History of HAMP
Many factors contributed to the 2008 Foreclosure Crisis. The key factor, by far, was that lenders were offering unusually low but temporary interest rates in an effort to get more people into homes. But once those low interest rates increased and other issues arose , such as loss of income, several homeowners found that they owed more on their homes than they were worth and could no longer afford their payments. They were upside down on their mortgages without any sign of relief.
Lenders panicked with the historical influx of potential foreclosures on the horizon. They were simply ill-equipped to provide relief to the large amount of potential foreclosures, and focused on their collections and foreclosure processes, instead. This placed even more of a burden on homeowners – so the Home Affordable Modification Program was introduced.
What is the Home Affordable Modification Program?
First, it’s a voluntary program that needs to be applied for. The program application is also known as the “Request for Mortgage Assistance” or RMA. In response to the most recent foreclosure crisis, the Obama Administration sought to provide financially-struggling homeowners with a way to keep their homes. So, the program provides a way for homeowners to keep their homes and work with lenders to continue payments, but at a lesser amount, to deal with either loss of income or no income at all. The program was designed to modify mortgage conditions by extending homeowners’ loan terms, fixing or lowering their interest rates or providing a payment deferral. In some instances, deferments were made so that borrowers would not continue to get behind on their mortgage payments.
Second, homeowners must meet the current requirements and criteria in order to be eligible. You may be eligible for HAMP if you meet the following basic criteria:
- You are struggling to make your mortgage payments due to financial hardship.
- You are delinquent or in danger of falling behind on your mortgage.
- You obtained your mortgage on or before January 1, 2009.
- Your property has not been condemned.
- You owe up to $729,750 on your primary residence or one-to-four unit rental property (loan limits are higher for two- to four-unit properties).
There are other considerations for homeowners interested in applying for this program. For example, when they are calculating their mortgage payments, they should take into account all of their expenses. Proof of gross income is also necessary. In the instance of a self-employed homeowner, their adjusted gross income is used.
What are the Main Benefits of HAMP?
- HAMP achieves a more affordable payment by adjusting your interest rate, extending your term, and reducing or forbearing your principal.
- HAMP homeowners typically save about $500 per month.
- Through HAMP, you can get help with your primary residence or rental property.
- If you owe significantly more than your home is worth (>115 Loan-To-Value), you’re automatically evaluated for principal reduction.
- Just for making timely payments, you could earn up to $10,000, which would be used to reduce your principal balance.
Why HAMP is Ending and What it Means for You
The RMA was designed in 2009 as a temporary program to help homeowners in a time of a crisis, which, largely, no longer exists. This is evidenced by the decreasing number of new borrowers who have entered the program.
The program has helped an incredible 5 million homeowners avoid foreclosure through mortgage assistance programs. And the current timeframe still allows homeowners to take advantage of the program. If you are in need of mortgage modifications, now is the time because the HAMP program ends on December 31, 2016.
Find Out if You’re Eligible
At Vokshori Law Group, we have made it our mission to help homeowners like you to keep your home through loan modifications. If you’re struggling to keep up your payments, contact us TODAY for a free consultation.