Thousands Found Help In HAMPYou may already be familiar with HAMP, the Home Affordable Modification Program. Designed to help employed homeowners who are having difficulty meeting their mortgage obligations, the HAMP program offers rate and term changes to reduce your payments to 31 percent of your verified monthly pre-tax income. In June 2012, the Obama Administration expanded the scope of the HAMP program, to aid even more distressed homeowners. Expansions include modifications for rental properties, changes in debt-to-income ratio requirements and a second chance for homeowners who defaulted on a previous HAMP modification.
More Help In 2MPIf you modified your first mortgage under HAMP, you can now benefit from a modification or principal reduction under the Second Lien Modification Program (2MP). Designed to address the long-term affordability and sustainability issues inherent in second mortgages, 2MP is a lifesaver for homeowners who bought properties during the housing boom with 80/20 mortgages, often at adjustable rates. Homeowners with unaffordable home equity loans and home equity lines of credit (HELOC) may also benefit. Some of the ways servicers may modify the rate and term of a second lien under the 2MP program include reducing the interest rate to 1 percent on amortizing loans, reducing the rate to 2 percent on interest-only loans or extending the term to 40 years. If the servicer forgave any of the principal of the first mortgage under a HAMP modification, they must forgive the same proportion on the second lien under 2MP.
SEE ALSO: Home Equity Loans: The Ins And Outs