How to Get a Mortgage Loan Modification After the HAMP Expiration
For many years, homeowners struggled with attempting to modify their mortgage in hopes of saving their home. As a result, the Home Affordable Modification Program (HAMP) was enacted in 2009 as part of the making of a home affordable program. This was a direct result of some of the careless and reckless practices of the mortgage industry which helped create the sub-prime mortgage crisis. Under the HAMP program, certain financial criteria needed to be met which could result in the terms of a loan being changed which may include reduction of interest, forbearance or even elimination of principal balance, an extension of the terms of the loan, etc. Oftentimes, these changes were successful in resulting in homeowners retaining their properties. The advantage of the HAMP program is that it provided government intervention in providing objective standards in which homeowners could potentially benefit. Unfortunately, HAMP was not extended beyond loans processed prior to December 31, 2016. However, the termination of the HAMP program does not mean that homeowners can no longer save their property through loan modifications. Read more from our Pennsylvania mortgage foreclosure lawyers at Young, Marr & Associates about other options still exist for homeowners facing foreclosure.
How Do In-House Mortgage Modifications Work?
In-house or traditional mortgage loan modifications existed before HAMP. Unlike the HAMP program, each lender has their own internal standards for determining what options may exist for a homeowner who needs assistance. One of the main disadvantages of this process is that there is no consistency from company to company. However, with that being said, mortgage companies have fewer regulations that must be followed and therefore by not needing federal government approval, it may be possible for a bank to approve an application more quickly than was possible with the HAMP. Furthermore, some other advantages include fewer trial payments as well as less stringent guidelines. Finally, multiple options may be provided which may include many of the options that existed under the HAMP program, i.e. lower fixed interest rates, modified loan terms, etc. While there is less regulation, this does not necessarily mean that less paperwork is needed. In many situations, applicants are finding that the paperwork is extremely onerous. Furthermore, it is important to remember, unlike the HAMP program, your lender is not required to even provide an in-house modification option.
What is HARP (Home Affordability Refinance Program)?
HARP applies to any loan originated on or before May 31, 2009. On August 17, 2017, the FHFA announced that HARP would be extended to at least December 31, 2018. To qualify for HARP, all of the following must apply:
- The mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac.
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
- Borrowers must be current on their mortgage payment and have no payment more than 30 days late in the last six months and not more than one late payment in the last 12 months.
- Eligible property types must be a primary residence.
- The current loan to value (LTV) must be at least 80%
- You could not have previously refinanced under HARP. You will not qualify for HARP if you have poor credit, minimal or no equity in the property, have previously utilized the HARP program and have a loan that was not owned or guaranteed by Fannie Mae or Freddie Mac.
For the aforementioned reasons, the applicability of HARP is somewhat limited. However, for the select group that meet the requirements, it can provide a valuable option.
Fannie Mae Flex Modification Program
Fannie Mae has combined the features of the HAMP along with standard modification streamlined modification into the Fannie Mae Flex Modification Program offering servicers an easier, flexible way by offering more borrowers a streamline approach to qualifying for loan modification. In this instance, if successful, the lender agrees to change the borrower’s loan term, which lowers the monthly payment to a more affordable amount. In essence, flex modification is supposed to reduce an eligible borrower’s mortgage payment by up to 20%. This is accomplished by the servicer either capitalizing any overdue amounts, lowering the interest rate, extending the term of the loan, or in some instances, forbearing some of the principal amount. In order to be considered under the Fannie Mae Flex Modification your loan must be owned by Fannie Mae or Freddie Mac, must be a conventional first mortgage and you must have taken out the mortgage at least 12 months before being evaluated. Since being implemented, there has been considerable concerns over implementation and eligibility. Furthermore, many borrowers are unsure whether Fannie Mae or Freddie Mac are actually the owners of their loan.
What Loan Modification Program Should I Choose?
One of the significant advantages of HAMP was that borrowers who fit the eligibility requirements were required to be evaluated for it. This cast a wide net and gave many borrowers immediate access. Currently, there is no such program that offers a guaranteed evaluation process. However, if your home is facing foreclosure or is either in pre or post-foreclosure, it is wise to consider all of the aforementioned options including in-house modifications. In fact, some borrowers have found that in-house modifications have offered greater relief than was available in any of the government programs. Most importantly, if you do pursue any of these options, it is important that you are persistent and organized in providing requested paperwork, as it is estimated that over 80% of the loans that are not modified fail because of improper document submission.
Pennsylvania Mortgage Foreclosure Lawyers Offering Free Consultations
If you are facing foreclosure on a home in Pennsylvania, do not go through it alone. Our experienced Philadelphia bankruptcy attorneys at Young, Marr & Associates can help guide you and your loved ones through the process and help to find solutions that work for you. Call today for a free consultation at (215) 701-6519.