The Home Affordable Modification program (HAMP loan modification) was initiated as part of the Making Home Affordable Program to stabilize the housing market by helping homeowners avoid foreclosure. The program was designed to specifically target the millions of homeowners who are at risk of foreclosure. The program offers a variety of options to US citizens who may have mortgages that are no longer affordable. If you are a homeowner and you have suffered major financial losses as a result of an illness or divorce, this program may be able to help you reduce your monthly mortgage. The program also offers options to individuals who are unemployed or owe more on their home than what the home is worth.
What Is It?
The base of the program consists of mortgage servicers, FHA, VA, lenders, investors, securities, FNMA, FHLMC, and the Federal Housing Finance Agency to establish loan modification guidelines for loan servicers to consider when determining their qualifying procedures for a potential loan modification.
Under this program, lenders are offered the opportunity to establish a contract with the Federal government to modify a homeowner’s loan requirements in a specific fashion, and the lenders will receive an incentive for doing so.
The United States Treasury has taken several steps to streamline the entire HAMP loan modification process. First, the United States Treasury has described in detail the purpose of the program and have provided a step-by-step guide on how lenders should perform under HAMP modifications. For example, in the HAMP handbook, the United States Treasury instructs loan servicers to solicit borrowers for participation in the program prior to conducting any type of foreclosure sale.
Second, the United States Treasury instructs servicers to use the net present value when calculating for HAMP. Under the HAMP program, if the lender makes more money completing a HAMP modification, the lender must enter into a HAMP modification program. If the lender is expected to lose money by entering into a HAMP modification program with a borrower, the lender may then move forward with foreclosure.
Eligibility Requirements For A HAMP Modification
1) The loan must have originated prior to January 1, 2009.
2) The lender must be a first lien holder on an owner occupied dwelling with an unpaid balance not exceeding $729,750.
3) The program offers higher limits for properties with 2 to 4 units.
4)The existing principal, property taxes, homeowners insurance, and interests may not exceed 31% of the borrowers household income.
5) All borrowers are required to document income and provide proof of income, such as pay stubs or tax returns.
6) Owner occupancy status must be verified. Investor owned properties, condemned or vacant properties are not eligible for this program.
7) Incentives are offered to lenders and servicers for the modification of at risk borrows that have not missed any payments.
8) Loans can only be modified once under this program.
9) Borrowers must not have been convicted of a felony within the last 10 years, involving any type of real estate transaction.
How to apply for a HAMP loan modification?
To apply for a HAMP modification, borrowers will need to complete the following documents and provide these documents to the lender that participates in the program.
1) Request For Mortgage Assistance Form (Video Tutorial Instructions)
2) IRS Form 4506T-EZ Or 4506-T
3) Verification of Income
If a borrower’s existing first mortgage was subject to a HAMP loan modification, and the borrower has a second mortgage on the same property, the borrower may qualify for a modification on the second mortgage as well. The Making Home Affordable Program (MHA) also offers a second lien modification program. This program was designed to offer homeowners a comprehensive solution with their existing second mortgage.
To qualify for this program, borrowers must meet the following requirements:
1) The borrower must have his or her first mortgage modified under HAMP.
2) The borrower must not have been convicted of a felony with the last 10 years involving any type of real estate transaction.
3) The borrower must not have missed three consecutive payments on the existing HAMP modification.
The following lenders participate in the Second Lien program
1) Bank of America
2) Bayview loan Servicing
3) Citi Mortgage
4) Community Credit Union of Florida
5) GMAC Mortgage
6) Green Tree Servicing
7) iserve Residential Lending
8) J.P. Morgan Chase Bank
9) iservice Servicing
11) One West Bank
12) Penny Macloan Services
13) PNC Bank
14) PNC Mortgage
15) Residential Credit Solutions
16) BSI Financial Services
17) Wells Fargo
If a borrower is unemployed, the program may be able to reduce the existing mortgage payments by 31% of the borrowers income or suspend payments for 12 months or longer if needed.
To qualify under the unemployment program, borrowers must meet the following requirements:
1) The borrower must be unemployed and eligible for unemployment benefits.
2) The borrower must occupy the home as his or her primary residence.
3) The borrower must not have previously received a HAMP modification.
4) The mortgage must have been acquired prior to January 1, 2009.
5) The borrower must owe no more than $729,750 on the home.
United States Department of Agriculture (USDA) Program
The United States Department of Agriculture, VA, and FHA offer programs for homeowners who reside in rural areas that may need to lower their monthly payments. This program will lower payments up to 31% of the borrowers gross income, in an effort to make the home more affordable. If the borrower has an existing loan with the United States Department of Agriculture, the borrower may meet the requirements for entrance into the program.
Veterans Administration (VA) Program
A loan modification program was specifically designed for veterans who have acquired home loans through the VA. This program also will reduce payments up to 31% of the borrowers gross income, with the expectation of making the home more affordable. This program is usually reserved for veterans.
For more information on the HAMP Program and how a lawyer can help you permanently lower your monthly payment, click here