HAMP Mortgage Modification and Alternatives
by Antonio, by Mara, by Emory, and by Donna
Ask Kate about HAMP mortgage modification options and alternatives: Antonio is perplexed over the new guideline requiring delinquent payments for rental properties. Mara asks for alternatives to HARP refinance because she's afraid she will lose her home. Emory's friends have suggested he should strategically default on his mortgage. Donna doesn't know who to trust so asks me about modifying her home loan with a fixed rate.
HAMP Tier II for rental property requires two due or unpaid monthly payments? By Antonio
Kate, My loan on what now is a rental property (due to an increase mortgage rate, reduced income, and to avoid foreclosure) is current.
However, you have stated that you must be at least two payments behind for rental properties to be considered.
The HAMP Tier two handbook or guideline states "that a mortgage loan secured by a rental property that is not in default even if default is reasonably foreseeable is not eligible for HAMP Tier 2".
My question is with their statement of "a mortgage loan secured by a rental property" - What makes a mortgage loan secured by a rental property? Isn't this something that must be stated clearly on the original mortgage, meaning when I got my original mortgage I didn't get and don't have an investment property mortgage. But after not being able to afford the house I now have it rented out.
Can the fact that I'm probably underwater and owed $35,000 more that the original loan amount (I wasn't able to make payments in 2008 - and at that time Countrywide did a loan modification adding the $35k into the original principal of the loan ) help me qualify?
All I want is a fixed rate which I haven't not been able to get in a refinance from any bank probably because I am underwater. Your thoughts are greatly greatly appreciated.
Ask Kate answers: HAMP Tier II for rental property requires two due or unpaid monthly payments?
I'm glad to see you are questioning this distasteful guideline which is drastically out of sync with the spirit of Making Home Affordable program.
For Making Home Affordable guidelines to require two delinquent house payments on rentals to possibly get loan consideration is shameful.
Although I quoted the HAMP II guideline, I am not suggesting that homeowners purposefully miss house payments in hopes of securing HAMP approval for investment properties. That would be risky and carry no guarantees.
Principal Residence or Rental Property?
Now to answer your question, what defines a mortgage loan secured by a rental property?
Even if the original mortgage was secured for a principal residence, the current occupancy at the time of refinancing or modification dictates loan terms.
In other words, the current occupant, owner or renter, determines the status of new financing.
Hardship Letter of Circumstances
I can understand your dismay after taking responsibility by renting your home to avoid mortgage foreclosure. So here's what I'd suggest. I'd pour my heart and soul into a hardship letter. Not overly emotional but detailing the circumstances that led up to the decision to rent your home.
A hardship letter doesn't guarantee modification approval. But if you don't work on one that truly explains your situation, your HAMP application is nothing more than a pile of paperwork. So personalize it with an outstanding hardship letter.
To read more about modifying your home loan, go to HAMP 2 Mortgage Modification News
I wish you the best, Antonio,
Are there alternatives to losing my home? By Mara C from Rehoboth, Massachusetts
I have a subprime loan that is interest-only and my bank will not continue to give me interest only. This is a 5 year ARM. They said they would do a modification but have to amortize principle and interest over the remainder of the term.
Is there any help for me to get a low rate with a payment I can afford. My bank said my loan is not Fannie Mae or Freddie Mac.
I am a school office assistant making $15,000 per year and am afraid that I will lose my home. I was victim of the stated income, interest only, ARM scandal that I want out of.
I have been making my house payments with the insurance money I received when my husband passed away. That money has gone to pay for my children's college expenses and my house payments. The money is almost gone so I have to sell the house by March 2015 or my payments will more than likely start going up and then I will have an even tougher time making payments.
Is there any help for me? Thanks, Mara C.
Ask Kate answers: Are there alternatives to losing my home?
To be eligible for refinancing with the HARP 2.0 plan
, a mortgage must be backed by Fannie Mae or Freddie Mac.
But go here to see for yourself whether or not your mortgage is Fannie or Freddie backed
before ruling out HARP.
HAMP modifications accept mortgages that are not necessarily backed by Fannie Mae or Freddie Mac. However lender participation in the HAMP program
is voluntary, so not all homeowners have the program at their disposal. And as you've found out, modification payments are not always affordable.
HAFA Alternatives to HAMP and HARP Programs
You may have additional alternatives, although perhaps different from what you've had in mind. These options are called Home Affordable Foreclosure Alternatives, HAFA for short.
HAFA includes Deed in Lieu, Deed for Lease, and Real Estate Short Sale
. (Follow this link to more details on the plans.)
Mortgage Forbearance for Unemployed Homeowners
Due to the job uncertainty in our economy, I want you to know about HAUP, Mortgage Forbearance for Unemployed Homeowners
House payments of unemployed homeowners are sometimes deferred up to a year or reduced to an affordable level. So keep this option in your back-pocket should you lose your job.
Funds for the Hardest Hit Housing Markets
Although Massachusetts is not included in this list today, there are special funds available for struggling homeowners in Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, and Washington DC.
Used in conjunction with Making Home Affordable Modification Program or separately, the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (HHF) assists by:
- Helping with mortgage payments for unemployed and underemployed.
- Reducing principal balances.
- Eliminating 2nd mortgages.
- Smoothing the transition into more affordable residences.
To verify the current inclusion of a state, go to its .gov website by searching for "state-name.gov".
Making Home Affordable Housing Counselors
Mara, I also suggest calling a Making Home Affordable housing counselor
to discuss your housing options. Their service is free and they may have additional suggestions based on your personal circumstances.
Best wishes in getting an affordable payment,
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