at their calculation. Working with a HOPE Help Line representative from Money Management International, Ms. Becker, she and I were finally able to speak to a supervisor in the HAMP center at Citi, on Jan. 21, 2011. He felt that there may have been an error in the gross up of the social security. He promised both of us that he would follow up and that I was to call back the following Tuesday or Wednesday, which I did. I was told by the representative who answered the phone at Citi that there were no follow up notes from the supervisor, I asked to speak to him and I was told that he was not available and that he was possibly on vacation. At that point Citi pretty much told me that I could either accept their offer or be disqualified from the HAM program.

My HAMP trial period began Feb 1, 2011, so that I would not be disqualified I made my first trial payment to Citi in the amount of $2,409.61 on January 27th. I believe that the payment is overstated by approximately $300.00 per month.

Your help would be greatly appreciated.

Thank you
Alice J. Arney
Littleton, Colorado



First of all, I sincerely XXXXX XXXXX you have explained the entire issue so nicely and in lucid manner and it is extremely well defined now.


I understand that due to the above referred explanation, you are making payments of almost over 10% more and you are being put to financial loss.


Please note that you are a typical victim of a hard skinned financial / lending institution who consider themselves as doing a favor to the borrowers like you and this is a clear cut case of negligence and deficiency in services. I advice you as under:


First of all, either by yourself or by taking anyone's assistance, send a Certified Letter to the CITI stating everything as precisely as you have done here, and demand a rectification to your issue within a stipulated time frame, say for example 15 days. State in no unclear terms in writing that you are being put at a financial loss and failing any reply from their side, you would consider all available legal options.


There are bright chances that your matter should get resolved through such communication threatening damages and legal action. However, if not, you may take this matter for arbitration at as they take up similar cases. You may reach out to them at National Arbitration Forum
P.O. Box 50191
Minneapolis, MNNNN-NN-NNNNbr/>USA

Telephone:(NNN) NNN-NNNN or toll-free(NNN) NNN-NNNN
Fax:(NNN) NNN-NNNN or toll-free(NNN) NNN-NNNN/p>


I am suggesting the arbitration route because the facts of the matter are very much in your favor and also, this is a cheaper route than going in for a litigation. If you feel so, you may also get your local attorney serve them a legal notice for damages. But arbitration is favored as it is a cheaper route to take.


In short, you will have to show some aggression in dealing with such hard skinned companies.


I am sure this would help..Wish you good luck...

Warm Regards,

Edited by rakhivasavada on 2/5/2011 at 3:05 PM EST
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