Forget Foreclosure Make Mortgage Affordable
By Michael Hughes November 29, 2009
There’s a new sheriff in town and their going to help you out. Government’s new Home Affordable Modification Program, known as HAMP.
The U.S. Treasury created the program as part of the Troubled Asset Relief Program, or TARP. It is intended to help struggling home owners work with their lenders to get those payments down to what is more reasonable.
“The U.S. Treasury has introduced a streamlined process to expedite more affordable monthly mortgages addressing current financial hardships,” said Meg Reilly, a spokeswoman from the Treasury Department. “We surpassed our goal sooner than anticipated with over one-half-million borrowers who already have trial modifications underway.”
While some lenders have been slow to start HAMP is proving to be quite a life saver to those in need who have now gone through the process.
“ More than 25,000 applicants are being processed each week through HAMP”, Reilly said. To qualify for HAMP, a home owner’s monthly mortgage, including principal, interest, taxes and insurance, must be greater than 31 percent of total gross monthly income.
“Once a mortgage modification is approved, it will reduce a monthly mortgage to 31 percent of monthly income for at least five years,” Reilly said.
There is no cost to have a mortgage modified in HAMP.
HAMP can reduce a homeowner’s payment by lowering the interest rate to as little as 2 percent, extending the repayment term to as long as 40 years.
The reduced interest rate will remain in place for five years. After that period, the interest rate can only go up to a capped current market rate based upon the day the modification is effective per Freddie Mac’s weekly market rate survey. Currently the maximum the rate could reach is approximately 5 percent.
“Our goal is to have delinquent customers or those who are current but know they are going to have trouble making their mortgage payments to receive timely financial assistance to lower their payments through a modification or some other means,” Goyda said. “We’ve hired and trained more than 5,800 additional employees this last year in our home-retention department to address the increased demand.”
Wells Fargo was among the lenders criticized early in the process for not modifying enough eligible mortgages.
The HAMP process generally consists of a homeowner contacting his or her mortgage provider. Home-retention specialists ask questions and request documentation to determine qualification.
Upon preliminary approval, a homeowner will be placed on a three-month trial with a lowered monthly mortgage payment while the documentation is processed and reviewed. The deadline to participate in HAMP is Dec. 31, 2012.
“We are making many of the HAMP forms available online and many can be signed and forwarded with an electronic signature to expedite the process,” Reilly said.
Once final approval is received after the trial period, the HAMP applicant will receive documentation in the mail outlining all details. Since this program is still in its infancy, a two-month trial period extension is possible if needed to provide all documentation. To avoid scams and people asking for a fee go to www.makinghomeaffordable.gov
Contact me today if you or anyone you know needs real estate help. e-Mail michael.hughes@sothebysrealty.com Direct 303-359-6627 Website:www.bolderrealestate.com
