Recapping the qualifications for the HOME AFFORDABLE MODIFICATION PROGRAM: HAMP

Recapping the qualifications for the HOME AFFORDABLE MODIFICATION PROGRAM: HAMP

We are nearing the end of 2010 and many of you have felt the past years hardship financially. The government's Home Affordable Modification Program will run its course till 2012. With the inception of the program it has saved thousands from losing their home and on average saves about $300 a month in reduction of mortgage payments.

Heading into the 2011 year we have heard news about the program getting tweaked so the application and process times are faster, better understood, and much more organized. We will have to wait to see what the government may change to the process of the HAMP program.

If you have not applied for assistance and are behind or current, below we recap on some of the basics of the program and what you will need to do to qualify.

Borrower eligibility is based on meeting specific criteria including:

1) Borrower is delinquent on their mortgage or faces imminent risk of default (current or ONLY 1 month behind.

2) Property is occupied as borrower's primary residence

3) Mortgage was originated on or before Jan. 1, 2009 and unpaid principal balance must be no greater than $729,750 for one-unit properties.

After determining a borrower's eligibility, a servicer will take a series of steps to adjust the monthly mortgage payment to 31% of a borrower's total gross monthly income:

First, reduce the interest rate to as low as 2% stay fixed for 5 years.

Next, if necessary, extend the loan term to 40 years,

Finally, if necessary, forbear (defer) a portion of the principal until the loan is paid off and waive interest on the deferred amount.

Note: Servicers may elect to forgive principal under HAMP on a stand-alone basis or before any loan modification step in order to achieve the target monthly mortgage payment.

The Home Affordable Modification Program includes incentives for borrowers, servicers and investors, for more information on what exactly the incentives are visit the Making Home Affordable website.

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