FHA HAMP Loan Modification Requirements & Guidelines

Published: 07th September 2009
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Department of Housing and Urban Development Secretary Shaun Donovan proclaimed today the Federal Housing Administration has completed changes to its loan modifications initiative so that it will further tie in with President Obama's Home Affordable Modification Program (HAMP) under Making Home Affordable. It is in all likelihood that the new FHA mortgage modificationguidelines will be in place by August 15th.



How does this help you? Well, if you currently are responsible for a loan held by the Federal Housing Administration (FHA), you will be able to drastically lower your monthly loan payments, interest rate, and possibly complete a partial principal forbearance or balance reduction (a decrease in the amount you owe on your loan), provided you meet the new guidelines.



borrowers that have successfully realized a mortgage loan modification through Obama's Making Home Affordable Program have had miraculous results, some decreasing their mortgage rates to as low as 2% on 30 and 40 year permanent loans, saving thousands of dollarseach month on their home loan.



The Burst of the Housing Bubble is a very stimulating era for homeowners in FHA loans, as they now similarly can reap similar outcomes. Qualifying for the FHA -HAMP can be somewhat awkward, and there's a good deal of gobbledy-gook out there on how to qualify. We're going to resolve the gossip, and help you understandhow to get qualified, ModificationZoom style.



First we should cross the "eligibility" bridge - Your mortgage servicer needs to be FHA-Approved to modify under FHA-HAMP. The bulk of banks that offer FHA mortgage loan programs are approved. The superlative way to resolve whether or not your servicing bank can amend your mortgage lien under FHA-HAMP is to call and query if they take part in the initiative! If your "mortgagee" (lender) is eligible, your next step is to make sure that you are eligible!

Your current home mortgage must be an existing FHA-backed single family home loan, and the present mortgage must be behind, meaning that you are 1 payment past due more than 30 days, but less than 12 full loan payments delinquent.



Your abode must be a FHA insured single family home (1-4 units), home mortgages previously adjusted under HAMP do not qualify, you must have had the loan for 12 months, and here's a great piece of information: There is no net present value (NPV) check for eligibility!



(The NPV assessment is used to conclude whether it is agreeable for your mortgage holder to amend your lien. Under this initiative, it doesn't matter if it is financially optimal for your mortgage company to amend your mortgage or not! If you qualify, your servicing bank should change your home loan, in spite of the quantity of equity you have in the house!)



There is no maximum loan amount for home loans eligible for mortgage loan modification, and it have a bearing what your credit looks like! There is no appraisal required, and your FHA - HAMP modified mortgage lien needs to be at a lower interest rate and payment than what you already possess!



For supporting evidence, you will need to present the following:

1) Hardship Letter

2) Income Documentation - Paystubs & W-2s, or Profit & Loss Statements & Full Tax Returns if you are Self-Employed.

3) 3 Months Bank Statements

4) Financial Worksheet of Income & Expenses

5) Hardship Affidavit



So what is going to occur when you achieve a loans modifications through FHA - HAMP? First, you will be placed in a temporary mortgage modification payment plan, and after you make the first 3 payments under your new plan, FHA-HAMP can be fixed for the life of the loan.



Your home mortgage will be adapted to a 30 year fixed rate to a (proposed) front end DTI of 31%. You must confirm that your back end (proposed) DTI is below 55%.



What exactly does this mean? Your "front end" DTI can be calculated by dividing your mortgage loan expense by your gross income. Your "back end" DTI can be calculated by adding all of the monthly payments that show up on your credit report by your gross income - e.g. - credit cards, automobile loans, and other home mortgage payments.



Conversely, to calculate what your new payment will be, simply multiply your gross income by 31 percent!



Alright, I can appreciate that was tons of information, so we're going to encapsulate everything with a "To-Do List":



1) Confirm that you own an FHA loan, and that your Mortgagee (mortgage lender) is FHA - Approved.

2) Your home mortgage must be at least 1 payment late, but not more than 12 payments late.

3) Make sure your home is 1-4 units, that it is your primary and only residence, that you've had the loan for 1 year, and you haven't previously modified under HAMP.

4) Fill out the hardship affidavit, write a hardship letter, document your income, completed a financial worksheet, include bank statements and submit the package to your lien holding mortgage bank!

5) Get your home mortgage modified!



The remainder of the particulars out there on FHA - HAMP is relevant, but not necessarily stuff that has to be absorbed to get a loan modification through the government program. For example; your mortgage holder will influence how to get to the goal 31% payment by giving you a 30 yr or 40 yr fixed term and the calculated fixed rate, and may have to lower your principal to help you qualify for the payment you need to be financially stable. For more information, contact ModificationZoom toll free at (866) 760-9099.



ModificationZoom is not a Government Agency, but we do understand the ins and outs and loopholes of FHA - HAMP, and can help you.



Alright, now you're ready to rock and roll with the FHA Home Affordable Modification Program (HAMP).

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