What income can be used under the Home Affordable Modification Program HAMP?

By Anna Cuevas

Lets examine the current income guideline released October 2009 for use by the lender/servicer for HAMP Home Affordable Modification HAMP

Monthly Gross Income

The borrower’s “monthly gross income” is the borrower’s income amount before any payroll deductions and includes wages and salaries, overtime pay, commissions, fees, tips, bonuses, housing allowances, other compensation for personal services, Social Security payments, including Social Security and adoption subsidies received by adults on behalf of minors or by minors intended for their own support, and monthly income from annuities, insurance policies, retirement funds, pensions, disability or death benefits, unemployment benefits, rental income and other income. If only net income is available, the servicer must multiply the net income amount by 1.25 to estimate the monthly gross income. All non-taxed income, including non- taxed social security income, is considered net income.

***********PLEASE NOTE THESE IMPORTANT CHANGES***********************
Revisions to income requirements Eliminating the use of unemployment benefit income for HAMP evaluations
We are revising our income verification requirements to provide that Servicers may no longer consider unemployment benefits as a source of income when evaluating a Borrower for a Trial Period Plan under HAMP. This change is effective for Trial Period Plan Effective Dates on or after November 1, 2010, although Servicers are strongly encouraged to implement this change as soon as possible.****************

Servicers should include non-borrower household income in monthly gross income if it is voluntarily provided by the borrower and if there is documentary evidence that the income has been, and reasonably can continue to be, relied upon to support the mortgage payment. All non- borrower household income included in monthly gross income must be documented and verified by the servicer using the same standards for verifying a borrower’s income.

The servicer may not require a borrower to make an up-front cash contribution (other than the first trial period payment) for the borrower to be considered for HAMP.

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