The Home Affordable Modification Program (HAMP) was created to provide assistance to homeowners who are struggling to make mortgage payments. It provides meaningful savings for homeowners who have experienced reductions in income and unaffordable increases in expenses. Now, administration officials announce that borrowers who use HAMP will receive additional benefits if they continue to make payments on time.
Previously, homeowners who made on-time payments under HAMP were able to earn up to $5,000 over the first five years of their loan. That benefit will go towards reducing the principal balance. According to the Treasury Department and Department of Housing and Urban Development, borrowers will now be able to earn an additional $5,000 in their sixth year of the modified loan. This means that they will receive $10,000 in reductions. They will even have an option to re-amortize the reduced balance to lower their monthly payments.
How many people will benefit from this change in the program? Estimates show that about one million homeowners with HAMP loans will be eligible for the additional $5,000 incentive. Ideally, these homeowners will be aware of the opportunity and it will motivate them to stay current.
The Treasury also announced incentives for homeowners in the HAMP Tier 2 alternative program. The HAMP Tier 2 program provides a fixed interest rate for borrowers who did not qualify for the HAMP modification. They will now be able to receive a $5,000 pay-for-performance incentive in their sixth year in the program. To qualify, they must be in good standing with the program.
The Treasury also enhanced its deed-in-lieu and short sale programs. Before this change, distressed homeowners who complete a deed-in-lieu transition or short sale were offered $7,000. Now, they will be offered $10,000 in relocation assistance.
If you would like to know how the recent changes affect you and your family, it may be in your best interest to discuss your options with an Orange County real estate attorney. The housing market has improved drastically in the area, but many families still need help. These recent changes could have a significant and immediate impact for local homeowners.