HAMP Loan Modification Program - Steps to Getting an Approval

A Financial Analysis: The first step to getting approved for the HAMP Loan Modification Program involves a financial analysis that will be performed by your loan servicer. He or she will analyze everything that involves your financial personality. This will include any car loans that you may have, any child support that you might pay, any mortgage payments that you currently pay, and any credit cards that you own. Your financial analysis will figure out if your current expenses are equal to or exceed 55% of your gross monthly income. If it exceeds this number, you will be required to see a housing counselor that is approved by HUD.

In order to qualify for the HAMP Loan Modification Program, your current home has to be your primary residence. This means that if you need help with a home that you rent out or use as a vacation home, the HAMP program will not help you.

Your current mortgage has to be equal to or less than $729,750. In addition, you had to have taken out your mortgage before January 1st, 2009.

Prime loans, adjustable loans, and sub prime loans will qualify for the HAMP Loan Modification program. Loans backed by any securities will also qualify. In addition, loans that are owned by the FNMA OR FHLMC can qualify. If you have a mortgage that is owned by the VA or FHA, you will not be able to apply for the HAMP Loan Modification Program.

Your payment on the mortgage has to be more than 31% of your gross income. This includes interest, principal, taxes, homeowner association dues, and insurance.

The Net Present Value Test

Finally, your loan servicer will perform the Net Present Value Test. This test is essentially a test to figure out if the value of the loan will be more important to the investor after he or she has allowed it to be modified. A great deal of attention will be focused on incentive payments. If you have a low amount of income but you have a high level of equity, you will be denied. Not a lot of people know what factors affect this test.

Bringing the Papers

After you have passed the Net Present Value test, you will need to provide proof of your income. You should bring pay stubs of the past two months. If you are self employed, you can only bring your quarterly earnings report. Rental agreements and divorce decrees should also be brought if the situation fits.

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