An Overview of HAMP Tier 2 Changes that may just save your home or your investment property.
By: Anna Cuevas
Changes to the Home Affordable Modification Program (HAMP) expand HAMP to the end of the year 2013 and are intended to make more homeowners eligible for the program. The additional qualification criteria is referred to as Tier 2, which will go into effect on June 1, 2012
A major overview of the revisions to HAMP include:
- Extension of the program to December 31, 2013.
- Servicers may now qualify a residence as owner occupied if the owner has been displaced, as long as the owner lived in the residence immediately prior to that displacement and has plans to re-occupy it. If the current resident is not the owner, he or she cannot be a tenant.
- HAMP Tier 1 allows only one loan modification. HAMP Tier 2 allows modifications of up to three different mortgages.
- Servicers are being required to consider borrowers for UP assistance, without regard to their monthly mortgage payment ratio, or if they’ve defaulted on a HAMP Tier 1 trial or modification payment plan.
- Mortgage holders who don’t occupy the home as their principal residence are now eligible under HAMP Tier 2.
- Borrowers who weren’t successful with a HAMP 1 trial payment plan are eligible to apply for HAMP 2 modification.
- HAMP Tier 2 sets the pre-modification monthly mortgage payment below 31 percent of debt-to-income ratio. Borrowers are not eligible under HAMP Tier 2 if their post-modification debt-to-income ratio is less than 25% or greater than 42%.
- HAMP Tier 2 eligibility requires a 10% or greater reduction in monthly principal and interest payments after modification. If less, the mortgage is not eligible for modification under HAMP.
With these revised eligibility guidelines, it is hoped that a larger population can qualify and be approved for a loan modification under HAMP, making the program more effective in reducing foreclosures.
Anna Cuevas, ex-bank executive turned homeowner advocate known as “America’s Loan Modification Guru,” has empowered and guided thousands of Americans in keeping their homes from foreclosure through loan modification self-advocacy. A popular blogger (askaloanmodguru.com), Cuevas has been called a “superhero of the loan modification industry” and has been nominated for CNN’s Heroes. She is the #1 bestselling author of SAVE YOUR HOME Without Losing Your Mind or Money.
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