To help aid some homeowners who have pre-qualified for the Home Affordable Modification Program but were unable to achieve a permanent modification Freddie Mac came out with a new program. The program is called the Freddie Mac HAMP Backup Modification and it is designed to help borrowers avoid foreclosure who were initially offered a trial period based off stated income, but after the trial period were determined to be ineligible for permanent assistance.
This new alternative is in efforts to help homeowners get evaluated for a new modified payment to help bring their account current without having to restart the extremely long and grueling loan modification process.
Freddie Mac first introduced this program back in late May and is to only offer this assistance for a limited amount of time. Homeowners must have a first modified payment due date on or before September 1, 2010, and will be required to send in all needed documentation to Freddie Mac no later than the fourth business day of the month the first payment is due.
Eligible Properties:
- Single-family homes (one to four units), including condos units and certain eligible manufactured homes.
- Borrower must reside in property
- The home cannot vacant
Eligible Loans:
- Mortgages must meet the eligibility requirements of HAMP
Ineligible Loans:
- Loans currently in litigation, not including foreclosure proceedings
- Loans transferred to Freddie Mac on a participation basis
- VA, FHA, or RHS loans
Homeowner Eligibility:
* Borrower must have entered the trial period for HAMP on or prior to May 1, 2010 based off stated income.
* Borrowers who were denied a permanent modification on or after April 1, 2010 may be eligible if they were denied for one of the following reasons:
- Using stated income, the first mortgage payment divided by the borrower’s gross monthly income was determined to be less than 31%.
- The 31% target could not be reached due to forbearance caps or NPV result.
- Borrower did not provide the needed income documentation for the HAMP program.
- Homeowner has completed all required trial payments (typically three to four). However, if payments were not made by the borrower since Borrower notice was received, and the borrower’s HAMP trial was canceled on or after April 1, 2010, the borrower may be eligible for this modification if they can afford to pay the total f their post-trial payments prior to the mortgage servicer executing form 1151.
Documents Required:
Mortgage servicers are required to use the information provided by the homeowner during the trial period.
- HAMP hardship affidavit form
- Proof of income, such as paystubs or vouchers
- Proof of additional income, including bonuses, tips, Social Security, commission, alimony, rental income, unemployment, disability, etc.
- Those who are self-employed must provide last year tax return or year-to-date profit and loss statement
Key features of the Backup Program:
- Homeowners who achieve a Freddie Mac Backup Modification will make payment close to, but not less than, 31% of their gross monthly income.
- This type of modification allows servicers to offer modifications to borrowers who had their trial plans canceled without having to redo the underwriting process.
- For completed modifications under the Backup program servicers will receive incentives.
Forms for the Freddie Mac HAMP Backup Program are available at: FreddieMac.com/singlefamily/service/hampbackup_mod.html
If you are currently going through the HAMP trial period or have any questions in regards to this program we strongly encourage you to join our free forum here on LoanSafe.org. We are a community of now over 33,000 homeowners and mortgage professionals alike. Here yo will find all the information you could need in regards to any type of loan workout you are pursuing.
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