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:
- Only first mortgages, which must have originated prior to January 1, 2009, apply
- The loan must either be delinquent or reasonably expected to default.
- The borrower must have suffered hardship (increase in expenses and/or decrease in income).
- The mortgage must be for the borrower’s primary residence.
- The mortgage amount for a one-unit residence must not exceed $729,750.
- 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.