Hello to all,

I keep on getting questions regarding the H.A.M.P. and mostly regarding who and how to qualify. Again, in order to qualify the borrower must:

1)      Have enough income to pay the modified loan (NO JOB = NO INCOME = NO MODIFICATION!) and this goal can be achieved by;

         Reducing the interest rate to as low as 2.000%.

         Extending the term of the loan to 40 years.

         Forbearing (deferring) a portion of the principal as a balloon payment and waive the interest on the deferred amount. The balloon payment is due with the final payment of the loan. Try to contact your sevicer, (here how to Search for Your Mortgage Servicer) for detailed requirements.

2)      Have a documentable hardship (NO HARDSHIP = NO MODIFICATION!)  The borrower must fully document income, including a signed IRS from 4506-T, two most recent pay stubs, most recent tax return, and a signed affidavit of financial hardship. 

         Loss of income

         Interest rate increases (A.R.M. Loan – Pay Option A.R.M.)

         Loss of Spouse etc. etc.

3)      The borrower MUST BE delinquent on the mortgage or at risk of imminent default. (Only if the owner of the loan has issued prior approval).

4)      The borrower(s) existing mortgage payment (including mortgage principal, interest, taxes and insurance) MUST BE greater than 31% of gross monthly income. Here below is an example of how HAMP defines mortgage payment relative to gross monthly income:

         $1,500 mortgage payment, with gross income of $5,000 per month. The borrower does not meet the housing expense to income ratio requirement of HAMP for a loan modification. (1,500:5.000=30%)

         $ 2,500 mortgage payment, with gross income of $5,000 per month. The        borrower does meet the housing expense to income ratio requirement of HAMP for a loan modification. (2,500:5.000=50%)

5)      The subject property MUST BE occupied as the borrower’s primary residence. This will be verified through the borrower's credit report and other documentation.

      Investor-owned properties are not eligible for HAMP.

6)    The mortgage MUST BE originated on or before Jan. 1, 2009 and he unpaid principal balance  MUST BE no greater than $729,750 for

one-unit properties.

In addition, forget about getting a Principal Reduction thru the Principal Reduction Alternative (P.R.A.) program, since, in addition to all the above requirements, an investor that allows for this principal reduction modification MUST own the loan. Good luck to find one!

Follow this link for a full page of Q&E and if you need additional clarifications, please feel free to directly contact me, or post to this blog.