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Q+A: Federal Help for Homeowners

What is the “Home Affordable Modification Program”?

The “Home Affordable Modification Program” or HAMP is a federal program part of the Obama administration’s stimulus package that seeks to incentivize mortgage providers to reduce mortgage loans down to a monthly payment that borrowers can reasonably afford.

Will my monthly mortgage payment actually be reduced?

If your current mortgage bill is more than 31% of your monthly income, under HAMP mortgage providers are required to reduce the monthly payments to 31% of gross monthly income without going under.

Do I qualify?

There are several requirements for qualification:

  1. Only first mortgages, which must have originated prior to January 1, 2009, apply
  2. The loan must either be delinquent or reasonably expected to default.
  3. The borrower must have suffered hardship (increase in expenses and/or decrease in income).
  4. The mortgage must be for the borrower’s primary residence.
  5. The mortgage amount for a one-unit residence must not exceed $729,750.
  6. The borrower must consent to an escrow on real estate taxes and insurance.

What about second mortgages?

When the first mortgage is modified, a second mortgage will also be reviewed if it exists. The interest rate on your second mortgage will be reduced down to 1% for the first five years. Additionally, the term of the second mortgage will be increased to match the term of the first mortgage.

Where can I learn more?

You can visit http://hmpadmin.com for press releases and announcements or download the requisite forms here.

Source: Chicago Consumer Bankruptcy Conference Educational Materials and the Home Affordable Modification Program website.

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