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  • by Andrew Latham

    UnderwaterHouseIf you are one of the 11.3 million (and counting) homeowners who are underwater on their homes, you are probably not taking advantage of today’s low-interest rates. If on top of that you are behind in your payments or your credit history is poor, the likelihood of a lender approving your refinance application is negligible. That does not mean you cannot lower your mortgage payments and enjoy current interest rates. Welcome to HAMP, the federal mortgage aid program for underwater and struggling homeowners that doesn’t care what the market value of your home is.
    HAMP, the Home Affordable Modification Program, is the Obama Administration’s response to the housing crisis. It is designed to offer struggling homeowners who are struggling to pay their mortgage, or are already behind on their payments, a chance to reduce their monthly payments by offering lenders financial incentives for approving loan modifications.
    Although only your mortgage servicer or lender can approve your application, HAMP has some minimum requirements you must meet before you can even apply for a loan modification.

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    To qualify for a HAMP loan modification on your underwater mortgage you must:
    – Be the owner of a one- to four-unit home.
    – The unpaid balance on your home must be equal or lower to following mortgage limits:
    One Unit= $729,750
    Two Units= $934,200
    Three Units= $1,129,250
    Four Units = $1,403,400
    – Have signed your mortgage agreement before January 1, 2009.
    – Your mortgage payments and associated housing costs must be more than 31 percent of your pre-tax income.
    – You must be able to prove you are going through a financial hardship, and you can no longer afford your mortgage.


    Unfortunately, many counselors and even lender have provided bad advice to underwater homeowners hoping to join the government’s HAMP program. For instance, some lenders have advised their customers to stop making payments on their mortgage so they can qualify for a loan modification under the HAMP program. This is bad advice. Not paying your mortgage will simply put you deeper in debt. You can qualify for a HAMP modification even if you are not behind in your mortgage payments. As long as you can prove you are likely to default on the mortgage soon due to financial hardship, you can apply for a loan modification.

    Our advice is to talk to your servicer as soon as possible and talk to a certified housing counselor before you make any important decisions on your mortgage. Call 1-888-995-HOPE (4673) to find a housing counselor approved by the Department of Housing near you, and ask how you can apply for a loan modification with HAMP.

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