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Home Affordable Modification Program | HAMP 2.

The federal government has changed and enhanced the Home Affordable Modification Program. The revisions, which are commonly referred to as HAMP 2, will now provide a larger number of homeowners the opportunity to apply for and receive loan modifications. In addition, any type of assistance provided has also been improved, including lowering an individual’s monthly mortgage payments to a more affordable level.

The program tries to provide as many homeowners as possible with assistance. This can include lower monthly payments, reduction in their interest rates, extension of the term of the home mortgage, and maybe even a principal reduction. The revised HAMP tier 2 loan modification guidelines will also take into consideration more types of debts when determining who can apply for help. Another key benefit is the program will lower a borrowers monthly mortgage payments to as little as 25% of their total income. As per government HAMP 2 rules and regulations that were put into place, home loan modifications granted must now be able to reduce the borrower’s monthly mortgage payments by a minimum of 10%. This will go a long way towards making someone’s mortgage more affordable.

Principal reductions may even be provided. Under the new government criteria and guidelines, additional encouragement and enhancements have been provided to banks and lenders to encourage them to participate in a reduction of a homeowner’s principal. This option is usually available for borrowers who are currently underwater on their mortgages, and a reduction in principal has been shown to be one of the most effective types of assistance programs.

If you signed up for the original Home Affordable Modification Program and defaulted on it, or struggled to keep up, then you can still apply for the revised and enhanced HAMP tier 2 program. So this will also help ensure the greatest number of potential borrowers can benefit from the government program.

Terms of the HAMP 2 Home Affordable Modification Program

The main goal is to lower your monthly mortgage payments in order to make the property more affordable for both the short and long-term. Some of the qualifications may include, but are not limited to, the following.

It is currently available to qualified homeowners over the next couple of years, however the federal government may well decide to extend the dates or further revise it.





Improved Debt-To-Income Limits have been put into place. The new rules and regulations allow borrowers the ability to reduce their monthly payments if they have a DTI ratio of as low as 25%. What is considered as part of this equation has also changed and been improved. For example, as part of HAMP 2, what is now taken into consideration includes expenses such as second mortgages, medical bills, credit card debts, etc. This was not previously done in the past, and is a revision.

Landlords with rental properties may now even be able to qualify. The federal government program can now help landlords who have rented properties but are struggling to pay their monthly bills and home loans. Part of the reason for this is so that the tenant is not evicted because a landlord falls behind.

As indicated above, families can apply for repeat modifications. In other words, those homeowners who want delinquent on their trial or permanent loan modification plans in the past can decide to re-apply for the Tier 2 program.

Homeowners that are not currently residing in but who are thinking of re-occupying their homes after getting displaced can qualify for help if they have occupied those homes previously.

The mortgage must have been acquired on or before January 1, 2009, and the maximum amount owed needs to be less than $729,750 on your primary residence or single unit rental property. As indicated, multiple rental properties can also be considered, and the balance on a loan can increase to as much as $1.4 million, depending on the number of rental properties.

The program is for people who are faced with a financial hardship and who are either in danger of falling behind on their mortgage payments or who are currently delinquent. Proof of this needs to be provided, and applicants will still need to have sufficient, documented income to support a modified payment.

Tens of thousands of homeowners all across the nation have benefited from government assistance, modifications, and support from Home Affordable Modification Program 2. At the end of the day, the goal is to make a mortgage more affordable, and prevent foreclosures. If you are struggling with paying your current home loan, or if you are a homeowner who qualifies based on the criteria above, then you may be able to qualify for a loan modification. You can call your bank or lender, a HUD certified housing counselor, or call the federal government hotline at 888-995-4673 for more information or to apply.




By Jon McNamara

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