The Home Affordable Modification Program (HAMP) is set to expire in December of 2016, after being extended by the federal government several times over the past few years to allow homeowners who were affected by the Great Recession to modify their home loans. To date, the program has helped over 1.8 million families keep their homes.
HAMP was designed to help homeowners who are behind on their mortgages to lower their monthly mortgage payment and interest rate after going through a series of waterfall tests to determine a new affordable monthly payment. The goal is to lower the overall monthly payment by considering the net present value of the property, the income of the homeowner, whether or not the mortgage term could be extended to 40 years, and periodically, if needed, by adjusting the payment with a principal forbearance, which allows for a portion of the principal to remain due without accruing interest and fees.
As of today’s date, if a homeowner wants to modify their loan through HAMP, their application must be submitted by December 31, 2016. Loan modification approvals must be effective no later than September 30, 2017.
Many of the major companies who have participated in HAMP may offer homeowners who are still behind on their mortgages an option to modify their loans through a “proprietary loan modification.” Time will tell if and how these loan modifications will work.
Although HAMP is scheduled to end at the close of the year, the federal government has extended the Home Affordable Refinance Program (HARP) through September 30, 2017. In order to refinance through HARP, your loan must be current. The Federal Housing Finance Agency (FHFA) has also stated that the HARP program will offer a streamlined application process to simplify the seemingly complicated process for homeowners. The HARP streamlined application process can help homeowners refinance even though they would have trouble with a traditional refinance due to their credit scores, loan-to-value ratios, and debt-to-income ratios.
Fannie Mae and Freddie Mac are slated to come out with a new refinance program at the end of 2017. HARP was extended as a way to help homeowners until Fannie Mae and Freddie Mac release the new refinance program.
There has been no word on whether HAMP will be extended again into 2017, but it is likely that the outcome of this election will influence whether it could be a real possibility or not.
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