If you fell behind on your mortgage and modified your loan with the lender, you probably know that it's no picnic. Having been down that road before, you might be surprised to find that your lender can re-modify your loan if you fall behind again. The federal government's Making Home Affordable initiative allows homeowners to obtain a Home Affordable Modification Program, or HAMP, more than once.
The government introduced round two of HAMP -- Tier 2 -- in 2012, extending modification eligibility to a wider range of homeowners. It dropped its floor qualifying ratio to 25 percent and the ceiling ratio to 42 percent, meaning that the modified payment can't dip below 25 percent of gross income, and total monthly debts -- including the mortgage -- can't exceed 42 percent. Homeowners who default on a HAMP Tier 1 modification trial period or permanent modification may apply for HAMP Tier 2; homeowners with a previous Tier 2 modification can't re-modify.
Get It Together
Get ready to repeat the drill from the first modification. Gather your income, tax, and asset documents, fill out the HAMP request form, and write about your current financial woes for the lender to review. This "initial package" also includes a tax transcript request form and the federal Dodd-Frank Certification, which confirms that you haven't been convicted of certain federal crimes. Your lender may direct you to its own website to get the checklist and forms, or you can visit the Making Home Affordable website.
When you previously modified, you may remember having opened your home to an appraiser who reported the condition and value of your property back to the lender. The lender sends out for another appraisal when you re-modify -- again, to evaluate whether the home's condition and value are sufficient and to determine whether you live in the home or not. Revisions to HAMP Tier 2 allow homeowners to modify non-owner occupied properties, as well.
Keep In Touch
HAMP guidelines streamline the modification process and the lines of communication between homeowners and lenders. Keep in close contact with your point of contact at the mortgage company via phone or e-mail and respond promptly to requests for paperwork. You're not the lender's only borrower in need of a modification. To avoid being placed at the bottom of the stack and delaying the process, fill out paperwork completely and accurately, submit all pages to documents the lender requests, and heed the lender's submission deadlines.
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