While foreclosure rates have dropped somewhat in the recent past, there are still many homeowners out there living with the possibility they’ll lose their homes. What are these worried, stress-out folks to do? The following information will provide some insight about how HAMP loan modifications can help them stay in their houses.
Phoenix, AZ -- (SBWIRE) -- 10/30/2012 -- It is necessary to begin this article with clarification of what the acronym HAMP means. It stands for home affordable modification program, and is a government-sponsored plan to help people who are employed but struggling to keep their mortgage payments up by lowering them through interest reduction or a longer repayment term. The HAMP modification program has recently made some changes to its original structure and now allows people who have a solid payment history but have become unemployed to benefit from the plan. Originally, a homeowner had to be trying to modify a mortgage on their primary residence and have a debt-to-income ratio of greater than 31%. Now, one can be asking for a modification on a property one owns but does not live in, like an apartment building.
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The home affordable loan modification program lowers one’s mortgage payment, making it easier to keep up on. This can be done through the new loan service incentives. HAMP will now pay 18 cents to 63 cents for each dollar a lender deducts from the principal of a loan, increased from 6 cents to 21 cents per dollar. If a lender reduces the principal, it follows that the payment will decrease, enabling a homeowner to keep his property. Although Fannie May and Freddie Mac do not have principal reduction plans, this may change as the government offers them the same incentives offered to traditional lenders.
One can apply for HAMP modifications through one’s loan service, but be prepared to have all the paperwork necessary at the ready. One must be able to show pay stubs for the past several months, prove that a financial difficulty has arisen, and be able to show that the property had not been condemned. One must have obtained the original mortgage loan before Jan. 1, 2009 and must owe a specific amount of money on one’s single residence home or single unit to be rented out. One cannot have been convicted of a felony in the past 10 years, also. Understand that once an application for a HAMP has been approved, it has only been approved for a three month trial period, during which one must make payments in full and on time.
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