HUD Mortgage Modification Requirements

If you're struggling with making your home mortgage payments, there are places you can turn for help. The Home Affordable Modification Program (HAMP) was created by the U.S. government to help homeowners with financial troubles refinance or modify their existing mortgages. If you qualify, a HUD mortgage loan modification can help make your mortgage payments more manageable and ease some of the stress you might be feeling.

Residency

To be considered for a HUD mortgage modification, the mortgage you're attempting to modify must be for the home that you consider your primary residence. If you own vacation homes or rental properties, HUD won't consider these for a modification. HUD is the U.S. Department on Housing and Urban Development.

Mortgage Balance

Only first mortgages are eligible to be modified and the total outstanding balance can be no more than $729,750 for a one-unit home. If you own a duplex or a multiple-unit home the mortgage, limits are increased to $934,200 for a two-unit home, $1,129,250 for a three-unit home, and $1,403,400 for a four-unit home. If you owe a second or third mortgage, these loans won't be considered as part of the modification and you'll have to negotiate with the individual lenders to try to get better terms on them.

Financial Hardship

HUD will consider a modification if you can demonstrate that you can't make your mortgage payments because of a significant financial hardship. For modification purposes, examples of financial hardship would be if you've lost your job, gotten divorced, had to move or been relocated, there's been a serious illness or death in your family, or similar reasons. You'll need to provide evidence or documentation of your situation to show that you were truly unable to make your mortgage payments.

Loan Origination Date

HUD will only consider first mortgages that were originated on or prior to January 1, 2009. If your first mortgage was obtained after this date and you're having trouble making your payments, you may have to consider a refinance, or appeal directly to your lender for help.

Gross Income

HUD considers all costs related to your mortgage, including taxes, homeowner's association fees, and insurance. To be considered for a modification, the sum total of these payments plus your mortgage has to be greater than 31 percent of your gross monthly income.

Trial Period

Before a loan modification is considered complete, you must first go through a three-month trial period. During this trial period, you're required to pay the modified mortgage payment in full and on time. If you can't make the payments during the trial period, your modification will not be approved.

Exclusions

As of January 2010, the modification program applied only to conventional loans that were secured by a deed of trust and issued by a bank. These types of loans include prime and subprime loans, jumbo loans, and adjustable rate mortgages. If you have an FHA or VA loan, check current programs, as the government has been working to create a program that will allow for modifications of these types of loans.

References

• Making Home Affordable
• HUD Loan Modification FAQ
• HUD Loan Modification Option