Mortgage Daily Logo
mortgage news from industry experts

FHA HAMPered by Modifications

FHA HAMPered by ModificationsServicer can earn up to $1,250 per modification

July 30, 2009

By MortgageDaily.com staff

A loan modification program has been developed for mortgages insured by the Federal Housing Administration. The program includes a special no-interest second mortgage.

FHA loans were excluded from the Helping Families Save Their Homes Act of 2009’s Home Affordable Modification Program. The U.S. Department of Housing and Urban Development instead would develop a stand-alone FHA program.

Today, HUD unveiled the FHA-Home Affordable Modification Program, according to Mortgagee Letter 2009-23. The program, which is effective on Aug. 15, excludes borrowers who qualify for current loss mitigation home retention options.

Borrowers will be required to successfully complete a three-month trial modification. The front-end debt-to-income ratio must be 31 percent, while the back-end DTI ratio is limited to 55 percent.

Under the new program, a partial claim of 30 percent is allowed on “the unpaid principal balance as of the date of default combined with a loan modification.” Claims include principal reduction, up to 12 past-due payments and legal and foreclosure fees and costs.

Mortgage bankers praised the new plan, which reportedly includes a second-mortgage feature.

“Allowing lenders to set aside up to 30 percent of the loan principal in an interest-free second mortgage will make it possible for lenders to reduce the monthly mortgage payment for thousands of troubled borrowers with FHA loans,” the Mortgage Bankers Association Chairman David G. Kittle stated in a news release. “We are excited to have another tool that lenders can use to help borrowers who have the ability and desire to stay in their homes, do so.”

Servicers can receive an incentive fee of as much as $1,250 — including $500 for the partial claim and $750 for the loan modification. Mortgagees can also claim up to $250 for reimbursement of recording and title search fees.

In order to receive FHA-HAMP incentive fees, mortgagees must file a claim for insurance benefits for the partial claim within a 60-day period.

HUD has hired C&L Service Corp. / Morris-Griffin Corp. as HUD’s secretary-held assets servicing contractor.

next story

back to current headlines

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts

THE TRUSTED PROVIDER OF ACCURATE RATES AND FINANCIAL INFORMATION