Loan Modification

HAMP Guideline Highlights – Obama’s HAMP Guidelines For Approval on Loan Modification Outlined

The Home Affordable Modification Plan (HAMP) is a loan modification plan pushed by the Obama administration as an answer to the housing loan meltdown last 2009.

It was designed to aid the estimated 8 million Americans who were at the risk of losing their homes purchased via loans. HAMP guidelines was conceptualized, streamlined and applied thru the collaborated efforts of the Federal Housing Aid, Veterans Association, USDA, banks, lenders, credit unions, etc.

HAMP Guidelines: Scope of loan Modification

This article will discuss the HAMP guidelines as well as the requirements in order to avail of the HAMP. Please note that while the HAMP guidelines were designed to aid homeowners in distress, nowadays it is considered the industry standard guideline for home modification application. HAMP loan modification entails the lender providing one, some or all of the following:

• Interest reduction (reduction rate floor is 2%),

• Amortization extension (maximum of 40 years)

• Forbearing the principal

• Reduction of the principal

• Hope for Homeowners refinancing (as an alternative)

HAMP Guidelines: Rationale

HAMP Guidelines for application are designed to gauge financial capacity, as well as the type of home loan that was taken. This is necessary to make sure that only those who are actually willing and able to save their homes are considered.

Here are the more important points of the HAMP guidelines:

1. The modification must be for the principal residence

2. The loan must have originated on or before January 1, 2009

3. It must be the first lien, owner occupied and the unpaid principal balance is not higher than $729,750 (higher amounts are allowed if owner occupied and consists of 2 to 4 units)

4. All borrowers (principal and co borrower) must show full income documentation or at least a signed IRS 4506-T, proof of income (paystub, bank statements, and tax returns).

5. All borrowers must write and sign a hardship letter, stating the reason for the hardship, their ability, willingness and means by which to pay the loan.

6. Priority is given to those who have never missed a single payment with the servicer

HAMP Guidelines: Things to Know

It is very important to realize that as a general rule you only need to fall within the above mentioned HAMP guidelines and can provide all the above-mentioned documents to require the servicer to consider you for a HAMP or a loan modification.

Also take note, based on HAMP guidelines, for those who qualify, the lenders are only required to reduce the amortization to no more than 31% of your monthly gross income.

Last but not the least the District Attorney’s office is up to its neck in foreclosure rescue scams that offer some sort of loan modification aid. Oftentimes they will disguise themselves as government agencies, experts in the field who have a secret techniques, HAMP or HOPE personnel.

Therefore homeowners must take special care not to be duped by these individuals. Ask your lender for the HAMP guidelines, go to the FHA website, read the HAMP guidelines, do your research and only deal with refutable individuals.

Read also: Loan Modification

Page: Hamp Guidelines