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Loan modification calculation qualification examples for HAMP

The government program known as the Home Affordable Modification Program creates a defined loan modification process.

The HAMP program is designed to help borrowers who are in default, at risk of imminent default, or in foreclosure can have their loans modified to a more affordable monthly payment equal to a target 31 percent of their monthly gross income.

I created a HAMP page with lots of resources to help you check eligibility guidelines.

I want to give you a few examples to help you understand the numbers to see if you qualify.

Loan Modification Calculation 1

Your income is: 5,000 per month
Your current interest rate is: 8%
Your current loan term is: 30 years
Your current loan amount is: $800,000
Your Tax, Insurance & Ass Fees: $9,000/yr
You have a Hardship: Yes

In Bailout Calculation 1: You DO NOT qualify because your loan is over the limit of a conforming loan.

Loan Modification Calculation 2

Your income is: 3,000 per month
Your current interest rate is: 8%
Your current loan term is: 30 years
Your current loan amount is: $400,000
Your Tax, Insurance & Ass Fees: $5,000/yr
You have a Hardship: Yes

In Bailout Calculation 2: You DO NOT qualify because even if the bank drops your interest rate to 2% and stretches your loan to 40 yrs, your payments on your loan are $1,211. If you add to that your tax, insurance and association fees you are now at $1,628 per month.

Unfortunately, that is 54% of your monthly income so you do not qualify for the government bail out program.

Loan Modification Calculation 3

Your income is: 6,000 per month
Your current interest rate is: 6%
Your current loan term is: 25 years
Your current loan amount is: $400,000
Your Tax, Insurance & Ass Fees: $5,000/yr
You have a Hardship: Yes

In Bailout Calculation 3: You DO Qualify because if the bank drops your interest rate to 2% and stretches your loan to 40 yrs, your payments on your loan are $1,211. If you add to that your tax, insurance and association fees you are now at $1,628 per month.

This is 27% of your monthly income so YOU DO qualify for the government bail out program. Likely the bank will not drop your rate to 2% in this case since they do not need to have you qualify.

If you qualify some of the other benefits to the government’s bailout program are:

1. Once the program is in place your loan will not change rate for 5yrs and even then it can only adjust 1% per year for a maximum of 5% points above your start rate.

2. If you are on time with your payments for 5 years, you get a one time reduction in your principle of $5,000 at that time.

Important considerations

Be prepared. Even if your numbers do work out so that you likely qualify for a HAMP loan modification, it has been a challenge (and that’s putting it mildly) to get approved. This blog has exposed the banks and loan servicers for their underhanded practices of rejections, denials, dragging their feet and accidentally-on-purpose foreclosures – even for those borrowers who have been on a trial modification for months.

You can fight back using the strategies I outline in my free report. They will give you the legal leverage to negotiate a fair loan modification or much more like wiping out your loan completely and/or getting monetary damages for mortgage fraud. So be sure to get your personal copy.
CLICK HERE FOR DETAILS
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Source: http://www.thedebtmanagementexpert.com/2009/06/01/loan-modification-calculator-debt-management-bailout/

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One Response to Loan modification calculation qualification examples for HAMP

  1. eivai on 07/04/2011 at 16:37

    If you think nobody cares if you’re alive, try missing a couple of payments

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