The U.S. is still recovering from the major recession of 2007. Sub-prime mortgages played a major role in the crisis. Home prices fell and there was an avalanche of foreclosures and a big decline in home values. The government initiated several programs to stop the bleeding including the Home Affordable Modification Program, HAMP. HAMP offers applicants an opportunity to reduce mortgage payments to something more affordable. Families who participate in the program receive an average monthly reduction of $530.
In order to be eligible home-owners must show:
- a proven financial hardship
- must be delinquent on the mortgage
- must have obtained the mortgage on or before January 1, 2009
- the property has not been condemned
- a debt of up to $729,750 on primary residence or one-to-four unit rental property
- they have not been convicted within the last ten years of a crime dealing with a mortgage or real estate
Most mortgage companies participate in the HAMP Program Struggling to Help Home-owners. Applicants must provide a pay check and a monthly budget to show that they cannot afford the monthly payment. Further, the lender wants to see the last two years of income tax returns and proof of other debts. In addition, it may be helpful to write a letter explaining why one is making less money. This program is historical in many aspects.
Before the recession, mortgage companies did not have the resources to fix the ailing housing market. Indeed, the companies were only trained to foreclose on people who fell behind on the mortgage. The program introduced a uniform way to help people keep their homes. HAMP Program Struggling to Help Home-owners has helped over five million people. Initially, borrowers make reduced payments on a trial basis. If the trial payments are paid on time, mortgages are changed to loans with lower interest rates. Further, the new loans are extended so they can be repaid over a longer period of time. The HAMP Program Struggling to Help Home-owners was scheduled to end in 2012. However, the program was extended through the end of 2015. Borrowers who are struggling, and eligible, should contact their mortgage company.
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