This week the administration announced that its program that provides the framework for mortgage services to provide modifications to distressed homeowners will be extended for an additional year and will now be available through December 31, 2013.
Additionally, the administration will modify the framework of the Making Home Affordable program to offer assistance to an increased target population of homeowners. To accomplish this goal, the Home Affordability Modification Program (HAMP) will shift its sole focus on front-end debt-to-income ratio, or the comparison of income to a homeowner's mortgages, taxes and insurance, to also evaluating back-end debt-to-income ratios, or the comparison of income to a homeowner's total debt, including non-real estate related debt. Its interesting that it took the administration so long to shift to this focus because back-end debt-to-income has traditionally been the primary focus of lenders when making a loan. Still further, the program will be extended to income-producing properties, with tenants, as well as vacant properties instead of being limited to owner occupied properties as it currently exists. Lastly, the administration has expanded its incentive offerings to services who offer principal reduction to underwater homeowners.
To read the administration's explanation of its new policies with respect to the Making Home Affordable Program, click here.