HAMP Tier 2 Help for Underwater Mortgages

by Amy in CA, Carol in CO, Debbie in CA, and Joan in OH

Ask Kate about HAMP Tier 2 help for underwater mortgages: To avoid further foreclosures among American households who are struggling with debt and underwater mortgages, Making Home Affordable now offers phase II of Home Affordable Modification Program, effective June 1, 2012.


Question 1: Can I qualify for a 2nd HAMP Loan

By Amy from Highland, CA United States

Kate, Can I qualify for a 2nd HAMP loan modification? I was hurt at work, income went from $6300 a month to $61 overnight. I applied for a HAMP loan and qualified. My payment didn't really go down as they put my taxes and insurance on my monthly payment, so my payment went up $20 a month.

I received my disability retirement making my income $3500 a month. My mortgage is $1863, HOA fees $101, leaving not much to pay utilities, food, gas, doctor bills, medicines, etc. I have been working with Citi Mortgage since August trying to modify my mortgage. They keep telling me they cannot open some MAT Tool.

House now in foreclosure, no sale date yet, but I know it is coming. Didn't want a foreclosure, so put house up for short sale. I have two buyers, Citi said they have opened the MAT tool for the short sale, then turned around and told me they didn't get it open. Without it open, they cannot offer me any assistance at all, no modification, no short sale, no assistance moving.

Myself and my son are both disabled. We don't have the money to move and cannot move anything ourselves as we are both disabled. My husband, who is also disabled was living with us, contributing $1000, but because of disability reasons, I had to move my husband out of our home.

I owe $276,000, house worth around $185,000.

My loan is a Freddie Mac. I was told by friends I could not no way get a second loan through the HAMP program, as I already had one.

With this new HAMP Revision, do you think it is possible now?

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Can I qualify for a 2nd HAMP Loan?

Dear Amy,

Homeowners who...

1. Are not approved for HAMP Tier I

2. Defaulted on HAMP Tier I trial period payments

3. Lost good standing under HAMP Tier I

4. Experienced a change in circumstances after HAMP Tier I approval

...are eligible to be considered under HAMP Tier 2 extension and expansion guidelines.

Rental properties are eligible to be considered under HAMP Tier 2 also.

Principal reduction alternatives (PRA) under HAMP Tier 2 continue to include non-Freddie and non-Fannie (non-GSE) loans. But the PRA program also becomes available to homeowners with Freddie Mac and Fannie Mae loans. Yes!

In addition, the government offers triple incentives to loan servicers who participate in PRA. This should act as a carrot-on-the-stick to mortgage companies and help additional homeowners get more affordable mortgage payments.

Go to HAMP 2 Mortgage Modification News for more details.

One more thing, tell your story by writing a descriptive letter regarding your hardship and include it with your HAMP application. Make the lender care!

Sincerely,

Ask Kate


Question 2: Barely Making Ends Meet

By Carol from Denver

Hi Kate, My husband and I had some really severe hardships. Loss of a child. Loss of a huge amount of our income and got a HAMP modification about a year ago. Our home is way upside down still from current market values.

We have a regular loan at 2% and a 2nd mortgage line of credit (HELOC) that we needed to buy in the first place. These total over $330,000.00 but I doubt that we could get 230,000.00 for our home.

We had to declare bankruptcy over a year ago and live in fear every month about making the mortgage. Can anything help us?

My husband has medical problems and I don't make much either. We are 50 years old and have no savings or retirement.

I love our home and fear that if we give up, we won't be able to get another home because of the bankruptcy. Any advice you could offer would be so appreciated. Carol

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Barely Making Ends Meet

Dear Carol,

You family circumstances are overwhelming but adding the threat of losing your home must create a very heavy load.

I so wish I had more ideas to offer.

I'll admit, if HARP 2.0 refinancing fails or modifying your mortgage under HAMP is impossible, the left-over help is not the most palatable.

Nonetheless, I want you to know what Making Home Affordable offers. So go to HAFA Short Sale Foreclosure Alternatives, Deed-in-Lieu, and Deed-for-Lease to understand your MHA options. There is even information on Strategic Default.

Remember, your home is not between the four walls. You and your husband have created a home and will take it with you if it comes down to one of the Making Home Affordable Foreclosure Alternatives.

I wish you the very best.

Sincerely,

Ask Kate


Question 3: Hamp Modification Requirements

By Debbie from California

If you get a HAMP loan modification, do you have to live in the house?

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Hamp Modification Requirements

Dear Debbie,

HAMP Tier 2 changes the guidelines to include rental properties. This is a huge help for homeowners who have moved out of their homes.

But unfortunately, at least 2 monthly house payments must be due or unpaid for rental properties to be considered under HAMP Tier 2.

The homeowner also cannot own more than 5 single family properties.

However, the property may be lived in by grandparents, parents, or dependent children, even with no rent collected. But to be considered a rental, it cannot be used as a vacation or 2nd home.

Go here for more details on HAMP Tier 2: Is HARP 2.0 or HAMP Loan Modification Best.

Best wishes,

Ask Kate


Question 4: Defaulted on HAMP Mortgage Modification on VA Loan

By Joan from Ohio

Kate, We were given a HAMP loan modification in June 2011 after making 3 trial payments. In October of 2011, we defaulted on the loan and have been trying to get a new modification.

But my husband passed in February 2012 (we are on social security) and this lowered our income. What do you think of my chances for modifying our loan a second time?

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Defaulted on HAMP Mortgage Modification on VA Loan

Dear Joan,

I'm sorry to hear of your loss.

There is additional evaluation under HAMP Tier 2 for homeowners struggling with debt beyond their underwater mortgages.

Flexible debt-to-income criteria will assist those with excess obligations other than monthly house payments. These guidelines are designed to serve a broader pool of borrowers.

So don't try to qualify yourself. Call your loan servicer and ask when they are evaluating loan modifications under the phase two guidelines.

Go here for more details on getting HAMP help face-to-face: When Home Affordable Modification Program Says No.

Best wishes,

Ask Kate

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HAMP Tier II Loan Limits
by: Marc in Nassau County, NY

My 1st and 2nd liens are both a Home Equity Lines of Credit (HELOC), a total of $700,000 on a house worth about $450,000.

I saw somewhere on the internet that I still qualify for HAMP. Is this true?

Also what are the principal reduction requirements under HAMP 2?

Hi Marc, Kate here...

Eligible borrowers can owe up to $729,750 on one unit primary residences. Loan amounts can be even higher on two-to-four unit primary residences.

Rental properties of one-to-four units are restricted to loan amounts of $729,750.

If you are interested in exploring your qualifications for HAMP, I recommend calling your loan servicer right away. HAMP is set to expire in December 2016 (as of December 2015). One year seems like sufficient time to process a modification but loan servicers are not known to be speedy.

The amount of equity you have in your home could possibly hinder a principal reduction as MHA says you need to be significantly underwater to be automatically evaluated. But don't assume you won't qualify for HAMP or a principal reduction. Only your loan servicer can determine your qualifications.

Read more at No Principal Reduction Alternative for GSE Mortgage.

Best wishes, Kate

Byron from Baltimore, Maryland
by: FHA HAMP Tier 2

Due to unforeseen medical bills, we got behind in our mortgage. At no time were we in foreclosure. Our mortgage company placed us in a trial period for the HAMP loan modification program which we will complete on Nov 1, 2012. At this time they said we should qualify for the full HAMP program.

I called today to inquire about the HAMP Tier 2 and was told they were not participating in it as of yet. I don't understand.

We presently owe approximately 245k and it's probably valued at 170k. We have a FHA loan.

Questions:
1. How can there be a HAMP Tier 2 Program, and they not be participating in it?

2. They have reported us as late in our mortgage to credit bureaus even though we have been making the trial payments (three months) as agreed. Can they do this legally?

3. We have made all trial payments. Can we be turned down for the actual program? And if so; then what?

4. Can we apply for the HAMP Tier 2 program without our mortgage company being involved?

Hi Byron, Kate here.

1. Can a lender participate in HAMP yet not be participants of the tier 2 phase?

Good question, especially since you fall under FHA HAMP! Call the Making Home Affordable counseling line at 888-995-4673 to pass on what you were told. Mention "MHA Help" to escalate your case. Or call FHA's National Servicing Center at 877-622-8525. Why not call both!

2. Can the lender report your mortgage late to credit bureaus even though trial payments are paid as agreed?

If your mortgage was paid on time prior to the trial and trial payments are on time, you must be reported as current. However, if you were behind on payments and not caught up before beginning the trial, the lender considers that you are still behind on payments and can report as such.

3. If you make all trial payments, can you be turned down for HAMP?

Some homeowners do not make it through the trial into a permanent loan modification. Example: If servicers run a Net Present Value (NPV) test after the trial period and determine the lender does not benefit by modifying a mortgage, they are not required to make it permanent.

If the trial modification is not made permanent, Making Home Affordable offers several alternatives under HAFA, Making Home Affordable Foreclosure Alternatives. Be sure to check them out.

4. Can you apply for the HAMP Tier 2 program without involving your mortgage company?

Another lender can't modify your promissory note because it is an agreement between you and your current lender. So you are limited to (and stuck with) your mortgage servicer for loan modifications.

Go here to compare HARP 2.0 to HAMP with tier two enhancements.

All the best, Kate

Thank you
by: Amy from Highland, CA

Thank you so much for responding so quickly to my question regarding my mortgage. You are an angel sent to us that are so worried and can't get any answers, thank you again. Amy

Hi Amy, Kate here You are very welcome. I appreciate hearing back from you. Comments like yours mean the world to me. My door is always open! All the best, Kate

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