Recently, new changes have been enacted regarding the HAMP program. HAMP was originally designed to help borrowers with a higher debt load by offering incentives to banks to reduce the principal on mortgage loans. HAMP was supposed to help 4 million mortgage borrowers when it was introduced in February of 2009, but it has helped fewer than 1 million homeowners.
Here are a few of the changes:
1. HAMP was extended until December of 2013 - it was originally set to expire at the end of this year.
2. Eligibility has been expanded - originally, there was a floor for the borrower's debt ratios set at 31% of the borrower's income. This is no longer the case. The new guidelines allow for a more flexible approach without the hard floor.
3. Eligibility has been extended to owner's of rental property - HAMP originally applied solely to owner occupied property; this is no longer the case.
4. The balance reductions incentives to lenders have been tripled - New HAMP guidelines will pay lenders between 18 and 63 cents for every dollar of reduction of the mortgage principal balance, up from 6 and 21 cents.
5. Fannie Mae and Freddie Mac loans are now included - Fannie and Freddie loans had not been included in the principal reduction plans, previously.
The changes in HAMP do not take effect until April.
CNN-Money
HAMP was expected to help 4 thousand home loan people when it was presented in March of 2009, but it has assisted less than 1 thousand home owners.
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