Loan Modification Limits

I received the modification package but the amount of the mortgage is still a little out of our range. what can we do if anything? Can a modification be modified twice.

2 Answers

There are two different kinds of mortgage loan modifications, as I understand it.  There are the HAMP modifications, and all others. 

The category of 'all others' is complex and to be frank, I do not have a complete handle on it, so I will just gloss over it. 

The HAMP modifications are a creature of the new federal program that is starting to kick in.  As of the last week in October 2009, there were less than 2000 such modifications that were permanent, on a nationwide basis.  Yes, unbelievably that is the total number for the whole country.  However, there are more than 50,000 temporary HAMPs that are pending final approval. 

HAMP is goverened by the regulations called 'supplemental directives' that are available on the website.  These are long and confusing, but a must if you are going to try an get thru this program.  It is critical to understand that HAMP is a one time only deal.  After the trial period you will be given a permanent offer, or told you don't qualify.  Its a take it or leave it kind of thing and there are no second chances, period.  Whatever they have proposed is all you are going to get under HAMP.  If you default, you can not reinstate, so do not consider you have any kind of grace period, like under normal circumstances, you don't. 

While there is the possibility of principal reduction under HAMP, I have never seen it, and all the banks that are acting as servicers won't do it.  This is because they are generally required to repurchase the loan if they want to make that kind of a modification. 

First off, Congratulations on receivng your modification package. If you have completed this process yourself, then you know the time, effort and experience needed to be successful. The modification is based off of your net income at 31%. There should be no reason that you cannot afford or as you state "a little out of our range". If there was a mistake or you included income that is only temporary then you will need to resubmit the income details and start over. You also need to look at all of your liabilities to make sure that everything needed to pay on a monthly basis has been included in your debt to income ratio. If this in fact is not the case then also you will need to resubmit and start the modification process over from the begining.