| Homeowners who find themselves upside down on | | | | 5. Have a current mortgage expense-including |
| their mortgages due to the housing meltdown and | | | | property taxes and homeowners insurance and HOA |
| disappearing home values may find a solution with a | | | | dues - that equals more than 31% of the household |
| federal bailout plan. HAMP is the government program | | | | gross monthly income |
| that is designed to modify home loans into affordable | | | | 6. Owe more than 115% of the homes current value |
| payments. Now, it will also provide an option to lower | | | | Upside down homeowners need to learn how to |
| the loan balance for those borrowers who owe | | | | apply correctly for this federal loan modification plan |
| substantially more than their home is worth. | | | | in order to take advantage of this principal reduction |
| Upside down homeowners have very few options | | | | option. The application process involves submitting a |
| for refinancing or selling their homes. The | | | | financial statement which details the borrowers |
| government's solution is to provide a loan modification | | | | monthly gross income and expenses. This information |
| that not only will lower the interest rate but will also | | | | will be used in a standard formula to determine if the |
| reduce the amount owed so that it is closer to the | | | | homeowner qualifies. It makes sense for borrowers |
| homes actual value. The idea is to provide incentive | | | | to learn this basic formula ahead of time and use it |
| for homeowners to keep making payments while | | | | to fine tune their application. This will ensure the best |
| they wait out the housing slump and for values to | | | | chance of approval. |
| recover. | | | | Principal reductions have not been widely offered up |
| HAMP loan modification with PRA-Principal Reduction | | | | until now, and many analysts have been pushing for |
| Alternative, will be offered to homeowners who | | | | this expansion to the government plan as a way to |
| meet the government eligibility requirements. Those | | | | help the housing market recover. Loan modifications |
| borrowers who can meet these basic guidelines may | | | | have been lagging behind government goals, and |
| be offered this plan: | | | | pressure is being placed on lenders and investors to |
| | | | start showing more permanent loan workouts. |
| 1. Live in the home as primary residence | | | | Distressed homeowners need to contact their |
| 2. Have a loan balance of $729,750 or less | | | | lenders and specifically ask to be considered for |
| 3. Loan originated prior to Jan 1, 2009 | | | | HAMP with PRA-but first learn how to apply correctly |
| 4. Be facing a financial hardship situation | | | | for the best results. |