Frequently Asked Questions

Frequently Asked Questions

Can I obtain a loan modification through (HAMP) if my loan is not owned or guaranteed by Fannie Mae or Freddie Mac?

Yes. HAMP assists borrowers struggling to make their mortgage payments in an effort to help them either keep their loans current or to help them avoid foreclosure. The Treasury Department is providing lenders with financial incentives to modify qualifying first lien mortgages for borrowers in an overall objective of keeping borrowers in their homes.

How can I know if I am eligible?

You can call our offices and one of our friendly representatives will ask you a few questions to see if you may be eligible for a loan modification.  Below are the questions they may ask.

 

 

 

How can I become eligible for a HAMP loan modification?

To apply for a modification under HAMP, you must:

  • You must have an outstanding principal balance that is equal to or less than:
    • 1 Unit: $729,750
    • 2 Units: $934,200
    • 3 Units: $1,129,250
    • 4 Units: $1,403,400
  • Your loan must have originated on or before January 1, 2009.
  • You must have a monthly mortgage payment (including taxes, hazard insurance, and home owners association dues, if applicable) greater than 31% of your monthly gross (pre-tax deductions) income.
  • You must have suffered a financial hardship that can be documented.

If you answered YES to all of these questions, you may be eligible for a modification under HAMP.

What if my home is going into foreclosure?

Participating lenders should forestall foreclosure proceedings until an eligible borrower has been reviewed for the HAMP modification and, if eligible a trial modification offer to the borrower should be made. Participating lenders should be making every effort to work with homeowners who are facing foreclosure. Under the guidelines of HAMP, the lender is forbidden to foreclose on the homeowner while the homeowner is either being considered for a loan modification or the homeowner is in the preliminary trial loan modification period. In addition, once a homeowner has entered into the preliminary trial loan modification period and has made the required first trial modification payment, the lender, under the guidelines, is prohibited from starting new foreclosure proceedings as long as the homeowner remains current on their mortgage payments.

I am currently unemployed - am I still eligible for a loan modification?

Yes, you may be eligible for the Home Affordable Unemployment Program (UP) that just became available August 1, 2010.

  • If you are already participating in a HAMP trial loan modification period and have recently lost your job, you may be able to qualify for the Home Affordable Unemployment Program.
  • If you are currently unemployed and were turned down for a HAMP modification in the past, you may now be eligible for the Home Affordable Unemployment Program.
  • If you are currently in a permanent HAMP modification and have recently lost your job, you will be ineligible for the Home Affordable Unemployment Program.
  • While you are being qualified for the Home Affordable Unemployment Program, participating lenders may be prohibited from foreclosing on your home.

Do I have to be delinquent on my mortgage to be able to apply for a loan modification?

No. If it appears that you will become delinquent in making your mortgage payments and are currently struggling to make your payments (known as an “imminent default”), then your lender will take your situation into consideration. The circumstances surrounding your financial situation will be reviewed such as any cause for a significant loss of income, a hardship that would cause a financial setback or any substantial increase in mortgage payments because of an interest rate hike or payment increase that is occurring or will occur.

How will my lender qualify me for a loan modification through HAMP?

  • First, there are minimum eligibility requirements that are described above.
  • There must be a hardship that is causing your financial situation to change.
  • An Income and expense sheet will be reviewed to determine your inability to pay the current mortgage payment and your ability to pay a lower modified mortgage payment.
  • Your monthly mortgage payment (first lien only-not including junior liens) must be more than 31% of your gross monthly income for all borrowers before tax or other deductions.
  • A Net Present Value (NPV) Test is conducted to determine if the lender will benefit financially in granting a loan modification versus foreclosing on the property. If the value is positive then the lender must offer you a trial period loan modification (usually three months to start).
  • If you meet all of the requirements during the trial period loan modification, your lender will grant a permanent loan modification for a specified period of time or for the life of the loan.

What are the techniques used by my lender to lower my payments?

  • The lender may lower your interest rate incrementally to as low as 2% until they arrive at a figure that reflects the required monthly mortgage payment equal to 31% of your gross monthly wages. The Treasury  Department is offering incentives to lenders to meet that figure. The lender is only required to lower your payment to 38% of your monthly gross wages and the Treasury Department is financially incentivizing lenders to make the difference between 38% and 31%, so it is a joint effort between your lender and the Treasury Department.
  • The lender may extend the term of the loan. If a 2% interest rate is not sufficient to lower your payments to the projected 31% of gross monthly income, then your lender will extend the term of your payments up to 40 years which would cause a decrease in your overall monthly mortgage payment.
  • If the payment needs to be reduced further to meet the 31% of gross monthly wages, the lender may defer a portion of your principal balance to be paid at a later date (principal forbearance) usually when the property is sold.
  • The lender could also do a principal reduction which is a forgiveness of a portion of your outstanding balance that would not have to be repaid. Usually this is reserved for properties in real estate markets that have seen an unusually high loss in value.

What if my house is worth less than what I owe. Can I get a principal reduction?

As mentioned earlier, the lender could grant a principal reduction but is not obligated to do so. Usually if a real estate market has been particularly devastated by unusually high property devaluations, then it may be considered.

What financial incentives are being offered through HAMP?

If you make your monthly mortgage payments on time each year an incentive of $1,000 will be used to pay down your existing loan balance up to 5 years or $5,000.

What types of documentation would be considered reliable enough to validate “Other Earned Income” for HAMP?

Other earned income (bonus, commission, fee, housing allowances, tips, overtime) must be documented by your employer in either your paystubs or other employment paperwork/contracts. Homeowners are encouraged to work with their employers to gather this information to describe the nature of the income and the continuity of the income.

What should I do if I have stopped making payments and I am receiving letters from my lender threatening to foreclosure?

You may be able to stop the foreclosure sale simply by applying for a loan modification. Under the guidelines, the lender is to stop foreclosure proceedings while your situation is being reviewed for a HAMP loan modification.

We at National Mortgage Help Center have solutions available to you if you take the first step in solving your challenge. Doing nothing is the worst option a homeowner can take. Our representatives are available to help you obtain a loan modification and avoid foreclosure.

Contact an Advocate today to see what we can do for you or Apply Now to see if you are eligible for a loan modification.