Pittsfield, MA -- (SBWIRE) -- 12/13/2012 -- Shortly after President Obama took office for his first term, he recognized the country-wide need for financial help for homeowners. While some were at risk of or already defaulting on their mortgage payments, others were already looking at losing their houses to foreclosure. That is why the Obama administration developed the home affordable modification program, known as HAMP. The purpose of the program is to help struggling homeowners avoid foreclosure by modifying, or changing, the terms of their original mortgage loans.
The HAMP loan modification guidelines at that time, January 2009, were fairly straightforward and included the following: A homeowner had to provide proof of financial hardship and two or three pay stubs to indicate his ability to handle the modified payment; he had to reside on the property he was requesting the modification for; and his debt-to-income ratio had to be more than 31%. The idea at back then was to help those with a debt-to-income ratio higher than 31% to get it below that level, making the payments easier to meet.
As it turned out, the above requirements narrowed the field too much. Many troubled homeowners had a debt-to-income ratio of less than 31%, had rental properties they needed mortgage modification on, and did not live on the properties they needed help for. The Obama administration realized that these folks deserved help just as the others before them did, so the HAMP modification guidelines were adjusted to include this new batch of homeowners. In June 2011, a property owner could be approved for HAMP assistance even if his debt-income-ratio was lower than 31%. He could also get help for a second mortgage if necessary, and despite having been approved before for HAMP aid and defaulting during the three-month trial period, he could be given another chance at loan modification. Some of the requirements from the earlier plan remained the same, such as the assurance that the property for which a homeowner is requesting assistance is not condemned and the guarantee that the applicant had not been arrested for a felony in the past 10 years.
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