According to CNBC report, the Obama administration will expand its signature foreclosure-prevention program to try to help with heavy debt home owners avoid losing their homes. Home owners can have more time to seek a mortgage modification under the Home Affordable Modification Program or HAMP.
The Treasury Department has announced last January 27, Friday, that the Home Affordable Modification Program (HAMP) will also be extended through 2013. The program was initially set to expire by the end of 2012. The following changes are to take effect too:
- Treasury will triple the incentives it pays to private lenders. They'll be reimbursed from 18% - 63% of the amount they take off the mortgage principal.
- Currently, Fannie Mae and Freddie Mac do not offer principal reduction plans as part of their HAMP modifications. To encourage the assistance, Treasury said it will pay the same principal reduction incentives to Fannie Mae or Freddie Mac if they allow servicers to forgive principal reduction in conjunction with a HAMP modification.
- Modification guidelines will be relaxed to take into account debt such as medical bills and home equity loans.
- Houses occupied by renters will also be eligible for HAMP modification.
No new funds are allocated for HAMP's expansion, since less than $10B of the $29B of the program has been spent so far. If you need more information on Home Affordable Modification Program or HAMP, please don't hesitate to contact me.
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