The Making Home Affordable Program was introduced in February, 2009 with the HAMP Tier 1 version. Due to lack of response the government anticipated, they made some changes to make the process easier and thus, HAMP Tier 2 program was released and effective June 1, 2012.
The new guidelines expand the qualifications and changed the eligibility deadline for a loan restructuring under HAMP or any other mortgage relief available through HAP. It is the same as HAMP 1 in that any loan that is secured by Fannie Mae, Freddie Mac, the Veterans Administration, the Department of Agriculture Rural Housing Service or the FHA are not eligible.
Significant changes to HAMP Tier 2 are as follows:
The program is extended to December 31, 2013 for applications to be submited
Expansion up to 3 different mortgages
Non-owner occupied mortgages are eligible
An expansion to include properties of displaced borrowers, deployed military, job transfers, etc. with the stipulation that the property was their principal residence before relocation and intend to re-occupy the home in the future.
Occupant cannot be a tenant for owner occupied terms
Unemployed are allowed and lenders must offer a 12 month forbearance assistance.When the borrower is employment or the 13th month, borrower is evaluated for HAMP eligibility. This assistance now includes borrowers of property that secured by tenant-occupied or a vacant property
Debt to monthly mortgage ratio does not affect consideration for assistance
Defaulted HAMP 1 or HAMP loan restructuring are to be considered for UP assistance
UP unemployment assistance extended and lenders are required to consider borrowers for UP assistance, with no regard to monthly mortgage payment ratio or if default on a HAMP Tier 1 or restructuring payment plan.
Eligibility for borrowers who received a restructuring under HAMP Tier 1. and weren’t successful are eligible to apply for HAMP 2 restructuring after 12 months
Pre-restructuring monthly payment is below 31 percent of debt-to-income ratio.
Borrowers must have a debt-to-income ratio less than 25% or greater than 42%
A requirement that there is 10% or more reduction in monthly principal and interest payments after restructuring
The Net Present Value for HAMP Tier 2 has been revised as well so that more homeowners could qualify for assistance
Loan restructurings and programs under HAMP and the MHAProgram are as follows:
One to four unit properties with documented hardship
For loans that originated before December 31, 2008
Homes must be habitable
Anyone that doesn’t qualify, but have documented hardship or are unemployed are recommended to consider other assistance depending on their circumstances.
The government is hoping that these revisions will offer more homeowners relief and impact the housing market with more homeowners able to avoid foreclosure with lower monthly mortgage payments.
NEW for HAMP Tier 2 starting Feb 2013
The range of allowable monthly payments for HAMP Tier 2 is potentially expanded beginning Feb 1 2013. As explained in Supplemental Directive 1209, the new monthly payment must be between 10% and 55% of borrowers gross income or a range specified by the loan servicer provided that the allowable percentage range fits between the old/new percentage ranges. Previously, the rules in MHA Handbook 4.0, section 6.1, p.90 required checking the new monthly payment to make certain it is between 25% and 42% of borrowers gross income. Currently, the unofficial calculator here is still using the 25-42% range to provide alerts when HAMP Tier 2 is calculated. Note that the new rule affects the check of HAMP Tier 2 eligibility after the proposed new payment is calculated, but does not otherwise change the formulas or procedures for calculating the new payment.