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.
Save Your Home
We bought a home right before the collapse, our loan amount was 225K with a 6.75 % interest rate. The fair market value of the same type of home in our area is around 160K. Our current mortgage payment is 1744.00 a month. My husband is not employed, he is a disabled veteran. I am an educator. Our income has decreased since our purchase of the home.
We just received a solicitation from the Litigation Law Group telling us they could modify our mortgage to a 157K principal with a mortgage payment of about $583.00. The catch is this, we have to pay around 3,500 for a lawyer retainer fee. This sent up a red flag. Should we use this company? Should I go about trying to get our mortgage company to modify our loan. We are mortgaged through CHFA (Colorado). We just want to make sure that we are being prudent and not getting scammed.
Hi Anna,
My name is Quetcy
i will like to briefly explain my situation, in 2009 there was a decrease in our income , that cause our mortgage to fall behind into the second month without making a payment, i contacted Bank of America to help us modify, Their answer was, ‘”in order to help you need to be at least 90 days behind. after the 90 days i contacted the bank and a trail modification began. they assure me that we were good candidate for a permanent modification , which never came took place. after making payments for almost a year on this trial they denied us for no reason whatsoever. They have continue to play games with us is now 2013. I recently contacted them again and they said only option is deed in lieu. or short sale. that my option to modify were impossible. right now i own them over 50.000 plus the loan 134.000
do i still have hope to save my home??? and what step should i take first in order to make this happen.
thank you and God bless you and your family.
Hi Quetcy,
First of all I am sorry you are going through all of this, but I am glad you are fighting back. The first thing I would do is escalate an appeal of the denial – to find out exactly why you were denied – get details. Find out how much income they used, how much in expenses, what do they say you owe, how much is it worth, who is your investor. That is where I would start. Include the fact that you made trial payments in good faith of a pending loan modification and state from when to when you made those payments.
Send it to the office of the President of BofA and cc: your governor, HUD, Treasury etc. Worst case scenario if you can afford your home now is to possibly file for a bankruptcy where you can make the back payments spread out.
May God bless you and guide you in your fight to save your home.
“You will seek me and find me, when you seek me with all your heart. 14 I will be found by you, declares the Lord, and I will restore your fortunes” Jeremiah 29:13-14
Expect ONLY Miracles and Question Authority,
Anna Cuevas
America’s Loan Modification Guru
Hello Anna
My name is John
I fell behind on my mortgage at the end of 2010 due 3 consecutive pay reductions which amounted to a 50% loss of pay. This was just after signing a modification with my lender in September of 2010. I was able to make the first installment but in October my father became seriously ill and I had to take some time off to deal with the situation. Then in January I lost my job and had to battle with unemployment for 10 months until I finally was granted my benefits. Me and my family were forced to live off of public assistance for those 10 months and needless to say I was unable to make any of my mortgage payments.My lender seems to be willing to redo the modification now that I am back to work full time but the last modification was not based on market value of the home or my income. I guess what I am asking is if the HAMP program would be able to allow me to attain a modification that is affordable based on my income and not the lender saying take it or leave it. I have been receiving many offers from so called modification firms that say that they can get the loan amount modified and the payment subsequently reduced through the HAMP program. Just sounds too good to be true and I was burned by one of these type of companies during my last modification. Just trying to find out what is the truth because the program obviously is real but can it help me?
Thank you for your time
John from PA
Hello John,
First of all I am sorry that your family had to struggle over the last few years, I know what a toll that could take on a family and a head of household trying to keep it all together, but you did John!! Be proud of yourself for fighting on.
The HAMP program is designed to be a percentage of your income 31% of the gross for HAMP Tier 1. I am not sure where you fall in with those calculations. Have you picked up a copy of Save Your Home it gives you the play by play on how the loan modification process works as well as many resources to guide you through- written from the heart by yours truly.
Don’t let anyone take advantage of you ! Follow the plan in the book.
You can do this!! Fight on !!!
“We have chosen to be teachers of hope. “My little way is the way of trust and absolute surrender.” With childlike faith, all things are possible.” – St. Thérèse –
Expect ONLY Miracles and Question Authority,
Anna Cuevas
Americas Loan Modification Guru