Home Affordable Modification Program (HAMP)
HAMP – the government’s Home Affordable Modification Program, was created to offer assistance to home owners with loan modifications on their home loan debt. It was set up during the subprime mortgage crisis in the debt markets, started by the banks for reasons known only to themselves in 2007 – 2008.
The people targeted by HAMP was 7 to 8 million homeowners at risk of foreclosure. The aim was to lower their monthly mortgage payments. The program was created as collaboration with banks, credit unions, services, the VA, the FHA, the USDA and the FHFA, to set up standard loan modification guidelines that lenders must take into consideration when assessing a borrower for a possible loan modification.
If you are considering a loan modification bear in mind that the company modifying your loan must verify, that you are able to make your payments and will continue to be in future.
Be aware that not everyone qualifies for a mortgage modification. It is in your interest to remain in contact with your advisor. You will need to provide documents and fill out a lot of forms. You must be honest about your situation to ensure that you don’t face foreclosure again downthe line.
The HAMP process
Under the government guidelines your servicer will need to obtain the following from you to assess you for a HAMP modification:
An explanation from you of your financial hardship and why you cannot or may soon be unable to make your home loan payments. Acceptable hardships include:-
a. Reduced income or loss of income.
b. Change in financial circumstances.
c. Recent or future increase in your mortgage payment.
d. Unavoidable increases in other expenses.
e. A lack of the cash reserves needed to maintain mortgage payments while covering basic living expenses. (This does not include retirement accounts.)
f. Excessive monthly loan payments and credit card payments. If you have been using credit cards, or other credit to meet your mortgage payments.
g. Other reasons as detailed by the borrower.
The first thing you need to do is contact your “servicer,” i.e. the company you pay your mortgage to, who must collect the following information :-
1. The current monthly of your household income including all salary or wages, bonuses, tips, alimony, unemployment benefits, retirement benefits, or public assistance. You must know when your benefits are scheduled to expire. You must have evidence that unemployment benefits will continue for 9 months at least. Borrowers should also provide documentation of any other income, if applicable, including disability, social security, pension, death benefits, or public assistance and should be able to show the duration and frequency of such benefits. You must also provide the two latest bank statements showing receipt of such payments.
2. Your current employers two most recent pay stubs with year-to-date earnings.
3. IRS Form 4506T that has been signed and dated by each borrower.
4. Self-employed must show their most recent quarterly or year-to-date profit / loss statements.
5. In some cases, signed copies of your latest federal tax return.
6. Household expenses, which may include but are not limited to second mortgages, car payments, revolving debt, alimony / child support and homeowners’ association and / or condominium fees, if applicable.
7. Hazard and flood insurance premiums, if any.
8. Real estate taxes.
9. Household assets, such as checking and savings accounts, certificates of deposit, stocks and bonds.
If you are up to date or less than 60 days delinquent with your mortgage payments but neverthless believe you may be at risk of “imminent default” and wish to discuss a possible loan modification, you will be required to give a more thorough review of your household finances.
Bear in mind also that a HAMP modification is not the only loss mitigation tool available. If HAMP is not possible for you, ask your servicer about alternatives, such as postponing regular payments (known as forbearance), repayment plans, and other options and modifications.
Finally take care, even in this area there are still plenty of fraudsters around. See here for a list of companies
http://www.makinghomeaffordable.gov/get-assistance/contact-mortgage/Pages/default.aspx