Making Homes Affordable Program

Instead of an in-house mortgage modification, you may qualify for a modification under the Home Affordable Modification Program also known as HAMP.

HAMP is part of President Obama’s Making Home Affordable program which started in March 2009.  HAMP was scheduled to terminate at the end of 2012 — but on 1-27-2012 it was announced that the HAMP program was extended thru 2013.

Banks and financial institutions who received money (bailouts) under the U.S. Government’s TARP program are required to offer HAMP to homeowners.

In addition, all mortgage loans insured or owned by Fannie Mae, Freddie Mac, FHA, VA, and the USDA are required to be evaluated for  HAMP.

Therefore, the only mortgages not eligible for HAMP are those from lending institutions that:

Did not accept a government bailout.

Were not insured or owned by a Government Sponsored Enterprise (GSE) like Fannie Mae, Freddie Mac, FHA, VA, USDA, etc.

Even though not required, a home lender may elect to participate in HAMP.

If you are approved for a HAMP modification, your new loan could be as low as a 2% interest rate payable over 40 years.

You may be eligible for HAMP if you meet all of the following requirements:

You got your current mortgage on or before 1/1/2009.

Your house is your primary residence or is rented to a tenant.  The Rental feature is new as of 1-27-2012.

Your monthly mortgage payment is more that 31% of your gross monthly income. This means income before any taxes or deductions.  If you are self-employed, it means net income after business deductions.

Your current mortgage balance cannot exceed $729,750.

You must have documented income that can pay the modified payment.

You must have a financial hardship.

You must be either delinquent on your mortgage payment or are in danger of being delinquent.

In the last 10 years, you must not have been convicted of a felony involving a mortgage or real estate transaction.

To apply for HAMP, you can ask your mortgage lender for a packet named Request For Modification and Affidavit (RMA). Some lenders have the RMA available for download on their websites.

You may also go to the official HAMP site for the RMA packet and other valuable information.

If you are initially approved for HAMP, you will be put on either a three or four month Trial Plan.  During this Trial Plan, you will be required to pay the new modified mortgage payment.

If you successfully complete the Trial Plan, you are supposed to be given a permanent modification.

Even if you are eligible to apply for HAMP, it still is not easy for most people to receive a permanent HAMP modification.

Failing the Net Present Value test or NPV test is a major reason why homeowners are not qualifying for HAMP.

The NPV is an exceedingly complicated test. It basically measures whether a HAMP permanent modification is more financially beneficial to the lender than it is to foreclose and sell your home.  The NPV test should never have been part of the HAMP guidelines  — it has kept responsible homeowners from saving their homes.

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