Brian Vanderhoff's North Fulton Real Estate Blog: HAMP Offers Hope for Struggling Atlanta Home Owners

A new HAMP (Home Affordable Modification Program) is designed to help home owners who are struggling to pay their mortgages and whose homes are valued lower than the mortgage balance.

The ins and outs of the program are explained by real estate expert Ilyce Glink on the Equifax Personal Finance Blog. In summary, the rule-laden program divides a qualifying borrower’s mortgage into two parts. The first loan would be for the full current value of the property. The second carries no interest and is forgiven over a three-year period.

The article, “Want a Principal Reduction Loan Modification? The New Home Affordable Modification Program (HAMP) Rules You’ll Have to Live By,” spells out the basic requirements and advantages of the program. One interesting advantage: borrowers find out within 30 days if they qualify. In times past, borrowers often waited months for an answer to their loan modification applications.

Many homeowners are learning they don’t qualify under the new rules, so some banks are experimenting with their own programs to try to help those who can’t be helped through the government program. FHA, Fannie Mae and Freddie Mac are announcing their own loan modification programs later in the year, too, so their borrowers don’t qualify now.

Generally speaking, homeowners who can participate owe more than 115 percent of the current value of their home, they are in danger of default or are already there, and their house payment is more than 31 percent of their income. Of course, there are new forms to file, including IRS forms and recent pay stubs to provide proof of income.

Another Glink post in the Equifax Personal Finance blog describes a HAMP program for the unemployed. Glink promises to continue posting updates to rules and reporting on new programs that become available. She also invites comments and questions about loan programs.