In today's housing market, we are all aware of the horrible circumstances that have taken place. It has been projected that about 100 families a day lose their homes in a foreclosure. Fortunately, our government has enacted a few laws to help these people out of those situations. One of these laws, or programs rather, is the Home Affordable Modification Program. This program has been proven to be a  useful tool to combat foreclosure, but it can also be confusing and hard for people to understand. In this article I hope to lay out in detail what the Home Affordable Modification Program is and how it works, as well as, how you can benefit from it.

First off, If you are NOT unemployed, but you're still struggling to make your mortgage payments, you may be eligible for the Home Affordable Modification Program (HAMP). This program was engineered to lower the borrower's monthly mortgage payment to 31 percent of their verified monthly gross (pre-tax) income.

Borrower eligibility is based on meeting specific criteria:



1) The borrower is delinquent on their mortgage or faces imminent risk of default

2) The property is occupied as borrower's primary residence

3) The mortgage was originated on or before Jan. 1, 2009 and unpaid principal balance must be no greater than $729,750 for one-unit properties.


Determining Eligibility:

To take advantage of this program the borrower must be elegible for it. To ensure that the only people that have access to this program are legitimately in need of it, the government has set up a course of obstacles that must be met before the borrower is accepted into the program. If the home owner fails to meet any one of these criteria they will be denied access.

Here is a list of the criteria for the HAMP program:

• The home must be the primary residence
• The unpaid principal balance must be equal to or less than $729,750 for one unit properties and higher for two to four unit properties
• The loan must have originated before January 1, 2009
• The mortgage payment (including taxes, insurance, and homeowners association dues) must be more than 31% of your gross monthly income
• The mortgage payment can no longer be affordable due to a significant change in income and/or expenses
• The loan must be owned by Fannie Mae or Freddie Mac or a participating investor.

If the home owner does not qualify for a home modification, the Home Affordable Foreclosure Alternatives may provide a new option but I will have to cover that in a different article.

After determining the eligibility of the borrower, the servicer must to go through the process of adjusting the monthly mortgage payment to 31% of a borrower's total pretax monthly income. The steps in this process include:

• Reducing the interest rate to as low as 2%,
• Extending the loan term to 40 years,
• Deferring a portion of the principal until the loan is paid off and  interest on the deferred amount is waived.

By the way, a servicer can forgive the principal under HAMP, if they decide to. The reason they would choose to do this would be because through the Home Affordable Modification Program there are incentives for borrowers, servicers and investors. This situation would call for an incentive for the investor.

At this point I think it is important to mention that very few borrowers tend to qualify for a loan modification. It's important to know beforehand if your lender participates in HAMP, because this may save a ton a time in the long run. Luckily, all Fannie Mae and Freddie Mac lenders have to participate in HAMP.

Some lenders that are participating in the Home Affordable Modification Program include:


Aurora Loan Services, LLC

Bank of America, NA

Chase Home Finance, LLC

CitiMortgage, Inc

Countrywide Home Loans Servicing, LP

EMC Mortgage Corporation

GMAC Mortgage LLC

Green Tree Servicing LLC

HomeEq Servicing

Horizon Bank

J.P.Morgan Chase Bank, NA

Litton Loan Servicing

Navy Federal Credit Union

Ocwen Financial Corporation, Inc.

OneWest Bank

PNC Bank, National Association

Saxon Mortgage Services

The Golden 1 Credit Union

US Bank, National Association

Wells Fargo Bank, NA

 

HAMP Expansion:

Beginning in June of 2012 the U.S. government is going to expand the HAMP program . Under the new regulations, homeowners that have declared bankruptcy or are considering declaring bankruptcy and are already involved in HAMP or want to be involved in HAMP will be assessed and may be offered solutions to an impending foreclosure based on monthly income and amount of debt ratio.

The new HAMP guidelines will triple the balance-reduction incentives. The incentives will pay between 18 cents and 63 cents for every dollar taken off a mortgage principle instead of the prior six cents and 21 cents. The Treasury department has stated that Freddie Mac and Fannie Mae will also receive reduction incentives for permitting lenders to absolve principle under the new Home Affordable Modification Program.

This new modification of the HAMP program will change a substantial amount of things for the homeowners. One major change will be that regardless if the homeowner has met the previous debt-to-income requirement, they will be able to adjust their mortgage amount to a more affordable amount. What it is even better, is that people who were previously denied help from the Home Affordable Modification Program or had missed too many payments and were released, can  now re-apply according to the new regulations governing the HAMP program.  

This program has and will continue to save people's homes and streamline the way loan modifications are done. Our government is doing a great job of making sure its citizens are being taken care of in this economy and the HAMP program is just one the ways it's doing so. I hope this article has benefited you in some way. I'll be posting another article soon about the HAFA program and how it can help homeowners out of foreclosure as well.