Susan V.'s Blog

he Fed has updated and expanded their home retention outreach called HAMP in hopes that it will offer a solution to more homeowners.  Unfortunately, the number of borrowers who have received help to date is pretty dismal, and the Treasury Department is trying to avoid having to take the blame for the billion dollar failure by reaching out to more homeowners.  Effective April 5th, the expanded guidlines will now offer something for everyone (not quite-but close!)

The HAMP option will now be offered in a revised form to those homeowners who are unemployed and who have lost a lot of equity in their home.  This program will seek to provide an extremely low mortgage payment while borrowers look for new employment.  The idea is to give them an affordable payment until able to get back on the job again.  For those homeowners who have lost equity-nationwide over $2 trillion in home equity has evaporated-there will be new options designed to keep borrowers making payments instead of walking away.

Lenders will be governed by new timelines for providing timely responses to homeowners who request a HAMP option, and this will greatly increase the number of permanent loan modifications.  No more throwing out trial modifications and then deciding afterward if a homeowner is qualified.  Now, banks will need to acknowledge a request for loan assistance within 10 days, and then provide an answer-either qualified for HAMP or not qualified-within 30 days of receipt of a complete loan modification application.

If the homeowner qualifies for a loan modification under HAMP, then the 3 month trial modification will begin.  Once 3 payments are made on time, the modification will become permanent automatically.  No more re-applying or updating of information required.  This is going to help increase the number of permanent modifications completed.

If however, the homeowner's paperwork is reviewed and it is determined that they do not meet the approval guidelines for HAMP, then they will be offered another program option, called HAFA.  Home Affordable Foreclosure Alternative is the federal streamlined short sale option recently added to HAMP.  This program will help expedite the short sale process by providing a pre-determined approval and acceptable net proceeds to the bank, dictate escrow times, commissions and provide money to the homeowner to help them with the transition from home ownership.

Every homeowner must apply through HAMP for consideration before they can moved onto HAFA-so it is critical to know and understand the basic approval guidelines for the program.  The key to success with the federal programs is to prepare an accurate and acceptable financial statement. The debt ratio, target payment, disposable income and other calculations must meet the formula the HAMP dictates-so learn how to compute these for the best results.

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