In order to be considered for a loan modification under HAMP, you must meet the following basic criteria:
1. Primary Residence -This must be your primary residence.
2. Date - The loan must be dated prior to January 1, 2009.
3. Size Limit - The loan must be equal to or less than $729,750.
4. Hardship - Borrower must demonstrate a hardship or change in circumstances which make it more difficult to pay the loan such as a reduction in household income, increase in necessary medical bills or a significant increase in the monthly loan payment due to an interest rate increase.
5. Debt to Income Ratio - First loan payment which includes principal, interest, taxes, insurance and HOA dues equals more than 31% of the borrower's current gross income.
6. Current Income - Borrower must show adequate current income to make the reduced payment if the modification is allowed.
Lender loan modifications can be a forbearance agreement, interest rate reductions, conversion of ARM's to fixed rate loans, deferral of past due payments and in rare instances even principal reductions.
Unfortunately, negative equity is not sufficient grounds for a modification!!!! So it's best to explore other options (with a lawyer or real estate broker) such as a short sale before walking away from a home and letting it go into Foreclosure.
Linda Shank Broker Owner Linda Shank and Company is a 32 year real estate veteran in Phoenix's Southeast Valley. Contact her at www.ISellAZSunshine.com
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