Home Affordable Modification Program (HAMP)

This is easily the most well known of all loan modifications.  It may or may not be that HAMP is the “best” or the most applicable to your situation.  But it is easily the most applied for of the programs, and it is typically what people think of when they think of the Making Home Affordable Program.

HAMP has primarily been intended for “not unemployed” (a/k/a employed) homeowners that are struggling to make their mortgage payments on their primary residence.  Its primary goal is to lower the monthly payment to 31% of a borrower’s gross monthly income, at most, in order to provide relief for borrowers who otherwise would be unable to maintain their mortgage payments.

In June of 2012, HAMP was expanded to include the following homeowners:

  • Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner intends to rent it;
  • Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower;
  • Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments; and
  • Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good standing.

(available at http://www.makinghomeaffordable.gov/programs/lower-payments/Pages/hamp.aspx).

The eligibility requirements of a HAMP modification (as of the date of the publication of this book) are as follows:

  • You obtained your mortgage on or before January 1, 2009;
  • You owe up to $729,750 on your primary residence or single unit rental property;
  • You owe up to $934,200 on a 2-unit rental property; $1,129,250 on a 3-unit rental property; or $1,403,400 on a 4-unit rental property;
  • The property has not been condemned;
  • You have a financial hardship and are either delinquent or in danger of falling behind on your mortgage payments (non-owner occupants must be delinquent in order to qualify);
  • You have sufficient, documented income to support a modified payment; and
  • You must not have been convicted within the last 10 years of felony larceny, theft, fraud, or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

(available at http://www.makinghomeaffordable.gov/programs/lower-payments/Pages/hamp.aspx).

Upon approval of a HAMP application, the lender will usually require the borrower to complete a 3 month “trial payment” process to ensure that the borrower has the ability to make payments under a modification.  After the trial payments have been completed, the mortgage company should issue a permanent modification to the borrower for signature, which will include the terms of the modified loan.

HAMP guidelines (and most of the other programs) require an application and extensive financial documentation be submitted as part of the process.  Therefore, before requesting a HAMP modification, you should gather all of your financial information because the application process will require you to inform your lender of your assets, debts, income, and expenses.

Please see the Warnings about Loan Modifications page.  Applying for a government program will not automatically stop a foreclosure.

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