It calls for your PITI to be no more than 38% of your DTI. Sometimeas it does not make sense to the lender to adjust the payment to the 38% guideline and loan modification must also be in the interest of the investor. In fact on of the review items is if the cost of forclosure is lower than the cost of modification.
On a second note I talked with someone who had their income change. At the 38% DTI their monthly payment would not cover taxes,insurance,and HOA dues. They were denied a loan mod.The lender will not come out of pocket every month to cover the property while the owner is living there.
Loan Modifications are not the only option, if you have equity in the property and a clear 12-month mortgage payment history you may qualify for a rate-and-term refinance. Also, having two months of paystubs at the same pay level and a good explanation of the previous fluctuations is good to have. Some lenders will go as high as 50 DTI on rate-and-term refis, but there are a number of factors that can influence results. Much of what was said below is absolutely correct, especially the part about refusing to pay an up-front fee before seeing any footwork on your behalf. Make sure you keep your payments timely and good luck!
E Mortgage Management
800.793.9633 ext. 156