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Making Home Affordable Program: Help For Distressed Homeowners
August 17, 2010 · Written by Brock Dunda · Filed under Helpful Tips, Real Estate

The Obama Administration’s Making Home Affordable Program (HAMP) is a critical piece of the effort to bring relief to distressed homeowners and stabilize the housing market. What the program is attempting to do is to work with loan servicers to reduce a homeowners monthly mortgage payment. Homeowners that are struggling to make their mortgage payments on time, either due to an adjustable interest rate increasing or less income, can apply for HAMP. The program will reduce a homeowner’s monthly mortgage payment to 31 percent of their verified gross (pre-tax) income to make their payments more affordable.

Are You Eligible For HAMP?

You may be eligible for HAMP if you answer YES to all these questions.

Are you the owner-occupant of a one to four-unit home?
Do you have an unpaid 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

Have a first lien mortgage that was originated on or before January 1, 2009?
Have a monthly mortgage payment (including taxes, insurance, and home owners association dues) greater than 31% of your monthly gross (pre-tax) income?Have a mortgage payment that is not affordable due to a financial hardship that can be documented?

If You Qualify

Homeowners who qualify for HAMP must complete a trial period of three to four months to demonstrate that they will be able to make their reduced payments on time before their mortgage becomes permanently modified.

To create an affordable payment, your mortgage servicer applies a series of modification steps in the following order:

  1. Rate reduction to as low as two percent.

  2. Term extension up to 40 years.

  3. Principal forbearance (or deferral).

A portion of the principal can also be forgiven, although that is optional and is based on the discretion of the servicer.

If you think you qualify for HAMP, contact your servicer.

For more information and frequently asked questions, please see the Making Home Affordable government website.

August 17, 2010 · Filed under Helpful Tips, Real Estate

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