HAMP for Rental Property?

[v2tplan]

I have a rental property that I intend to move into and make a principal residence. I noticed that HAMP now includes rental property. Can I request modification assistance on the rental even though I intend to move back into it around March of 2013 (when the lease is up with the current tenants)? I was thinking I would have to move into it first and have it be "owner occupied" before I could request any assistance, but trying to take advantage of the current HAMP inclusion of rental property!

[Cat Damiano]

I have a rental property that I intend to move into and make a principal residence. I noticed that HAMP now includes rental property. Can I request modification assistance on the rental even though I intend to move back into it around March of 2013 (when the lease is up with the current tenants)? I was thinking I would have to move into it first and have it be "owner occupied" before I could request any assistance, but trying to take advantage of the current HAMP inclusion of rental property!

Are you just renting where you are currently living or do you own? Have you had a prior modification on the rental property when you were living in it?

The way the guidelines read for the HAMP Tier 2 eligibility is;

Effective June 1, 2012, the Obama Administration expanded the population of homeowners that may be eligible for the Home Affordable Modification Program to include:

• Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner intends to rent it.
• Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower.
• Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments.
• Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good standing.

Modification of Loan Secured by Rental Property:

A borrower seeking to modify the mortgage loan on his or her rental property must provide evidence of that income, which is generally documented on IRS Schedule E (Supplemental Income and Loss) of the borrower’s tax return for the most recent tax year. When Schedule E is not available to document rental income because the property was not previously rented, servicers may accept a current lease agreement and bank statements or evidence of damage deposits. All net income or loss from a rental property that is security for the loan being modified as well as income from any other rental property owned by the borrower must be documented and included in the calculation of the borrower’s gross income.

The monthly net income or loss on a rental property to be calculated for HAMP Tier 2 purposes should be 75 percent of the monthly gross rental income, reduced by the monthly principal and interest payment plus 1/12th of annual real property taxes, annual insurance premiums and annual homeowners’ associations dues, if applicable (PITIA). If 75 percent of the monthly gross income of a rental property securing the mortgage loan being evaluated for modification under HAMP Tier 2 is equal to or greater than the pre-modification PITIA of the rental property, the servicer must verify and document the cause of the borrower’s hardship as delinquency alone is not considered a hardship.

[walkin]

If Fannie Mae is the investor, you will not qualify for Hamp 2.0 for a rental property.. Ask me how I know, lol.

[Cat Damiano]

If Fannie Mae is the investor, you will not qualify for Hamp 2.0 for a rental property.. Ask me how I know, lol.

Yes, it isn't available for Fannie Mae, Freddie Mac, or any Government Backed loans either, but since they have been a member with us since 2009, if they are speaking to the initial property they owned back then, it would have been outside of the loan parameters for Fannie Mae to back, and if it is that loan, it would also be in excess of the limits imposed by HAMP Tier 1 and 2 as well.

[walkin]

Oh, I wasn't arguing or questioning anyone, I was just adding my 2 cents, based on their question. I don't know the back story, or who their investor is, both of which are not mentioned in the OP. I was just relaying my experience. I thought the scam 2.0 would apply to rentals, but in my case it didn't, because of the investor. Not sure who their investor is, but if it is fannie, don't hold your breathe.

[walkin]

In other words, the internet research on hamp 2.0 is very confusing. Some sources say fannie paticipates, some say they don't.

The truth is (based on my conversation with my spoc, and the subsequent letter from the servicer) is that Fannie does participate in Scam 2.0, to an extent. They pick and choose which guidelines they want to follow. They choose to NOT allow the rental property guideline. Period.