Loan Modification Guidelines

Borrowers can apply for government help with their onerous home mortgages.

The U.S. government's Home Affordable Modification Program (HAMP) became available in March 2009 to help keep more than 6 million distressed homeowners in their homes by reducing monthly payments to a level they can manage. According to the FDIC Loan Modification Program guidelines, the numerous rules must be strictly followed to participate.

Borrower Requirements

Borrowers must have a solid payment history with a Fannie Mae- or Freddie Mac-owned loan originated before January 1, 2009. The property must be an owner-occupied, primary residence with a principal balance on the loan of less than $729,750. Homeowners must sign an affidavit of financial hardship and verify their income.

Loan Servicer Requirements

Lenders must reduce a borrower's monthly payment to between 31 and 38 percent of his gross monthly income. Lenders will receive financial incentives for helping the homeowners.

Program Deadline

Borrowers have until the end of 2012 to participate in the Homeowner's Affordable Modification Program. All trial modifications must be active by December 31, 2012.

References

• FDIC: FDIC Loan Modification Program
• Making Home Affordable: Borrower Frequently Asked Questions

Resources

• Making Home Affordable: Request a Home Affordable Modification