The Home Affordable Modification Program is designed to reduce a homeowner's monthly payment to 31 percent of the homeowner's monthly gross income. In many cases, this could mean a reduction in principal or a lowered interest rate.
After the housing crisis, the US Department of the Treasury and of Housing and Urban Development put programs in place to help homeowners keep their homes by getting loan modifications that allowed them to make smaller payments even if they owed more than their house was worth.
Certain rescrictions have to be met to qualify for the Home Affordable Modification Program (HAMP), also called the "Obama Progam" and "Making Home Affordable" plan.
The HAMP and HARP programs provide government funding to help banks offer loan modifications to people who are behind on their mortgage but want to catch up on their mortgage and stay in their home. Put in place on June 1, 2012, and extended several times, the HAMP program is currently set to expire at the end of 2016.
A few requirements of the HAMP program include:
- You are struggling to make your mortgage payments due to financial hardship.
- You are delinquent or in danger of falling behind on your mortgage.
- You obtained your mortgage on or before January 1, 2009.
- Your property has not been condemned.
- You owe up to $729,750 on your primary residence or one-to-four unit rental property (loan limits are higher for two- to four-unit properties).
Note: the 242-page Making Home Affordable Guide for Servicers is available on hmpadmin.com, but as a homeowner, this doesn't provide much value.
If you apply for a HAMP loan without the help of a foreclosure attorney and are denieda loan modification, you will have to wait an entire year before re-applying. Only a foreclosure attorney can help you decide if you meet the qualifications for a HAMP loan and present your paperwork to the bank in a way that makes sense and is affordable. The bank will not approve a loan modification they think you can't afford. The first thing anyone should do when thinking of applying for a HAMP loan modification is to determine your monthly income versus your monthly expenses also known as your debt-to-income ratio as these will be some of the first things the bank will ask for when applying for the Home Affordable Modification Program. Use our financial worksheet to help find these numbers.
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