What Is Mortgage Modification Program?
Anyone who has even a modicum of understanding about the current financial affairs knows the condition of countrys economy
. Almost all financial sectors have been hit badly by this economic crunch and mortgage industry is no exception. According to an independent analysis, there are estimated to be seven to eight million borrowers or home owners who are on the brink of foreclosure. To avert this impending situation, President Barak Obamas government in liaison with the treasury department has announced Home Affordable Modification Program or HAMP for short.
The program has been introduced as a voluntary service meaning financial institutions which deal in home mortgage have the choice of signing up voluntarily and offer this program to their existing borrowers or customers. Until now, over 110 key lenders such as banks, service credit unions etc have already signed up.
The program has certain predetermined criteria which need to be met by the borrower to qualify for benefiting from it; these eligibility rules also contain certain verification requirements that need to be fulfilled.
First step for a borrower to undertake for benefiting from this program is to ascertain whether the financial institution he or she has borrowed from has signed up for HAMP. The mortgage should have been initiated on or before January 1, 2009. The borrower can only apply for this program for current and permanent place of residence, meaning this program does not include mortgage modification for business place, summer home and investor owned properties.
Proof of occupancy is to be produced that shall be verified by borrower credit report analysis. The borrower has to divulge documents relating to gross monthly income and must also compose and put forth a mortgage modification hardship letter which is a detailed document describing the circumstances which borrower is facing that has led for him or her to apply for this program. HAMP or Home Affordable Modification Program is valid till December 31st, 2012 and allows modification of mortgage only once.
Homeowners whose mortgage payment equals to approximately 31% of their gross monthly income are eligible to reap the benefits of this program and the interest payment on their overall mortgage payment would be subsidized down to meager 2%.
HAMP also comprises of leniencies for the borrower in form of reducing or affixing the interest rates from floating to fix. The tenure, in which the mortgage is to be repaid or mortgage amortization, can also be extended up to four decades if necessary. The program also accommodates the alternative of waiving principal amount to a certain percentage but this option varies from case to case.
From the looks of it, the program seems to be a well thought out and meticulously made. It should provide some much needed assistance to homeowners who have lost all hope and were dejectedly looking forward to imminent foreclosure of their mortgaged properties. It is now up to the borrowers to take advantage of HAMP and save their mortgages before its too late.
by: Muhammad Suhail
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