With so many homeowners facing the possibility of foreclosure, it’s good to know about the Obama home affordable modification program, known as HAMP. HAMP offers modifications that can help property owners prevent foreclosure.
Pittsfield, MA -- (SBWIRE) -- 02/28/2013 -- Credit-yogi.com is familiar with HAMP and is happy to share what it knows, including:
- Defining Loan Modification
- HAMP Tier 1
- HAMP Tier 2
- Applying for HAMP Assistance
Explaining Mortgage Modification
In mortgage modification, an original mortgage is altered in order to lower the monthly payment. As part of the Obama making home affordable program, HAMP encourages lenders to reduce a person’s principal, interest rate, or to increase the amount of time he has to repay the mortgage loan. Banks and other financial institutions are given incentives to participate in the program.
The First Incarnation
The Obama home modification program was first developed in 2009. Its goal was to help over 4 million struggling homeowners avoid foreclosure. It actually succeeded in helping just over 2.5 million. This led to a second look at the eligibility requirements, some of which were having obtained the mortgage on or before January 1, 2009; residing on the property whose loan was to be modified; and having a debt-to-income ratio of not more than 31%. The requirements for what is called HAMP Tier 1 were too restrictive, so changes were made. They are discussed in the next section.
To Qualify for Obama Home Affordable Modification Program People can Send Request Here
The Next Generation
The updated Obama home affordable modification program requirements open the field of those who can qualify. If one was approved for HAMP help but defaulted during the three-month trial period, one may still be able to get a modification. In Tier 1, if this happened, that borrower was out of luck. Tier 2, as the adjusted program is called, allows for a lower debt-to-income ratio, too, as little as 25% of the monthly income. Rental properties can also be modified under Tier 2, whereas Tier 1 did not allow this.
HAMP Application Process
Applying for HAMP assistance is easy. Simply go to a participating lender and fill out the initial application. The majority of banks in the country are active participants in the Obama making home affordable program, as they receive incentives for doing so. After the application is filled out, the lender will ask for proof of financial hardship, at least 2 weeks of pay stubs, and documentation of the ability to afford the reduced payment.
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