If you're eligible for the Home Affordable Modification ProgramSM (HAMP®), your mortgage company will usually put you on a three-month trial plan to let you demonstrate your ability to make timely payments at the new monthly payment level. If you successfully make all required payments during your trial period, your mortgage company will execute an official modification agreement.
HAMP was designed to provide deep and immediate savings if you have experienced unaffordable increases in expenses or reductions in income. It can lower your interest rate, reduce your payments and make your mortgage more affordable, both now when times are the most challenging and for the long term. In order to achieve the lower mortgage payment, HAMP modifications follow a structured protocol that may include the following:
- Adjusting the interest rate
- Extending the term
- Forbearing and/or forgiving principal
Your modification agreement contains all the details of your modified loan. Be sure to review it with your mortgage company or housing counselor if you’re working with one. You should understand what the new interest rate on the modified loan is, whether your interest rate will increase at some point and what the new term of the loan is (30 years, 40 years?). If a portion of your loan was forborne, you should understand when the balloon payment is due and how much you will have to pay. The more familiar you are with these details, especially concerning the interest rate, the more prepared you will be to consistently make your mortgage payments.
If you have any questions about the terms of your modification, please call a housing counselor 888-995-HOPE™ (4673).