mortgage modification

Mortgage Modification: Get Debt Relief And Undo Credit Score Damage

You can avoid losing your home over foreclosure by opting for the government mortgage modification programs. These programs are administered by the U.S. Department of Housing and Urban Development (HUD). One of the federal mortgage debt relief programs is known as Home Affordable Modification Plan (HAMP).

What is HAMP?

The federal mortgage loan modification program has been devised by the Obama Administration such that a struggling mortgage borrower will only be required to pay 31% of his/her monthly gross income. Primarily, HAMP has the following advantages:

– Extends the maturity deadline of the mortgage loans.
– Reduces the rate of interest on them.
– Cuts down the principal loan amount.

mortgage modification
mortgage modification

How to qualify for HAMP

You can use various online mortgage modification tools in order to find out whether or not you’ll qualify for the HAMP or any other mortgage debt relief programs. However, you can check out the below mentioned list in order to know about the HAMP’s eligibility criteria:

– The first mortgage loan should have been taken before 1st January, 2009.
– The lender should be wiling to work and participate in the HAMP program.
– Monthly mortgage payment of the borrowers must be more than 31% of their gross monthly income.
– The house should be the principal home of residence of the distressed borrowers.
– The total outstanding balance should not be in excess of $729,750 for single unit properties. However, this cap is higher in case of 2-4 unit properties.
– Borrower is unable to stay current with his/her mortgage payments.

How to apply for HAMP?

Here is a 3-step guide to apply for a HAMP:

As soon as you realize that you won’t be able to keep up with the monthly payment, act at once in order to resolve the issue before it is too late. You must gather all your financial information like present monthly income and expenses before applying.

Find out all the details about your mortgage, loan agreement terms and the lender.

Once you’ve completed the above steps, you may get in touch with a HUD-approved housing counselor for some free advice and to know about the various other debt relief alternatives, besides the HAMP.

Mortgage modification and credit score damage

Many a times, it has been found that due to lack of proper co-ordination between the borrowers and the lenders, it is the credit rating of the borrowers that suffer the most. This is because most of the times banks ask their borrowers to stop making the monthly payments.

This skipped monthly payments starts to show up in the credit report, thereby resulting in a damaged credit score. The notion that plays out here is that if borrowers keep making the monthly payments, then it confirms that they are not undergoing any kind of financial hardships.

However, borrowers can improve their credit score as well as credit rating by making timely mortgage payments or for that matter any loan repayments. Moreover, they need to avoid making too many hard enquiries within a short span of time.

One thought on “Mortgage Modification: Get Debt Relief And Undo Credit Score Damage”

  1. You cannot do a short sale until you’ve alaredy missed payments. If you are up to date on your mortgage, the bank has no reason to worry and therefore will not accept a short sale. The bank knows you can still make the payments because you still are, and will expect you to continue to fulfill your end of the bargain. If you do fall behind on payments, you have to have a good reason why. Such reasons might be a death in the family, loss of job or an injury that has kept you from working. A short sale protects the owners credit when the borrower can no longer make the payments. In that event, the bank realizes it’ll take many more months to wait to evict you and sell it themselves than if they cooperate with you and allow you to retain possession of the house while they sell it. The bank takes the financial hit and pays all the fees in the sale of the property, but in turn, the owner is not entitled to any equity that has built up on the property.If you have absolutely no equity in the house and just want to get rid of it, you might want to do research or talk with a lawyer about a quitclaim deed. With that deed, you sign off all your rights to someone else and they take on all the responsibility you once had. If nobody you know wants the property, I’m sure there are investors who will be more than happy to take it off your hands, rent it out and wait a few years for the market to rise. Then, you can move on to a less expensive house free from the hassle of your overpriced property.I am not a lawyer and not qualified to give legal advice, so please speak with an attorney about your options. Some of them may give you some quick advice over the phone without charging you. Good luck

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