Long Island Home Affordable Modification Statistics
In early 2009, the U.S. Department of the Treasury and the Department of Housing and Urban Development launched Making Home Affordable (MHA). The Make Home Affordable’s first lien modification program, Home Affordable Modification Program (HAMP), combines financial incentives and a standardized modification structure to encourage borrowers, servicers, and investors to participate in a nationwide mortgage modification program.
Prior to MHA, there were other efforts within government and the mortgage industry to develop more effective foreclosure prevention options for borrowers. Such efforts, however, often consisted of re-capitalization of missed interest payments and recalculation of the borrower’s monthly principal and interest payments based on the new, higher mortgage loan balance. Thus, most modifications prior to HAMP either raised the borrower’s monthly mortgage payment or, at best, kept it flat. Modifications completed in 2007 and 2008 experienced high redefault rates in the early months following the modification.
HAMP is now the largest mortgage loan modification program in the country. To date, more than 1.3 million borrowers have had their mortgages permanently modified through HAMP. Virtually all HAMP modifications reduce the borrower’s monthly principal and interest payment, with a median payment reduction of approximately $500, or over a third of the median monthly payment before modification.
As of March 2014, over 945,000 permanent HAMP modifications were performing and remained in good standing within the program. More than 380,000 or 28 percent had been disqualified from the program because the borrower missed three consecutive monthly payments on the modified loan. Through February 2014, HAMP modifications were experiencing overall redefault rates of 5.2 percent, 13.4 percent, 20.3 percent, and 26.1 percent by months 6, 12, 18, and 24, respectively.
Home Affordable Modification Tiers in Nassau County
Under the original HAMP program (which is now called HAMP Tier 1), the loan servicer uses a modification waterfall, which is a series of successive steps, to lower a homeowner’s total monthly mortgage payment (including principal, interest, taxes, insurance, and association fees) to 31% of the verified monthly gross income for all borrowers on the mortgage.
If the servicer agrees to modify the loan under HAMP Tier 1, the homeowner starts with a three-month trial period. So long as they make three on-time trial payments during this period, the loan agreement becomes permanent.
On June 1, 2012, the Obama administration expanded the original HAMP program by eliminating some of the previous qualification requirements. This means that borrowers who are ineligible for regular HAMP (Tier 1) may qualify for a loan modification under HAMP Tier 2. For example, you can now qualify for a HAMP Tier 2 modification for a home that is not your primary residence or if you defaulted on a previous HAMP modification.
In a basic HAMP Tier 2 modification, the mortgage servicer uses a waterfall to modify the mortgage. The waterfall steps include:
Good Standing and Long Island Loan Modifications
The HAMP guidelines state:
9.4 Re-default and Loss of Good Standing
If a borrower defaults on a loan modification executed under HAMP (delinquent by the equivalent of three full monthly payments at the end of the month in which the last of the three delinquent payments was due), the loan is no longer considered to be in “good standing.” Once lost, good standing cannot be restored even if the borrower subsequently cures the default. A loan that is not in good standing is not eligible to receive borrower, servicer or investor incentives and reimbursements and these payments will no longer accrue for that loan. Furthermore, the mortgage is not eligible for another HAMP modification. In the event a borrower defaults on the modified loan, the servicer should work with the borrower to cure the modified loan. If this is not possible the servicer should evaluate the borrower for any other loss mitigation alternative prior to commencing foreclosure proceedings. In any event, a servicer cannot refer a HAMP-modified first lien to foreclosure until the loan loses good standing under HAMP.
Successive Modification After a HAMP Tier 1 Default
If an individual defaults on HAMP Tier 1 payments, whether it was during the trial period or permanent modification, they may be eligible to receive another modification under HAMP Tier 2 if they meet HAMP qualifications. A homeowner can reapply for a modification under HAMP Tier 2 after a Hamp Tier 1 if 12 months have passed and one of the following applies:
Successive Modification After a HAMP Tier 2 Default
If an individual defaults after making one or more HAMP Tier 2 trial payments or loses good standing under a HAMP Tier 2 permanent modification, they are not eligible for another Tier 2 modification. If the individual fails to make the initial trial payment under HAMP Tier 2, however, they may be considered for another HAMP Tier 2 modification if they can demonstrate a change of circumstances.
The Freddie Mac Standard Modification (Standard Modification) provides borrower who are ineligible for the Home Affordable Modification Program (HAMP) or have previously defaulted on a HAMP modification and are 60 days or more delinquent (and the property is a primary residence, second home, or investment property), or current or less than 60 days delinquent and in imminent default (and the property is a primary residence), an option to resolve their delinquency and sustain homeownership. Eligible borrowers will receive Standard Modification terms with an interest rate that more closely aligns with current market conditions and a term that is extended to 480 months from the date of the modification, provided the modification terms result in a modified principal and interest (P&I) payment that is equal to or less than the pre-modified P&I mortgage payment.
The Freddie Mac Streamlined Modification (Streamlined Modification) provides severely delinquent eligible borrowers an opportunity to avoid further stages of delinquency and eliminates the requirement for a Borrower Response Package.
Mortgages ineligible for a Standard Modification include:
Contact an Experienced Long Island Successive Modification Attorney
The rules regarding modifications and successive modifications can be difficult to understand. If you are having a difficult time paying your mortgage or have already applied for a modification, it is important to speak to a skilled greater Long Island and New York area successive modification attorney who can interpret and apply these laws to your situation. Call the office of Ronald P. Weiss today at (631) 296-0361 in order to discuss the specifics of your financial situation and possible loan modification solutions.