HAMP – the Home Affordable Modification Program – is part of the US Treasury’s Home Affordability & Stability Plan, designed to help at-risk homeowners. A HAMP loan modification should be offered on every MGIC-insured loan that meets program criteria.

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HAMP
Have you ever been approached by a client or homeowner and asked; just what is this HAMP program?
Do you know how to explain it in simple terms?
Well you will now…
HAMP – the Home Affordable Modification Program – is part of the US Treasury’s Home Affordability & Stability
Plan, designed to help at-risk homeowners. A HAMP loan modification should be offered on every MGIC-insured
loan that meets program criteria:
1. The borrowers have missed mortgage payments or are in imminent risk of default.
2. The property is owner-occupied.
3. The mortgage was originated on or before Jan. 01, 2009, and the unpaid principal balance does not exceed
eligibility limits.
4. Participating servicers must evaluate all delinquent loans for HAMP eligibility using set program criteria and
the Waterfall process.
So how does this apply to a Short Sale?
Most lenders that are participants in the Home Affordable Modification Program as a part of the Governments
Making Home Affordable Program follow HAMP Waterfall steps to determine the borrower’s eligibility. These steps
are linked to the short sale approval process.
The term “Waterfall” is used within the HAMP program to describe the sequence of steps taken to reach the target
of 31% housing debt-to-income ratio. Before beginning the Waterfall process, it must be determined that the loan
meets the eligibility criteria.
5. Capitalize Arrears – Capitalize accrued interest and other eligible expenses to determine the modified loan
amount.
6. Reduce Interest Rate – Reduce the interest rate to reach 31% target housing-to-debt ration in increments
of .125%, subject to an interest rate floor of 2%.
7. Extend Loan Terms – If the 31% target ratio has not been reached, extend the term of the loan up to a
maximum of 40 years.
8. Forebear Principal – If the 31% target housing ratio has not been reached, then reduce the principal
through an agreement between the borrower and the servicer.
These guidelines are subject to revision from time to time; and remember the seller/borrower must first provide to
the lender a ‘verifiable’ and ‘justifiable’ hardship ‘event’ to be considered for the lender to agree to sell their
investment short.
“I’m just sayin’ TitleNation”
TEAMNATION HOLDINGS
P.D. Allen 909.376.8750 DIRECT
949.315.3911 eFax
Phillip D. Allen pallen@teamnationholdings.com
Vice President / Senior Negotiator