It was just announced that The Home Affordable Modification Program (HAMP), will be extended another two years, until December 31, 2015. This announcement came today from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development (HUD) and was determined in coordination with the Federal Housing Finance Agency (FHFA) to align with the Home Affordable Refinance Program (HARP) and the Streamlined Modification Initiative for homeowners with loans owned or guaranteed by Fannie Mae and Freddie Mac.
The modification programs were put into place to provide savings for borrowers by reducing interest rates, extending loan terms and in some instances, they have also reduced mortgage principals. The program was first launched in 2009 at the height of the financial crisis to try to help stimulate the housing market recovery by modifying the terms of a homeowner’s mortgage to reduce their monthly payment to prevent foreclosure.
The program was expanded last June 1, 2012 to homeowners who may be eligible for the HAMP to include: 1) homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner plans on renting it, 2) homeowners who previously didn’t qualify for HAMP because their debt-to-ratio income was 31% or lower, 3) homeowners who previously received a HAMP trial period plan, but defaulted in their trial periods, 4) homeowners who previously received a HAMP permanent modification but defaulted in their payments, therefore losing good standing. Any homeowner who may fall into the above named criteria may be eligible under this expanded program.
Under HAMP, there are many areas of modification such as the Principal Reduction Alternative (PRA) where, if your home is currently worth significantly less than you owe on it, your lender may reduce the amount owed. There is a Home Affordable Unemployment Program (UP) where your mortgage payments could be suspended for a period of 12 months, or payments reduced to 31% of your income. There’s also a Second Lien Modification Program (2MP) where, if your first mortgage was permanently modified under HAMP, and you have a second mortgage on the same property, you might be eligible for a modification or principal reduction on the second mortgage as well.
Under HAMP, there are protections for homeowners with requirements for mortgage servicers regarding clear and timely communications with homeowners and to ensure homeowners are evaluated for assistance before being referred to foreclosure.
Treasury Secretary Jacob J. Lew stated today “the housing market is gaining steam, but many homeowners are still struggling. Helping responsible homeowners avoid foreclosure is part of our wide-ranging efforts to strengthen the middle class, and Making Home Affordable offers homeowners some of the deepest and most dependable assistance available to prevent foreclosure. Extending the program for two years will benefit many additional families while maintaining clear standards and accountability for an important part of the mortgage industry.”
Keith A. Gantenbein, Jr. is a Colorado consumer advocate attorney, foreclosure defense and real estate attorney located in Denver and servicing all of Colorado. His foreclosure defense practice includes: foreclosure prevention, foreclosure assistance, loan modifications, short sales, and all other foreclosure defense legal assistance. He also handles bankruptcies, mortgage negotiations, lender liability, real estate,civil litigation, debt defense, debt harassment, contracts and landlord/tenant. If you think you will be facing debt collection, foreclosure, or are in the foreclosure process, or have had a wrongful foreclosure, contact Keith Gantenbein at (303) 618-2122 for a one-hour consultation where he will discuss your situation and go over all your options with you.