HAMP (Home Affordable Modification Program) extended through 2016
Designed in order to try and help millions of homeowners facing foreclosure, HAMP was created back in 2009 as part of the Making Home Affordable Program.
Originally set to expire in December 2013, this program was extended to run through December 2015. Since then, it has been extended yet again, and is currently set to expire in December 2016. Homeowners can still use HAMP to modify their loan terms to make payments more affordable now and up through December of 2016.
Why was HAMP extended?
When HAMP was originally proposed, the federal government had estimated that around 3.5 million homeowners would participate in the program. But according to statistics, only about 1.1 million people have actually participated.
It was determined that the difficulty of applying for and receiving assistance under the program has been one of the main reasons for that lack of participation. Many homeowners found it too difficult to complete the initial requests and paperwork and were instantly denied as a result. In most cases, those who found relief were able to do so by hiring loan modification attorneys to represent their interests to the lender.
Since then, HAMP has been streamlined and the process is much easier to complete, but it is still a very complex process. HAMP has been largely structured and driven by the lending institutions and they have been notoriously difficult for homeowners to deal with one on one. As a result, most homeowners are still consulting professionals in order to have a better chance at getting their modifications approved.
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How much can a homeowner save under HAMP?
The United States Treasury has reported that since 2009, the program has saved an average of $546 per month in mortgage payments for qualified participants. Those savings are rather substantial and as a result, many people have been able to stay in their homes.
Having an attorney represent your interests when working with the lender on a loan modification can make all the difference in whether you get approved or denied. Here in Florida, the Fernandez Law Group has been very successful in getting a steady flow of loan modification requests processed for clients while delivering results that often exceed their expectations.
Understanding how the HAMP process works:
The HAMP process is fairly straightforward. To begin, the lender is going to review the borrower's financial status using what's called a Net Present Value Test. The results will help the lender determine what interest rates are available to the borrower. From there, up to three separate waterfall tests will be conducted. The reduction will be granted if the interest rate is kept within the available range determined through the Net Present Value Test.
What is the Net Present Value Test?
The Net Present Value Test is a free tool that is provided by the U.S. Department of Treasury along with the Department of Housing and Urban Development all done in conjunction with the Making Home Affordable Program created under the Obama Administration.
The tool was designed to help assist homeowners in conducting the net present value evaluation required for their mortgage to be considered for HAMP. Homeowners can make use of this tool to gain a better understanding of the NPV prior to applying for HAMP.
The results provide only an estimate of a mortgage servicer's NPV evaluation. Although the same formula in the NPV tool is required to be used by mortgage servicers, differences in input data and other industry-related data could result in different outputs.
You can visit CheckMyNPV.com to conduct the evaluation on your own, but we strongly recommend having an attorney assist you with the process. If you do complete the process on your own, be sure to save a copy of the evaluation as you will need it in order to discuss what options are available to you through the mortgage servicer.
What are the waterfall tests?
After the NPV is determined, the lender is going to complete a series of waterfall tests once the range of interest rates have been determined.
First waterfall test:
The first of which will attempt to reduce the monthly payment. This reduction will attempt to reduce the monthly payment to no more than 31% of a borrower's income.
In order for the reduction to be granted, the interest rate must be kept within the available range. If this is not possible, then a second waterfall test will be conducted by the lender.
Second waterfall test:
This will extend the mortgage out for a period of 40 years.
Once again, if the interest calculated here rate does not fall within the range of interest rates from the Net Present Value Test, then a third waterfall test would be conducted.
Third waterfall test:
During this stage, a principal forbearance will be applied by the lender. When that happens, a portion of the principal amount of the loan will have interest charges waived. This provides an opportunity to minimize the amount of the principal forbearance without having to lower the interest rate below the allowable range determined with the Net Present Value Test.
Homeowners must participate in the HAMP program in order to qualify for having their interest rates adjusted through the waterfall tests.
How can the Fernandez Law Group help me qualify for HAMP?
Our years of experience in the industry as foreclosure defense attorneys enables us to work every possible angle between the homeowner and lender. When you hire an experienced foreclosure defense team who also specialize in loan modification and short sales, you can expect to maximize your potential savings while increasing your chances for getting approval as well.
The Tampa attorneys at Fernandez Law Group have been helping Florida homeowners get the loan modifications they've needed for years. Let us put our experience in foreclosure defense to work for you today.
The consultation is FREE and you can Call or Text us today at 813-489-3222 to schedule a review of your particular situation.
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Content authored by Gaston Fernandez
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