The most popular Modification program out there today is the US Government's backed Home Affordable Mortgage Program, also known as "HAMP". The HAMP mod, if granted, usually provides the homeowners/borrowers with the most to favorable terms where composed to other Federal or State government backed or in-house Modifications offered by mortgage lenders. HAMP modifications requires homeowners to commit a minimum of 31% of their monthly gross income as and for their new monthly mortgage payment. The 31% minimum payment requirement includes not only principal interest but monthly property taxes and homeowners insurance as well under the terms of HAMP modification, a lender can reduce the interest rate to 2% the first five years of the modified mortgage and capitalize all mortgage arrears into the new modified mortgage. If the homeowner cannot afford the new monthly payment based on the standard 30 year amortization schedule of the lender can lower the principal and interest payment on the modification mortgage by using a 40 year amortization schedule.
Beginning with the sixth year of the HAMP the mortgage, the homeowner's interest rate increases the 3%, and thereafter will increase by 1% a year until it is capped at the best available mortgage rates in effect at the time the applicant's HAMP modifications granted.
In presenting homeowners pertinent financial information a professional should describe the financial and related hardships which causes borrowers to default on their original mortgage obligation, while also explaining what the borrowers have done to stabilize their financial situation, i.e. put themselves in a position to be able to catch up on their mortgage arrears and be able to pay and remain current on the terms of the proposed modified mortgage if granted. Along these lines it is important to provide the homeowners projected monthly income and expenses to reflect this ability.
Other significant factors, which will likely affect a lenders decision the as to whether or not to grant HAMP or any other type of modification is how much if any equity exists in the homeowners property. For obvious reasons the of the less the of equity there is existing in homeowners property the better, being that if lenders are forced to acquire the properties through the foreclosure process or by taking ownership of by way of a deed in lieu of foreclosure, the lender is certainty to have taken financial loss of tens if not hundreds of thousands the of dollars so when forced to sell the property.
Another significant factor underwriters will likely consider is the homeowners filing for bankruptcy protection at the same time or prior to the filing or applying for modified mortgage. underwriters are almost universally consider a homeowners filing for bankruptcy protection as a positive factor in determining whether or not to grant any HAMP or other mod app. by dealing with the previously unmanageable debts through bankruptcy, the view of the most underwriters is that the homeowner is now in a much better position to pay their mortgage remain current with their mortgage payments, particularly if the new payment is significantly less than the homeowners original payment.
See the blog in this website entitled mortgage loan monitor applications, the important benefits of retaining a professional such as Marc G. Alster, Esq. or other professional who deals with lenders submits mortgage mod applications on a regular basis.