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Home Affordable Modification Frequently Asked Questions
1. Can I get a mortgage modification through the Home Affordable Modification Program (HAMP) if my loan is not owned or guaranteed by Fannie Mae or Freddie Mac? Yes. HAMP helps homeowners who are struggling to keep their loans current or who are already behind on their mortgage payments. By providing mortgage loan servicers with financial incentives to modify existing first lien mortgages, the Treasury hopes to help homeowners avoid foreclosure regardless of who owns or guarantees the mortgage.
2. How do I know if I am eligible for a modification under the Home Affordable Modification Program (HAMP)? To apply for a modification under HAMP, you must:
Be the owner-occupant of a one- to four-unit home.
Have an unpaid principal balance that is equal to or less than:
1 Unit: $729,750
2 Units: $934,200
3 Units: $1,129,250
4 Units: $1,403,400
Have a first lien mortgage that was originated on or before January 1, 2009.
Have a monthly mortgage payment (including taxes, insurance, and home owners association dues) greater than 31% of your monthly gross (pre-tax) income.
Have a mortgage payment that is not affordable due to a financial hardship that can be documented.
If you answered YES to all of these questions, you may be eligible for a modification under HAMP. Only your servicer will be able to tell you if you qualify.
3. What if I am facing foreclosure? Participating servicers may not refer a loan for foreclosure sale or proceed with a foreclosure sale on an eligible loan until the homeowner has been evaluated for HAMP and, if eligible, a trial modification offer has been made. Participating servicers must use reasonable efforts to contact homeowners facing foreclosure to determine their eligibility, including in-person contacts at the servicer’s discretion. Foreclosure sales may not be conducted while the loan is being considered for a modification or during the trial period. Additionally, once a homeowner has entered into a trial period plan by submitting the first trial period payment, the servicer may not take the first legal action to initiate a new foreclosure.
4. I am unemployed. Can I still get a mortgage modification? If you are unemployed, ask your servicer immediately for consideration through the Home Affordable Unemployment Program (UP). (See “Home Affordable Unemployment Program (UP)”) for eligibility criteria and for more information.
If you are currently in a HAMP trial period and just lost your job, you may request to be considered for UP as long as you entered the trial period plan before missing three full consecutive mortgage payments.
If you are unemployed and were previously determined ineligible for a HAMP modification, you may be eligible for UP.
If you are currently in a permanent HAMP modification and just lost your job, you will not be eligible for UP. You may still be eligible for other foreclosure alternatives, including the Home Affordable Foreclosure Alternatives (HAFA). Please contact your servicer right away for more information. (See “Home Affordable Foreclosure Alternatives Program (HAFA)”) While you are being evaluated for UP, servicers who have signed a HAMP Servicer Participation Agreement (SPA) are not permitted to refer you to foreclosure or conduct a foreclosure sale. Visit www.MakingHomeAffordable.com/contact_servicer.html to find out if your servicer is a program participant.
5. Do I need to be behind on my mortgage payments to be eligible for a modification under HAMP? No. Responsible homeowners who are struggling to remain current on their mortgage payments are eligible if they reasonably believe they are very likely to default on their mortgage soon (often referred to by loan servicers as "imminent default"). This might be because a homeowner has had (or will have) a significant increase in the mortgage payment (due to a payment adjustment or rate adjustment upwards); unemployment or some other significant reduction in income; or some other financial hardship that will make the mortgage unaffordable. If you are facing a similar situation, contact your servicer. You will be required to document your income and expenses and provide evidence of the hardship or change in your circumstances
6. I have a junior lien mortgage. Am I still eligible for HAMP? Yes, the first lien mortgage is eligible for a modification under HAMP. (See “Second Lien Modification Program (2MP)” for help with your 2nd lien.)
7. How do I know if my servicer is participating in HAMP? Are all servicers required to participate? Participation in HAMP is mandatory for servicers of loans owned or guaranteed by Fannie Mae or Freddie Mac (Government Sponsored Enterprises or GSEs). Participation in HAMP is voluntary for servicers of non-GSE loans. However, substantial incentives are available to servicers and investors who complete modifications under HAMP, and most major servicers already have committed to the Program. A current list of participating servicers is available at www.MakingHomeAffordable.gov/contact_servicer.html. Servicers not currently listed have until December 31, 2009 to opt into the Program.
Servicers of non-GSE loans sign a contract with Fannie Mae, as Treasury's financial agent, through which they agree to review every potentially eligible homeowner who asks to be considered for the Making Home Affordable Program. To ensure that a homeowner currently at risk of foreclosure has the opportunity to apply for a modification under HAMP, participating servicers may not proceed with a foreclosure sale until the homeowner has been evaluated for a HAMP modification and, if eligible, a trial modification offer has been made.
8. Why does my loan servicer have to ask the lender or investor if they can do a loan modification through HAMP? If the organization that services your loan does not own it, your servicer may need to get permission from the owner or investor before they can change any of the terms of your loan. Generally, there is a contract between the servicer and the investor that states what kind of actions the servicer is allowed to take. Most of these contracts, usually called servicing agreements or pooling and servicing agreements (PSAs), give the servicer flexibility to make modification decisions as long as the modification provides a better financial outcome for the lender or investor than not modifying the loan.
9. What will my servicer do to determine if I qualify for HAMP?
Determine whether your loan meets the minimum eligibility criteria (i.e., owner- occupied; originated on or before January 1, 2009; unpaid principal balance equal to or less the loan limit for the number of units involved, mortgage payment greater than 31% of gross income; and financial hardship).
If your loan meets the minimum eligibility criteria, the servicer will ask about current income, assets and expenses, as well as any specific hardship circumstances to determine if you are unable to make your mortgage payment. Your servicer may initially accept verbal income and expense information; however, you will need to provide verifying documentation before a final modification is approved.
Determine if your monthly first lien mortgage payment is greater than 31% of your gross or pre-tax monthly income.
Apply a Net Present Value (NPV) test to determine whether the value of the loan to the investor will be greater if the loan is modified (factoring in the government's incentive payments). If the modified loan is not of greater value, the investor and servicer may still modify the loan. However, modification in such cases is not required. Please note: Your servicer may re-run the NPV test before the modification becomes official if they receive new information that could affect your NPV score.
If the modified loan is of greater value, the servicer must offer you a modification under HAMP, and, if you accept the offer, will put you on a trial modification (typically three months) at the new payment level.
If you successfully make all of the required trial payments during the trial period and the income and expense information you provided is determined to be accurate, your servicer will execute an official modification agreement.
You will be required to sign the modification agreement and other documents and attest that all of the information you provided to your servicer was true and accurate. Misrepresenting any information required for the Home Affordable Modification is a violation of Federal law and has serious legal consequences.
10. Is the interest rate subject to change during the term of the HAMP modification? If the modified rate is below the market rate as determined from the Freddie Mac Primary Mortgage Market Survey rate on the date the modification agreement is prepared, the modified rate will be fixed for a minimum of five years as specified in your modification agreement. Beginning in year six, the rate may increase no more than one percentage point per year until it reaches the market rate at the time the modification agreement is prepared. Your rate can never be higher than the market rate as indicated in your modification agreement. If the modified rate is at or above the market rate at the time the modification agreement is prepared, the modified rate is fixed for the life of the loan
11. Will a modification under HAMP include property taxes and homeowners insurance? Yes. All loans modified under HAMP must include an escrow account for payment of future property taxes and hazard insurance, unless prohibited by state law. If your existing loan does not include an escrow account, one will be established. A new escrow account may require collection of a sufficient reserve to pay the taxes and insurance on or before they are next due. The reserve amount cannot be added to the modified loan amount. The servicer may give you the option of paying the reserve amount at the time the loan is modified or the option of spreading the amount over a period of 60 months and including it in the monthly escrow payment.
12. If I don’t currently have an escrow account on my mortgage, am I still eligible for a modification under HAMP? Yes, you are still eligible to apply for a modification under HAMP. Should you qualify for a modification and make all trial payments on time, your modification agreement with your servicer will require the servicer to set aside a portion of your new monthly payment in an escrow account for payment of your property taxes and insurance premiums.
13. If my mortgage qualifies for a modification under HAMP, will my escrow account payment change? It might. Your escrow payment will adjust if your taxes and insurance premiums change, so the amount of your monthly payment that the servicer must place in escrow will also adjust as permitted by law.
14. What will the servicer do through HAMP to get my new modified payment down to 31% of my gross income?
Lower the interest rate. Treasury is providing incentives to your servicer to write the interest down to as low as 2%, if necessary to get to a payment that you can afford. Each homeowner's interest rate will only be reduced to a point sufficient to get the modified payment to equal 31% of the homeowner's gross monthly income. Not all homeowners will need a rate reduction to 2% in order to achieve a monthly mortgage payment that is affordable.
Extend the term. If a 2% interest rate does not result in a payment that is affordable (no more than 31% of your gross monthly income), your servicer will extend your payment term. At the servicer's option, the term of the loan could be extended up to 40 years.
Forbear (defer) principal. If your payment is still not low enough, your servicer may defer a portion of the principal amount you owe until the maturity of the loan. This is called a principal forbearance. With a forbearance, you will still owe the principal; but repayment is deferred until a later date.
A portion of the principal could be also be forgiven. This is optional on the part of the servicer. There is no requirement for principal reduction or forgiveness, and there is no guarantee that your servicer will offer principal reduction or forgiveness.
15. I owe more than my house is worth. Will a modification under HAMP reduce what I owe? The primary objective of the HAMP is to help homeowners avoid foreclosure by modifying troubled loans to achieve a payment the homeowner can afford. Servicers may, but are not required to, offer principal reductions. It is more likely that your servicer will use interest rate reductions and term extensions in order to make your payment more affordable.
16. What is a HAMP trial period? The trial period is typically a three month period to see if the new payment plan will work for you, while providing you immediate relief and preventing any possible foreclosure sales from occurring. You should remember that during the trial, the terms and conditions of your original loan remain unchanged and only after you make all of your trial payments on time and send in all required documentation can your loan be officially modified.
17. Could my payment change in or after the HAMP trial period? Your payment will be based on 31% of your verified income. Your monthly payment could increase if property taxes, homeowner’s insurance, or homeowner’s association fees increase after the trial period.
18. How will the HAMP modification affect my credit? Accepting a loan modification can affect your credit score, but the actual effect will depend on a variety of factors. For more information about your credit score and how to improve it, visit www.ftc.gov/bcp/edu/pubs/consumer/credit/cre24.shtm.
Each month, servicers must describe to the credit reporting agencies the exact status of each mortgage. If you are current with your mortgage payments prior to the trial period and you make each trial period payment on time, your servicer must report you as current and also identify the loan as “modified under federal government plan.”
If you are delinquent (at least 30 days past the due date) prior to the trial period and the reduced payments do not bring the account current, your servicer must report the level of delinquency and also identify the loan as “modified under federal government plan.”
19. How will I know if my loan can be modified though HAMP? Once your servicer confirms that you are eligible and you make all of your trial period payments on time, you will receive a modification agreement detailing the terms of the modified loan. Any difference between the amount of the trial period payments and your regular mortgage payment will be added to the balance of your loan along with any other past due amounts as permitted by your loan documents. While this will increase the total amount that you owe, it should not significantly change the amount of your modified mortgage payment as that is determined based on your total monthly gross income, not your loan balance.
20. Will the terms and conditions of the HAMP permanent modification remain fixed for the life of my loan? Once your loan is modified, your interest rate and monthly principal and interest payment will be fixed for the life of your mortgage unless your initial modified interest rate is below current market interest rates.
If the servicer lowered your mortgage interest rate to make your payments more affordable, your initial modified interest rate could be below current market interest rates. In that case, the initial interest rate will be fixed for five years, and the amount you pay each month for principal and interest will not change for those five years or 60 months.
After five years, your interest rate will increase by 1% per year until it reaches the cap, which would equal the market interest rate being charged by mortgage lenders on the day your official modification agreement was prepared (the Freddie Mac Primary Mortgage Market Survey Rate for 30-year, fixed-rate conforming mortgages).
21. Could I end up with a balloon payment through HAMP? Yes. If your servicer determines that a principal forbearance is required to get your monthly mortgage payment to an affordable level, the principal forbearance amount, say for example this was $20,000, would be subtracted from the amount used to calculate your monthly mortgage payment, but you would still owe the money. You would have a $20,000 balloon payment that accrues no interest and was not due until you pay off your loan, refinance or sell your house.
22. What happens if I am unable to make payments during the HAMP trial period? Homeowners who are unable to make the required payments by the end of the trial period are not eligible for a permanent modification under HAMP. However, you may be eligible for other foreclosure prevention options offered by your servicer.
23. How much will a HAMP modification cost me? Homeowners who qualify for a modification under HAMP will never be required to pay a modification fee or pay past-due late fees. If there are costs associated with the modification, such as payment of back taxes, your servicer will give you the option of adding them to the amount you owe on your mortgage or paying some or all of the expenses in advance. Paying these expenses in advance will reduce your new monthly payment and save interest costs over the life of your loan.
If you would like assistance from a HUD-approved housing counseling agency or are referred to a HUD-approved counselor as a condition of the modification, you will not be charged a counseling fee. Homeowners should beware of any organization that attempts to charge an upfront fee for housing counseling or modification of a delinquent loan, or any organization that claims to guarantee success.
24. Is housing counseling required for a modification under HAMP? Homeowners, especially delinquent homeowners, are strongly encouraged to contact a HUD-approved housing counselor to help them understand all of their options and to create a workable budget plan. These services are free. Housing counseling is required, however, for homeowners whose total monthly debts are equal to or greater than 55% of their gross monthly income.
When you apply for a modification under HAMP, your servicer will analyze all of your recurring monthly expenses, including car loans, credit cards, child support, and what you will pay toward your mortgage. If the sum of all of these recurring monthly expenses is equal to or more than 55% of your gross monthly income, you must agree to participate in housing counseling provided by a HUD-approved housing counselor as a condition of getting a modification under HAMP.
25. I heard the government is providing a financial incentive to homeowners through HAMP. Is that true? Yes. Homeowners who make timely payments on their modified loans will receive success incentives. For every month you make a payment on time, you will accrue an incentive that reduces the principal balance on your loan. If your loan ceases to be in good standing (three monthly payments are due and unpaid on the last day of the third month), no further success payments will be paid, including accrued but unpaid amounts. The incentive will be applied directly to your loan balance annually—$1,000 each year—and over five years the total principal reduction could add up to $5,000. This contribution by the Treasury is designed to help you build equity faster.
26. I do not live in the house that secures the mortgage I'd like to modify. Is this mortgage eligible for a modification under HAMP? No. If you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible to be modified under HAMP. If you used to live in the home but you moved out, the mortgage is not eligible. Only the first lien mortgage on your primary residence is eligible. The servicer will check to see if the dwelling is your primary residence. Misrepresenting your occupancy in order to qualify for this program is a violation of Federal law and may have serious legal consequences
27. I have a mortgage on a duplex. I live in one unit and rent the other unit. Will I still be eligible for HAMP? Yes. Mortgages on two, three and four-unit properties are eligible as long as you live in one unit as your primary residence.
28. Can FHA or VA loans be modified under HAMP? Are all loans eligible? Most conventional loans including prime, subprime and adjustable loans, loans owned by Fannie Mae, Freddie Mac and private investors, and most loans in mortgage backed securities are eligible for a modification under HAMP. In July 2009, FHA launched the FHA-Home Affordable Modification Program to provide assistance to borrowers to modify their mortgages to provide more affordable payments. FHA-insured first lien mortgage loans that are modified under FHA-HAMP are eligible for certain incentive payments under HAMP. The Administration is working with FHA and VA on a program that would provide for modifications consistent with the Making Home Affordable Program. Currently, loans insured or guaranteed by VA are being modified under other programs.
29. How do I apply for a modification under HAMP? If you meet the general eligibility criteria for a modification under HAMP, you should gather the financial documentation that your servicer will need to determine if you qualify (See “What information and forms will I need in order to be considered for HAMP?”). Once you have this information, you should contact your servicer and ask to be considered for a modification under HAMP. The servicer's phone number and email address is on your monthly mortgage bill or coupon book. Please be patient yet persistent. Your servicer may be handling a large volume of inquiries about the program and it may take some time before your servicer is able to process your application.
If you would like to speak to a housing counselor, call 888-995-HOPE (4673). HUD-approved housing counselors can help you evaluate your income and expenses and understand your options, and apply to your servicer for HAMP. This counseling is FREE.
If you have already missed one or more mortgage payments and have not yet spoken to your servicer, call your servicer immediately.
The MHA Request for Modification and Affidavit Form (RMA). This Form captures information on borrower income, expenses, subordinate liens on the property, and liquid assets. It includes a Hardship Affidavit, fraud notice, and information about the Trial Period Plan.
The Internal Revenue Service (IRS) Form 4506T-EZ (Short Form Request for Individual Tax Return Transcript). This form gives permission for your mortgage servicer to request a copy of the most recent tax return you have filed with the IRS. After you have completed the form, print two copies—one for your records and one to send to your mortgage servicer.
31. What proof of income will I be required to provide with my HAMP application? Be prepared to submit a copy of your two most recent pay stubs that show year-to-date earnings. If you are self-employed, you must provide your most recent quarterly or year-to-date profit/loss statement. Visit the “Request a Modification” section of MakingHomeAffordable.gov for more detailed information. If you cannot find the required documentation, or have questions about the paperwork required, please call 888-995 HOPE (4673) and ask for “MHA HELP.”
32. I’m self-employed. How do I get a copy of my most recent quarterly or year-to-date Profit and Loss Statement? Contact your CPA (Certified Public Accountant) or the licensed tax professional who assists you in completing your tax documentation.
33. What types of documentation would be considered reliable enough to validate “Other Earned Income” for HAMP? Other earned income (bonus, commission, fee, housing allowances, tips, overtime) must be documented by your employer in either your paystubs or other employment paperwork/contracts. Homeowners are encouraged to work with their employers to gather this information to describe the nature of the income and the continuity of the income.
34. How do I get evidence of benefit income (e.g., social security, disability, death benefits, pension, public assistance, adoption assistance)? You can provide a copy of benefit letters/statements, disability policy, or receipt of payments such as copies of two most recent bank statements showing electronic deposit of benefits. For additional information regarding social security, disability or death benefit income, contact Social Security directly toll-free at 1-800-772-1213 or visit their website at www.socialsecurity.gov. For all other benefits, you must contact the provider directly for additional information.
35. How do I get evidence of unemployment benefits? Evidence of unemployment income may currently be obtained through the Department of Labor UI benefit tool, which is available at www.ows.doleta.gov/unemploy/ben_entitle.asp. After the Home Affordable Unemployment Program (UP) becomes effective on July 1, 2010, unemployment benefits and severance pay will no longer be acceptable sources of income for HAMP consideration. (See “Home Affordable Unemployment Program (UP)” for more information about help for unemployed homeowners.)
36. My rental income was not reported on last year’s tax returns because the property was vacant. What documentation do I need to validate rental income? In such cases where a property has recently been rented, a signed Rental Agreement contract must be provided to show: the property address, date of contract, lessees name and address, rental amount and rental period. The contract must be signed by all parties (lessor, lessee, rental agents etc.)
37. How do I get a copy of my Divorce Decree, Separation Agreement or other legal written agreements filed with a court (e.g., alimony or child support)? Gather the information listed below and contact the Office of Vital Statistics in the state where your divorce occurred. The homepage of the state’s website will provide a link/information on how to contact the office of Vital Statistics. Generally, the documentation needed may include, but is not limited to, the following:
Date of your divorce
Full name of spouse
Your driver’s license number
Purpose for which record is needed
Your name and address, together with a self-addressed, stamped envelope
55. How long will modifications under HAMP be available? HAMP expires on December 31, 2012. Your trial modification must be in place by that date.
56. My loan is scheduled for foreclosure soon. What should I do? Contact your servicer immediately and ask to be considered for HAMP. Servicers participating in the HAMP program are not allowed to proceed with a foreclosure sale until you have been evaluated for a modification under HAMP, and, if eligible, offer you a trial modification. You may also contact a HUD-approved housing counselor for help by calling the Homeowner’s HOPETM Hotline at 888-995-HOPE (4673).
57. How do I get help with my second mortgage? The Second Lien Modification Program (2MP) is designed to work in tandem with the Home Affordable Modification Program (HAMP). Together, HAMP and 2MP create a comprehensive solution to help homeowners achieve greater affordability by lowering payments on both the 1st and 2nd liens.
58. What do I need to do to be considered for 2MP? Under 2MP, when a homeowner’s 1st lien is modified under HAMP and the servicer of the 2nd lien is a 2MP participant, that servicer must offer to modify or provide some level of extinguishment on the borrower’s second lien. The 2MP offer will be made in reliance on the financial information provided by the homeowner in conjunction with the HAMP modification and without additional evaluation by the second lien servicer.
59. Which servicers are participating in 2MP? At this time, Citi, Bank of America, Wells Fargo, and Chase are participating.
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