Good Hamp Tier 2 Improvements Arrive For Affordable Loan Modifications

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Michael Naz

Michael Naz
Jan 9, 2011
2,965
38
48
Southern California
Attorneys, Mortgage Bankers, Loan Officers, Real Estate Agents and Non-Profit homeowner advocates do not usually know when an offer is the best offer that can be achieved for a loan modification, or if an application has been erroneously denied for such things as “defective” appraisals at Wells Fargo during Net Present Value (NPV) evaluations for HAMP and in house jumbo proprietary modifications, per a California mortgage broker, D.S., who has been a loansafe user for several years now.

The updated improvements to the Home Affordable Modification Program (HAMP) Tier 2 guidelines announced April 22nd, 2014 make it easier to qualify for a loan modification by getting rid of features which made the HAMP Tier 2 results less successful than intended as only 44,072 borrowers were helped under the expanded Tier 2 program as of the latest Making Home Affordable (MHA) Program Performance Report published on 4/4/2014.

To put that into perspective, the total permanent modifications for a federal expansion of an existing program now two years old as of June 1st, 2014, HAMP Tier 2, is roughly the size of attendance of one UCLA football game at the Rose Bowl in September of 2011 under former coach Rick Neuheisel.

Homeowners are often seemingly surprised when a payment or loan balance goes up after a loan has been modified because they have not been educated on what to expect for payments when they first apply for a loan modification or been told about the Loan Modification Waterfall Steps common to all loan modifications and initially started under the Sheila Bair’s FDIC Loan Mod in a Box Protocol:

“The IndyMac loan modification framework is an effective loss mitigation strategy for both portfolio and securitized mortgages. I have long supported a systematic and streamlined approach to loan modifications to put borrowers into long-term, sustainable mortgages—achieving an improved return for bankers and investors compared to foreclosure. Implementing widespread loan modifications based on the Program used at IndyMac will strengthen local neighborhoods where foreclosures are driving down property values and will help stabilize the broader economy. I would encourage all industry participants to adopt the FDIC Loan Modification Program as the standard approach in dealing with the grave problems facing us with continued mounting foreclosures.” - Sheila Bair, FDIC Chairman, November 20, 2008press release.

The Actual text of the full Sheila Bair FDIC Loan Mod in a Box guide is here as a PDF download.

There is an easy way to tell if your loan modification offer is a good deal or not, or why the payment or loan balance went up, and it depends on calculating your monthly income correctly at the time of your loan modification application as well as your total past due and servicer advances towards real estate taxes and insurance.... read the rest of the article here.
 
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jhn_plsn

LoanSafe Member
Apr 29, 2008
357
6
18
Riverside, Ca
We just received a tier 2 trial modification offer but the payments are 23% of our gross income. With a rate of 3.38% on a AG UTB of $294,173 the lender came up with a trial payment of $1387.05 that includes the $269.40 impound. So P&I would only be 1117.65. I am elated at this payment but am afraid they will find a mistake later. There is no mention of the specific actions taken to come up with this payment.

Is it true that the permanent modification payment will likely be the same as the trial payments?

Thanks
 

jhn_plsn

LoanSafe Member
Apr 29, 2008
357
6
18
Riverside, Ca
My single point of contact told me my mod is based on a new 40 year term. She also stated that the payment will likely stay the same once the trial is completed successfully.

This is great for us as it knocks almost $500 off the payments and I don't have to be in debt to catch up 10 payments.
 

hecrec174

LoanSafe Member
Feb 16, 2010
154
19
18
Hi. i recently was approved for a Hampt Tier 2 from SPS. A few months ago I received a letter that my ARM was resetting. We are paying an abysmal 6.3% and it was now going to 6.5%. Our loan is with SPS.

As I had recently been injured and the money from my side business was stopping , this bump would have us paying about $2800 a month. That would hurt as we have 3 kids and the wife's student loans are killing us. So I put in for the modification with SPS. Honestly , all I wanted was for them to maybe freeze the interest rates at 6.3% so we could have some stability. We had fallen one month behind as I had to pay for a surgery.

Sent them 4 sets of paystubs, tax returns for 4 years, 3 months of bank statements. Then sent them again. Got asked questions about them. Resent them. Arggh! Started on 7/14. Finally got a decision on 10/5.

Finally , we get a decision which I am really happy with. Approved for Hamp Tier 2. Pay 3 trial payments of $1933 a month. The past due is rolled into the mortgage. If I make all payments , from what the lady I spoke to said, this will likely be very close to what I will be paying going forward after the mod is permanent!

I was very pleasantly surprised. Has anyone had an experience that after the trial payments are done , that they renege and don't give the permanent mod ? I am just used to looking a gift horse in the mouth! This seems too good to be true. Any opinion will be appreciated. Thanks
 

Michael Naz

Michael Naz
Jan 9, 2011
2,965
38
48
Southern California
Hecrec174
Thanks for your post and congratulations! Nothing to worry about it's not too good to be true. Make sure to make all three payments in the month in which they are due and the loan will be permanently modified at a rate that is the Freddie Mac Primary Mortgage Market Survey Rate minus 0.5% about a month after your third payment. I estimate it will be around 3% fixed for the duration of your loan. Here is an announcement about the rate for more information: https://www.hmpadmin.com//portal/programs/docs/hamp_servicer/sd1404.pdf
 
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hecrec174

LoanSafe Member
Feb 16, 2010
154
19
18
Thanks so much for the information. I have my fingers crossed. 3% would be so awesome! IT would really make an impact in our budget! Thanks again.
 

Michael Naz

Michael Naz
Jan 9, 2011
2,965
38
48
Southern California
They go by the rate of that date when your application was submitted with a request of modification. You can check the exact rate you will be getting by clicking on link from FM:http://www.freddiemac.com/singlefamily/service/standardmodrate.html
Delta97,
Thank you for your response, but my research shows HAMP Tier 2 use the PMMS rate for the week the permanent loan mod docs are drawn, not the week of the application as you stated. They do round to the nearest 1/8th or 0.125%. The weekly survey rate is here: http://www.freddiemac.com/pmms/
Your rate link is correct for a Freddie Mac standard mod but this is a HAMP Tier 2 mod.
 
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