Friday, July 15, 2011

Who May Qualify for a Government Mortgage Loan Modification?

Who May Qualify for a Government Mortgage Loan Modification?

I obtained my mortgage in 2008; am I eligible? If you obtained your mortgage loan on or before January 1, 2009, then you may be eligible for a loan modification under the Government’s Home Affordable Modification Program (“HAMP”).

I’m current on my payments, so I’m not eligible, right?  WRONG. Borrowers who are current on their mortgage payments can still be eligible for HAMP, as long as they and their loan meet the other criteria, including financial hardship.

Can I get a loan modification if I have no income at all? Probably not, since the goal is to reduce mortgage loan payments to an amount which allows the borrower to make the new payment amount now and into the future. (In other words, there would probably be a reluctance to reduce the loan payment, only to have the borrower not be able to even make the reduced payments.)

Does the ratio of my mortgage payments vs. my expenses matter? Yes, this is one of the key factors. To qualify under HAMP, a borrower’s mortgage payment(s) must make up more than 31% of the borrower’s monthly income.

I need to get a loan modification for a home I don’t currently live in; can I? HAMP was designed to modify mortgage loans for primary residences – the home in which the borrower primarily lives.

I’ve heard that I might have to take some sort of class to be eligible for government mortgage loan modification – is that true? Borrowers whose monthly total debt payment to income ratio is 55% or more are supposed to enter into a free credit counseling class to be eligible.

The bank has already started foreclosure proceedings against me; can I still qualify for a government loan modification?  Yes. Borrowers against whom foreclosure proceedings are pending can be eligible.

What if I am filing bankruptcy? Filing bankruptcy, in itself, does not render a borrower ineligible.

This is the second article in a July, 2011 series about the U.S. Government’s Home Affordable Modification Program (“HAMP”). The next article will discuss which loans may qualify for a HAMP loan modification. McGrath & Spielberger, PLLC provides professional foreclosure prevention negotiation and mortgage loan modification services.