The federal government has made some changes to the Home Affordable Modification Program (HAMP) that will be implemented in the next few months. The changes include giving the loan servicers greater incentive to lower the principal of loans, temporary assistance to unemployed homeowners, making the program available to more homeowners, and helping individuals that cannot afford their homes get into one that is more affordable.
If a homeowner becomes unemployed, their mortgage payments will be temporarily reduced to a more affordable level for between three and six months. If a homeowner does not get a job during this reduction period or gets a job with a lower income, the homeowner will be considered for a permanent modification or enter into the alternatives to foreclosure program.
The most significant change was made to the process of considering homeowners for write downs of their principal. There is now more of an incentive for the servicer to reduce the principal of a mortgage. Loan servicers are now required in each foreclosure to consider another modification idea that will pay the servicers and their investors a percentage of every dollar of principal that they write down on a loan.
Other changes to the program include considering those that are actively in bankruptcy for HAMP. HAMP has been expanded to home owners that have FHA loans. Also, there are now increased incentives for the lenders to consider homeowners for permanent modifications. Hopefully these changes will increase the number of homeowners that are in HAMP.
