FHA all set to offer Home Affordable Modification Program

Hi all,

The Helping Families Save Their Homes Act of 2009, which was signed into law by the Obama administration on May, 20, now extends the benefits of Home Affordable Modification Program to FHA-insured borrowers. Until now, only those borrowers, who had mortgages owned by Fannie Mae or Freddie Mac, could take advantage of the HAMP.

This new program, known as FHA-HAMP, aims to help struggling FHA-insured borrowers to save their homes from possible foreclosures. The program will reduce the monthly payments such that they do not exceed 31% of the gross monthly income of the borrower. FHA will achieve that by deferring 30% of the outstanding loan principal amount, using an interest-free subordinate mortgage. This subordinate mortgage will not be due until the first mortgage is paid off.

The FHA also announced an incentive of $1250 to lenders offering loan modification to borrowers under the FHA-HAMP. All FHA-approved loan servicers are expected to implement this program by August 15.