government mortgage help

Obama Loan Modification

The Making Home Affordable Modification Program helps homeowners lower their monthly mortgage payments.

HAMP – Home Affordable Modification Program


The Obama loan modification program known as HAMP is helping millions of homeowners stop foreclosure and make home affordable

The Making Home Affordable Plan’s loan modification program now known as the Home Affordable Modification Program – HAMP is the Obama loan modification assistance program that was created to help homeowners in mortgage default obtain a lower mortgage payment and make home affordable through loan modification.

The Obama loan modification assistance program is intended for those homeowners who are at risk of foreclosure and have suffered a financial hardship. Homeowners in such a situation may be able to obtain a loan modification through this mortgage assistance program and stop foreclosure.

Program Overview

HAMP is the backbone of the Making Home Affordable Plan, and is by far the biggest over achiever of all the homeowner assistance programs that are available. It has helped over a million homeowners obtain the opportunity to lower their mortgage payment by $400 plus.

Proven Homeowner Assistance Track Record

Much of this success is attributed to Obama’s brilliant insight and strategy of creating a cash incentive for the mortgage lenders. He has allocated a 1,000.00 commission to the lender for each mortgage modified under the HAMP guidelines. This reward was just enough to win over the lending community.

Though the lender has some say over what the exact terms of a obama loan modification will look like, as a general rule of thumb if you obtain a loan modification through the Obama loan modification program your mortgage payments will be reduced to 31% of your gross income.

Almost 1.5 million homeowners have received help through this program alone (not counting those homeowners who have received help through the many other mortgage assistance opportunities offered through the Making Home Affordable Plan).

This mortgage payment reduction for the collective American homeowner adds up to big money, thus increasing free cash flow amongst the monthly budgets of middle class America. That kind of realized savings will allow many families to escape foreclosure and make home affordable for the long term.

HAMP has played a large roll in Obama’s broader efforts to stabilize the economy through a housing recovery. HAMP performance, in terms of mortgage assistance, has been successful by any comparative measure.

It is important that all homeowners understand that only the lender has the authority to approve a loan modification request. Though HAMP has helped modify many home loans, the ultimate “go ahead” and approval of each and every one of those modifications must come from the lender.

This is the lenders “God given right” and it is protected by the constitution of the United States of America.

Homeowner Qualifications and HAMP Eligibility

If your mortgage is no longer affordable due to a financial hardship then we strongly urge you not to lose hope. Get motivated and apply for the Obama loan modification program.

The Home Affordable Modification Program is becoming more and more accessible to homeowners with each passing day. However, the modification assistance program was not created for just anybody, nor is it intended to help every American homeowner reduce their monthly mortgage payment.

HAMP is for families in financial hardship only. Following this logic, there are some general qualifications you must meet in order to participate in this modification assistance program. We urge you to see if you meet the HAMP qualifications.

HAMP Qualifications

There are many qualifications governing eligibility for the Home Affordable Modification Program. Here we will focus only on the HAMP qualifications homeowners must meet in order to obtain modification assistance through this program.

Below we have listed the HAMP qualifications for homeowner assistance through the loan modification portion of the Making Home Affordable Plan.

Obama Loan Modification Qualifications

  • Financial Hardship is Present and Evident

This Government mortgage assistance program is for those homeowners who have suffered through a financial hardship of some kind. The hardship incurred must have been through no fault of the borrower. In other words what ever event or circumstance that has taken away the means or ability to pay the monthly mortgage payments must stem from unpreventable circumstance.

For example, you can not quit your job and claim financial hardship.

You must communicate this hardship to your lender.

The best way to communicate your financial hardship to your lender is by writing and submitting a hardship letter that outlines the exact nature and cause of your hardship.

This is an extremely important aspect of your ability and opportunity to lower your mortgage payment and make home affordable. This is why we suggest using a hardship letter template as guidance when you write your own unique hardship letter.

Also be sure to find, collect, and organize any and all proof or supporting evidence, that backs up your hardship claims. It is smart to be legally conscious of all pertaining activities through out this entire process. So keep your claim simple, concise, and consistent.

  • Borrower’s Primary Residence

The property must be the borrower’s “home” or primary residence.

This program is not for the rich, nor is it for investors. Assistance through the modification program is restricted to those homeowners whose mortgaged property is their primary residence.

You will not qualify for a loan modification if you own more then one home. If you have a vacation home in Aspen then you will not qualify.

If you own more then one home then you should probably sell one; thus reducing the amount you spend on housing or increasing your level of cash. If this still does not make home affordable, then by all means apply for a modification.

  • Property Restrictions

As previously mentioned this program is not for investors or land lords. As a measure to ensure that speculators are not able to obtain modification assistance the program qualifications mandate that only 1 – 4 unit homes are eligible for the Making Home Affordable Loan Modification assistance.

Why 3-4 unit properties are eligible is not yet clear to us. we suspect that there are individuals that own such a building and make a significant portion of their income from renting out the rest of the units. Perhaps there are others that have say a two unit property which serves as both a home and a office. Honestly we just are not sure.

  • Mortgage Principle Balance Restrictions

This program demands that homeowners have a mortgage principle balance of $730,000.00 dollars or less.

Your mortgage balance (1st mortgage) must be less then 728,000.00 dollars.

The reasoning for this is pretty simple. This rule is to ensure that the program is not utilized by the wealthy who simply need to downgrade their lifestyle a notch or two.

(pretty easy going if you ask us)

As long as you have a mortgage loan that was originated with a principle balance less the three quarters of a million dollars then you meet this qualification.

  • Your mortgage must have been originated prior to 2009

The modification program is for mortgages that existed prior to 2009. Program is available through this year 2016.

This is a qualification that was put in place in order to prevent homeowners who purchased a home recently from abusing the system.

  • Current Mortgage Payment Must Be Greater then 31% of your Gross Income

This qualification exists for a couple good reasons.

If your income is greater then 31% of your monthly mortgage payment then you should be able to make those monthly payments. It is true any budget with a housing payment of 28% – 33% of the household gross income is not going to leave very much breathing room if any, however, it is still affordable.
The program reduces the homeowners payment to 31% of the gross monthly income as a target. If you have that or less already then there is no reason to apply for this program. In fact you would most likely be better off not applying as your mortgage lender is going to be far less likely to extend any help and may even become more likely to increase there collection efforts if they target you as having the means to pay.

If this is you then you are either simply over spending, or have some other rare expense and this program was developed with that variable unaccounted for.

If you think that you are one of these rare homeowners who have fallen through a crack of the program guidelines then you may still be able to get assistance through the Hardest Hit Fund. We encourage you to check out the mortgage assistance opportunities that are funded through that program.

If after reviewing those suggested resources you feel that HAMP is something that may work for you then we hope you will reference our HAMP trial resource that focuses primarily on the trial portion of the HAMP modification process.

HAMP Trial Modification

Getting approved for a HAMP Trial Modification is a surprisingly simple process.

By obtaining a HAMP trial modification homeowners are able to realize immediate mortgage payment relief as well as the ability to obtain a permanent loan modification through Obama’s Making Home Affordable Plan.

If a homeowner successfully completes the trial modification they will be able to permanently reduce their mortgage payment to a level that will make home affordable for the long term.

How to Get a HAMP Trial Modification

The following is a list of steps that a homeowner needs to complete to obtain and complete a HAMP Trial Modification from Bank of America.

  • Prepare Your Hardship Story and Hardship Letter

You need to make sure that you communicate a consistent financial hardship claim to your lender. Many homeowners leave out detail fib or for what ever reason mix up the exact nature of their hardship when communicating with their lender. This can spell disaster because it ultimately gives the lender a way out if they so feel the need.

We suggest getting some scrap paper and jot down the events and dates that have cuased you financial hardship and more importantly have caused you default on your mortgage.

Make sure that your hardship is a HAMP approved hardship.

Be sure to gather what ever supporting materials you can to use as a proof of hardship.

Then once you have the hardship story and detail straight in your head it is time to sit down and write the actual hardship letter. We strongly urge you to reference a hardship letter template before and while writing your own unique hardship letter.

The HAMP application will actually provide a space for you to record your hardship. However you need to write a real professional hardship letter. If you have to hand write some summarized details on the application then so be it. Just make sure that you have a real professional looking hardship on record with your lender.

  • Prepare and Organize a Monthly Budget

After you have your hardship information together it is time to get your monthly finances together.

gather all your banking statements, receipts, pay stubs, and any other applicable document and go to work on some scrap paper. Once you have an accurate financial picture of what money is coming in on a monthly basis and what money is going out on monthly basis as well as the sources for both expenses and income then see if the figures meet the applicable HAMP Qualifications. If you need to reconsider your math do so.

Just make sure that you have it accurate, believable, and that you have evidence of some sort to back it up.

Finally go ahead and make a professional and organized monthly budget. HAMP Budget

  • Call Your Lender  

After you have your budget and hardship information together it is time to make contact.

Call your lender and explain to them that you are unable to make your monthly payments. They should ask you a few general questions about your hardship and your budget.You should be able to answer them like a skipping cd.

The agent should say something about making a reduced payment of 50% of your normal mortgage payment. They should also mention something about a package coming in the mail.

Do not send in any unusual amounts with out a written agreement. Please keep in mind that the person on the other line may or may not be lieing and or ignorant of what is going on with your account. If they tell you to send in a few payments to delay the foreclosure then say you need it in writing. if they say that there is no time or that they can’t then you can rest assured that there is no agreement of any sort.

  • Complete and Return Contract and Application

Within two weeks you should receive a package that either introduces the idea of half payments or just informs you that they are looking into the options and that you should be receiving another package soon.

Very soon after that initial package you should get a certified package that you have to sign for. This is your new trial modification agreement and HAMP modification application.

Read over it carefully. Sign the agreement, and fill out the application.

Make sure you provide all necessary proof of income.

Then locate and guard with your life the payment coupons. Send the payments and coupons as instructed via certified mail in the envelopes that they provide. DO NOT PAY LATE.

Do the same with the contract, application and proof of income.

Also make sure that you copy all contact information that the packages documents contain. Only use these outlets of communication for now on.

You may find that agents call and inform you that you are in default and they are gonna foreclose unless you send them some lump sum of money. They are lieing. You will get a response in the mail that information you of any offers and that informs you of your ultimate approval.

  • Payment Coupons – Make Your Payments

You will find that you have payment coupons with in your HAMP trial modification package. You must make all three payments with the coupons and you must send them in via the provided envelopes by the date specified for each payment. This is absolutely crucial.

  • Stay Organized and Reachable

Make sure you stay organized and are reachable in case your lender contacts you. If your lender contacts you stay skeptical. This is not common advice but regardless of what the media does not cover the fact is that the lenders collection agents have ruined more HAMP trial modifications then not. Period.

  • Await Approval

Await approval of the modification via snail mail.

It is great that you are researching mortgage solutions and thank you for using this finance blog.

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