If you are a struggling homeowner and have defaulted or are
at risk of default on your mortgage loan, an application for the Home
Affordable Modification Program (HAMP) may be your best chance of obtaining
an affordable loan modification.
Previously set to expire in December 2015, the Home
Affordable Modification Program has recently been extended
by the Obama Administration through December 2016. This federal loan
modification program has been successful in providing reductions in monthly
mortgage payments for millions of homeowners nationwide. Unlike Lender-based
modifications, this program has two tiers, one of which requires a
debt-to-income of 31% in its modification terms and another which requires a 10%
reduction in monthly mortgage payments. If a homeowner is not eligible for Tier
1, then he or she will be reviewed for Tier 2, thus giving homeowners two
chances to obtain lower, affordable monthly mortgage payments in their
application for HAMP.
Oftentimes, Lenders that have their own loan modifications
will only add the arrears to the principal balance without changing any other
terms of the loan, thus creating monthly mortgage payments that are, in fact,
higher than the original payments. Struggling homeowners often cannot accept a
modification with higher payments because their hardships are long term or even
permanent.
HAMP,
however, requires affordable mortgage payments as part of its program and now will
continue through the remaining term of the Obama Administration.