Mortgage Daily

Published On: July 30, 2009
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

FREE CALCULATORS TO HELP YOU SUCCEED
Tools for Your Next Big Decision.

Amortization Calculator

Affordability Calculator

Mortgage Calculator

Refinance Calculator

FHA Mortgage Calculator

VA Mortgage Calculator

Real Estate Calculator

Tags

Pre-Approval Resources!

Making well educated decions in a matter of minutes and stay up to date on the latest news Mortgage Daily has to offer. Read our latest articles to stay up to date on what’s going on…

Resource Center

Since 1998, Mortgage Daily has helped millions of people such as yourself navigate the complicated hurdles of the mortgage industry. See our popular topics below, search our website. With over 300,000 articles, we are guaranteed to have something for you.

Your mortgages approval starts here.

Add 1-2 sentence here. Add 1-2 sentence here. Add 1-2 sentence here. Add 1-2 sentence here. Add 1-2 sentence here.

Stay Up To Days with Today’s Latest Rates

Mortgage

Today’s rates starting at

4.63%

5/1 ARM
$200,000 LOAN

Home Refinance

Today’s rates starting at

4.75%

30 YEAR FIXED
$200,000 LOAN

Home Equity

Today’s rates starting at

3.99%

3 YEAR
$200,000 LOAN

HELOC

Today’s rates starting at

2.24%

30 YEAR FIXED
$200,000 LOAN