Home Affordable Modification Program: HAMP

The Home Affordable Modification Program is designed to help about 3 to 4 million financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now, and sustainable over the long term. The program provides clear and consistent loan modification guidelines that the entire mortgage industry can use.

Borrowers eligibility is based on meeting specific criteria including:
1) Borrower is delinquent on their mortgage or faces imminent risk of default
2) Property is occupied as borrower’s primary residence
3) Mortgage was originated on or before Jan. 1, 2009 and unpaid principal balance must be no greater than $729,750 for one-unit properties.

After determining a borrower’s eligibility, the lender will take a series of steps to adjust the monthly mortgage payment to 31% of a borrower’s total pretax monthly income:

• First, reduce the interest rate to as low as 2%,
• Next, if necessary, extend the loan term to 40 years,
• Finally, if necessary, defer a portion of the principal until the loan is paid off and waive interest on the deferred amount.

If you have gone through the HAMP process or are HAMP eligible and can’t afford to stay in your home then stay tuned for tomorrows blog, I will go over the Home Affordable Foreclosure Alternatives Program. This program  provide additional options to help avoid foreclosure by offering incentives to borrowers, lenders and investors who utilize a Short Sale or Deed in Lieu. Deed in Lieu is where the homeowner willfully gives the home to the bank instead of the bank taking it. This option has almost the same credit consequences as a short sale.

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