Tuesday, March 26, 2013


Federal Home Affordable Modification Program (HAMP) Explained

The federal Home Affordable Modification Program (HAMP) was implemented to reduce the number of foreclosures, support the housing industry and keep mortgages more affordable for the millions of Americans living in homes that are worth less than what they owe. The idea behind this program is that if banks will work with their borrowers to lower the monthly payments and interest rates, homeownership will be more affordable in the short term as well as the long term and both the individual homeowner and the housing market as a whole will be more secure. This program works well for the banks too, because it allows them to give homeowners an opportunity to fortify their mortgages. Financial institutions do not want to foreclose on properties unless it’s absolutely necessary; it only leaves them with a flood of properties instead of repaid mortgages.

There are certain conditions that need to be met in order for you to qualify for HAMP. For starters, you must be trying to modify the loan on your primary residence. Banks are not interested in helping you avoid foreclosure on vacation homes or investment properties. Your primary residence should be the focus of your efforts to work with your lender through HAMP. Some exceptions can be made if you own a property that is currently being rented out, or you intend to rent out the residence. If that is the case, you may still qualify for a modification through HAMP.

You must have obtained your mortgage on or before January 1, 2009. Any loans made after that date are likely using reasonable terms and interest rates, so you can only use HAMP to modify a mortgage if it is an older loan. The amount you owe must not be higher than the limits currently imposed by the government. For a single family residence, you cannot owe more than $729,750 on your mortgage.

There must be some sort of financial hardship that is making it difficult for you to meet your mortgage obligations. This could be a health problem, unemployment, a divorce or some sudden and unexpected change to your financial standing. HAMP only applies to people who are currently delinquent in their mortgage payments, or in danger of becoming delinquent due to that financial hardship.

While financial hardships are expected, in order to qualify for HAMP, you must also be able to demonstrate you have sustainable income. The amount of money you earn must be able to cover the cost of your mortgage payments on a monthly basis. Finally, you must have an acceptable criminal record. You cannot take advantage of HAMP if you have been convicted of a felony theft, robbery, money laundering or larceny in the last 10 years.

Homeowners who meet the qualifications of HAMP should talk to their lenders and find out how to take advantage of this federal program. Modifying a mortgage to make it more affordable is a great way to keep your financial future secure and to ensure you will be able to retain your home as both a place to live and a reliable investment for the future.
This post was written for Jon Michael Probstein by Stephen K .Hachey. Stephen is an Orlando real estate lawyer specializing in loan modifications, short sales, foreclosure and much more. He is also the owner of his own practice, the Law Offices of Stephen Hachey, PA. This article is for general informational purposes only and does not establish an attorney-client relationship. Please contact a licensed attorney in your state of residence. For more information on our services, please visit our website at www.floridarealestatelawyer.org/.



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