Home Affordable Modification Program

At the start of March 2009 President Obama announced a program that would help with home foreclosure prevention. The program is known as “Making Home Affordable” and a key component of this is “HAMP” (Home Affordable Modification Program).

The Home Affordable Modification Program helps homeowners who are defaulting, likely to default in the near future or who are in foreclosure by modifying their current loan. The loans that these homeowners have are modified so that they can make the payments as they have been made more affordable for them.

In fact this program has been designed by the Obama Administration in order to help as many 4 million homeowners who are struggling financially to help them with home foreclosure prevention. However, there are certain requirements that one must meet in order to be someone who is eligible for this type of program and below we take a look at what these are.

1. The homeowner is soemdon who has failed to meet their mortgage payments or is at imminent risk of actually defaulting on their mortgage. This may be as a result of your interest payments being increased, that your income has been reduced or you are suffering some other hardship. This can include where you are paying higher costs for treatment because of a medical problem.

2. The property which is at risk is the one that is considered to be the homeowner’s (borrowers) primary residence.

3. The mortgage originated on or before the 1st January 2009 and where the principle balance unpaid is no greater than $729,750 on the house.

4. You may be eligible for obtaining help through HAMP if you can clearly show that your mortgage payments each month are 31% more than your gross monthly income. When it comes to gross monthly income we mean what your are earning before tax has been deducted.

With this particular program as long as you are able to pay your mortgage at the new modified rate for three months then this will remain fixed for the next five years. However, if you should default at any time on these payments then you may find yourself back in the position you were before applying for assistance.

So what is it the lender does to help you with modifying the mortgage you have currently using this program to help make the payments more affordable?

1. First off they may look at reducing the level of interest that you are currently paying on your mortgage. In some cases the interest rate you may be required to pay in the future can be as little as 2%.

2. Another thing that the lender may consider doing in order to help make your mortgage payments more affordable and so help prevent home foreclosure is to extend the term of the loan. There are a few lenders working on home foreclosure prevention by extending the loan term to a period of 40 years rather than 25 so helping to lower the payments the borrower makes each month.

3. Finally when it comes to this program to help with home foreclosure prevention is that the lender may choose to defer (forbear) a portion of the main part of the loan until the rest has been paid off. Then once the rest has been paid off they may also opt to waive any interest on the portion that has been deferred.