Changes to the Loan Modification Program (HAMP)

Real Estate Broker/Owner with BROKER of Green Realty Properties® - 954-667-7253 BK3175566

HAMP loan modificationThere were lots of changes last year to many of the government programs available to homeowners that are in over their heads with their underwater mortgages. The Home Affordable Modification Programs (HAMP) is no exception and clients are still calling with questions because they are unsure of the program's guidelines. Below is a list of changes to HAMP that took effect on June 1, 2012.

1) Lower Debt-to-Income Limits: The new guidelines allow borrowers to lower their monthly mortgage payment to as little as 25% of their gross monthly income. In the past, the number was 31% of the gross monthly income. Big difference!

2) Broader Debt Guidelines: Before, there was a short list of the types of debts that the lenders took into account when evaluating the borrower's financial hardship, and all were linked to the 1st mortgage. They are now allowing 2nd mortgage costs, medical bills, etc. to be taken into account.

3) Rental Properties Eligible: Landlords who are struggling can now take advantage of this program, where they weren't eligible before. Properties do not have to be occupied to qualify, and a single borrower can qualify for loan modifications on up to 3 properties.

4) Repeat Modifications Allowed: Before these changes, you had 1 shot to get HAMP. If you couldn't keep up with your payments, they would kick you out of the program and you could never reapply. Now, borrowers can reapply after 12 months from their default have passed.

5) Minimum 10% Reduction: Under the new guidelines, all modifications under HAMP must reduce the mortgage payment by at least 10%.

6) Principal Reductions Encouraged: New incentives are being given to encourage lenders to allow principal reductions where the home is underwater.


These are pretty big changes! I'm generally weary of modification based on many  stories I've heard from my short sale sellers, but I'm optimistic that these changes will be positive and more homeowners can modify and stay in their homes.

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Help lots of people and have a great day!

Patty Da Silva, CDPE©, RESS®, AHWD®, e-PRO®, GREEN, CFS, TRC, RSPS

BROKER - REALTOR® Serving South Florida ::: 954. 667. SALE (7253) ::: Green Realty Properties®

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Copyright © 2008 - 2015 By Patty Da Silva, CDPE©. All Rights Reserved.

Legal Stuff: This article (Contents) reflects the opinion of the author and it is not to be considered legal advice. The author is not an attorney or a CPA. If you are in need of legal or tax advice, it is recommended that you to contact a trusted professional advisor.


Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Les & Sarah Oswald 02/02/2013 09:34 AM
  2. Pamela Seley 02/03/2013 02:56 AM
  3. Dennis Hearing 02/03/2013 12:53 PM
  4. Roy Kelley 02/04/2013 02:33 AM
  5. Charles Stallions 03/03/2013 06:51 AM
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Les & Sarah Oswald
Realty One Group - Eastvale, CA
Broker, Realtor and Investor

Patty - very informative changes that might help underwater homeowners in 2013! Suggested and reblogged.

Feb 02, 2013 09:12 AM #1
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Patty,  I think principal reductions are the biggest challenge many homeowners face.  Many lenders (from my experience) are simply not giving them.  This is a great re-cap of the changes. Homeowners will find this information helpful. 

Feb 02, 2013 09:32 AM #2
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

I hope that folks are able to prevent foreclosures and short sales.  We will keep our fingers crossed.

Feb 02, 2013 11:17 AM #3
Gail Robinson
William Raveis Real Estate - Southport, CT
CRS, GRI, e-PRO Fairfield County, CT

Patty - This is good news for me personally.  I've been rejected by HAMP for having too much debt, then too little income, then paying too much for medical insurance (what was I supposed to do, drop our medical insurance? being self-employed and older makes it expensive).  I will try again.

Feb 02, 2013 11:27 AM #4
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC


Thanks for sharing an outstanding post and information.

Good luck aamd success.

Lou Ludwig

Feb 02, 2013 11:59 AM #5
Frank Laisch
AmTrust Title Insurance Company - Chicago, IL
"The Insurance Guy"

Patty, Thank you for the updated info. Homeowners really need this info, there still are people that are stuck with their homes

Feb 02, 2013 10:06 PM #6
Jimmy Faulkner
Florida. Homes Realty & Mortgage - Wantagh, NY
The Best Of St. Augustine

The government is slowly pretending to show us they care.

Feb 02, 2013 10:11 PM #7
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Patty, good information for potential short sale sellers. Keeping up with the changes requires a professional REALTOR® like yourself to keep potential sellers aware.

Feb 02, 2013 10:43 PM #8
Chris and Dick Dovorany
Homes for Sale in Naples, Bonita Springs and Estero, Florida - Naples, FL
Broker/Associate at Premiere Plus Realty

Thank you Patty for explaining this precisely and easily.

Feb 02, 2013 10:57 PM #9
Scott Nowling
Prudential Starck - Saint Charles, IL
Prudential Starck

Too bad there isn't something out there for non Fannie or Freddie borrowers as well.  Thanks for the updates!

Feb 02, 2013 11:12 PM #10
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

yes to helping the ones that are trying to make a go of it...They need support and we all benefit from giving it too

Feb 03, 2013 12:19 AM #11
Chuck Mixon
The Keyes Company - Cutler Bay, FL
Cutler Bay Specialist, GRI, CDPE, BPOR

Great information, let all hope that this house mess clears up this year.

Feb 03, 2013 01:19 AM #12
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Patty, thanks for posting the new changes. Hope this can keep more homeowners in their homes. 

Feb 03, 2013 02:54 AM #13
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

6) Principal Reductions Encouraged: New incentives are being given to encourage lenders to allow principal reductions where the home is underwater.

If principle reduction is not automatic to the assessed value the entire program is a colossol FARCE.

Feb 03, 2013 02:59 AM #14
Chris Lewis
Gracious Living Realty - Front Royal, VA
I want to SELL your home, not LIST it!

These changes should be very welcome and will hopefully help more people to stay in their homes.  Unfortunately, some banks just won't do anything at all to help their borrowers.

Feb 03, 2013 06:00 AM #15
Jane Peters
Home Jane Realty - Los Angeles, CA
Connecting you to the L.A. real estate market

This is a great list of the HAMP changes, Patty.  Things are looking up, and hopefully this will stop many, many foreclosures and short sales.  Good news for those struggling.

Feb 03, 2013 10:52 AM #16
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Patty, there are very important changes - including one for rental properties. Hopefully, this will help some of our clients avoid the unwanted situation.

Feb 03, 2013 01:16 PM #17
Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

This is very good information for mortgage borrowers that need loan modifications.

Have a most productive month.  Congratulations on your endorsement by Kristin Hamilton.

Feb 04, 2013 02:27 AM #18
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

Do they really want it to work this time, is #6 or 10 I can't keep up. I have only known two people of the 30 or so that applied that got help and even they after a short time realized it wasn't any help and short sold their home.

Feb 26, 2013 01:09 AM #19
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