The Home Affordable Modification Program (HAMP) is set to expire on December 31, 2016. Launched in 2009, the federal program gives qualifying homeowners who are struggling to keep up with mortgage payments the opportunity to seek more feasible repayment terms through loan modification.
The HAMP modification program is restricted to homeowners whose mortgagers are backed by Freddie Mac and Fannie Mae. Those with mortgagers under these government-sponsored enterprises may utilize this program if they are in danger of default (payment is more than 31 percent of gross monthly income) or have experienced a hardship which is documented, such as a debilitating illness or the loss of a job. If a borrower does qualify, he or she must first complete a trial period before receiving a permanent loan modification. This modification will then make payments more affordable by either changing the type of mortgage the homeowner holds, extending the repayment period, reducing the loan’s interest rate, or through re-amortization.
Options for Struggling Homeowners Post-HAMP
When HAMP does come to an end this year, mortgagers threatened with foreclosure (link to foreclosure defense page) will not necessarily be left without options. Other types of loan modifications will still be available to eligible borrowers through the mortgage’s servicer. Additionally, there are still other alternatives homeowners can explore, such as:
- Short sale: the property is sold by the bank for less than what is still owed on the mortgage.
- Deed in lieu: the borrower agrees to transfer the home’s title to the lender, and in exchange is no longer obligated to repay what is still remaining on the mortgage.
If you think foreclosure may be in your future, the time to speak with a West Palm Beach foreclosure defense attorney is now. Call our office today to schedule a free consultation.