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Fed Reports on Mortgage Loans Modified under HAMP

[Oct 10, 2009.]


The US Treasury reports improvement in the numbers of mortgage loans being modified under the federal Home Affordable Modification Program (HAMP). Citi Mortgage has made rapid progress from August, when it had modified approximately 23% of eligible mortgage loans to September, when its modification rate jumped to 33%. Wells Fargo also improved its modification rate from about 10% to 20%; it has completed approximately 63,000 mortgage loans using the HAMP program.

Aurora Mortgage Services hasn't let its bankrupt holding company, Shearson Bros, impede its progress. As of September, Aurora had modified about one-third of its eligible loans for an approximate total of 24,000 loans. Homeowners struggling to make payments may be eligible for help through this program.

Home Affordable Modification Program: Can it Help You?

Current mortgage rates are a great reason to pursue modification of your mortgage loan if you cannot qualify for a refinance. Too little (or no) home equity can obstruct refinancing, as can income and credit considerations. Here are the eligibility criteria for a HAMP modification. Individual circumstances can affect eligibility, so these are general guidelines:

  • The home securing the mortgage loan being modified must be the borrower's primary residence.
  • Homeowners must be having difficulties making mortgage payments due to any of these causes:
  • Rapid increase in mortgage payments (adjustable rate mortgage loans).
  • Decrease in income due to illness, layoff, or reduction in work hours
  • Hardship causing extra expenses (illness, natural disaster, etc).
  • Your mortgage balance must be no higher than $729,750.
  • Your total housing expense (principle, interest, taxes, insurance, and HOA fees) must be equal to or more than 31% of your gross monthly income.

Homeowners meeting these requirements should contact their mortgage servicers to discuss modification of their mortgage loans. Current mortgage rates are near record lows and can reduce payments and help pay a mortgage faster than loans with high interest rates or exotic features that increase instead of decreasing the mortgage balance.

Free mortgage calculator tools can assist with estimating potential principle and interest payments. Stabilizing and reducing monthly mortgage payments improves budget planning and provides more cash for household needs.


About Author:

Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.

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