When you purchase your home with an FHA mortgage loan, chances are you’re thinking more about moving in, getting settled, and making the home your own than you are the possibility that you could encounter financial hardship at some point and miss mortgage payments.
But these things do happen to some borrowers, and the FHA has a program set up to help those who get into financial trouble. The FHA HAMP program was created to help borrowers avoid foreclosure and keep them in the home. FHA HAMP is a loan modification program and not a refinance loan, which is an important distinction to make.
Under the terms of the FHA HAMP program, the FHA permits ” the use of a partial claim up to 30 percent of the unpaid principal balance as of the date of default combined with a loan modification” according to the official site. But before the borrower can fully enter FHA HAMP, a trial payment plan period must be successfully completed.
“The trial payment plan shall be for a three month period and the mortgagor must make each scheduled payment on time. The mortgagor’s monthly payment required during the trial payment plan must be the amount of the future modified mortgage payment. The Mortgagee must service the mortgage during the trial period in the same manner as it would service a mortgage in forbearance” according to FHA.gov.
In the event that the borrower “does not successfully complete the trial payment plan by making the three payments on time”, the borrower cannot be considered for FHA-HAMP.
Trial payment plan considerations aside, who is eligible for an FHA HAMP loan modification? According to FHA.gov, “Mortgagors with FHA-insured mortgages that do not qualify for other loss mitigation programs and with adequate debt-to-income ratios.” A downloadable PDF at the FHA official site adds the following information on FHA HAMP eligibility where the number of late or missed payments is concerned. Borrowers are eligible for FHA HAMP when:
“The existing FHA-insured mortgage is in default, but is not more than 12 full mortgage payments past due. A default is defined as 1 payment past due more than 30 days. For default calculation purposes, all months are determined to have 30 days. For example, a mortgage due for the July payment is in default on August 1st”.
For more information on participating in the FHA Home Affordable Modification Program, speak to your participating FHA loan officer.