NEW: BP Podcast 66: Flips, Apartments, & Protecting Yourself From Professional Tenants with Michael Blank

Hide this

From the BiggerPockets Blog

 BiggerPockets Blog »

Jump to Forum View All

Click a category below to view different forum categories.

BiggerPockets

General Info

BiggerPockets Q&A, Site Questions, & Announcements

1508 topics, 14381 posts — Last Post 04/17/14, 08:09PM

BiggerPockets Exclusive PRO Area

117 topics, 838 posts — Last Post 04/16/14, 09:08PM

New Member Introductions

10871 topics, 85479 posts — Last Post 04/18/14, 04:03AM

Real Estate Success Stories

394 topics, 6124 posts — Last Post 04/18/14, 03:29AM

General Real Estate

General Real Estate

Buying & Selling Real Estate

5924 topics, 46699 posts — Last Post 04/17/14, 11:53PM

Renters

643 topics, 5817 posts — Last Post 04/18/14, 01:07AM

Get Foreclosure Help - Help Stop Foreclosure Forum

316 topics, 2557 posts — Last Post 04/16/14, 03:58AM

Home Owner Association (HOA) Issues & Problems Forum

237 topics, 1609 posts — Last Post 04/17/14, 08:53AM

Do it Yourself

655 topics, 6262 posts — Last Post 04/18/14, 02:12AM

Reviews & Feedback

Real Estate Deal Analysis and Advice

3666 topics, 29393 posts — Last Post 04/18/14, 12:03AM

Real Estate Guru, Book & Course Reviews and Discussions

1132 topics, 11546 posts — Last Post 04/18/14, 03:57AM

Ask About A Real Estate Company

740 topics, 7312 posts — Last Post 04/17/14, 09:46PM

Real Estate Investing

Real Estate Strategies

Wholesaling

5591 topics, 43682 posts — Last Post 04/18/14, 02:55AM

Rehabbing and House Flipping

3328 topics, 30948 posts — Last Post 04/18/14, 04:17AM

Real Estate Development & New Home Construction

552 topics, 4679 posts — Last Post 04/17/14, 10:10PM

Innovative Strategies

703 topics, 6023 posts — Last Post 04/17/14, 09:46PM

Tax Liens, Notes, Paper, & Cash Flows Discussion

864 topics, 6667 posts — Last Post 04/17/14, 06:13PM

Rent to Own a.k.a. Lease Purchase, Lease Options

692 topics, 4870 posts — Last Post 04/18/14, 03:52AM

1031 Exchanges

143 topics, 1052 posts — Last Post 04/16/14, 05:39PM

Foreclosure Investing

General Foreclosure & Pre-Foreclosure Forums

1686 topics, 11285 posts — Last Post 04/17/14, 06:41PM

HUD, VA, and Tax Sales

414 topics, 3088 posts — Last Post 04/17/14, 07:35AM

REOs

1214 topics, 10570 posts — Last Post 04/17/14, 02:28PM

Short Sales

1534 topics, 13120 posts — Last Post 04/17/14, 04:44PM

Landlord & Tenant Forums

Landlord & Rental Property Questions

7193 topics, 70640 posts — Last Post 04/18/14, 03:18AM

Mobile Homes & Mobile Home Park Investing

638 topics, 5138 posts — Last Post 04/17/14, 11:01PM

Investor Basics

Starting Out

7689 topics, 60362 posts — Last Post 04/18/14, 03:59AM

Investor Psychology

430 topics, 6092 posts — Last Post 04/14/14, 06:53PM

General Real Estate Investing

4711 topics, 37163 posts — Last Post 04/17/14, 05:53PM

Real Estate Investor Marketing

1730 topics, 14091 posts — Last Post 04/17/14, 06:21PM

Commercial Real Estate

Commercial Real Estate Investing Forum

1409 topics, 8983 posts — Last Post 04/17/14, 06:13PM

Multi-Family and Apartment Investing

1106 topics, 9196 posts — Last Post 04/18/14, 03:22AM

The Business of Real Estate

Real Estate Technology and the Internet

Real Estate Technology, Social Media & Blogging

638 topics, 4884 posts — Last Post 04/17/14, 02:08PM

Business Basics

Goals, Business Plans & Entities

830 topics, 7549 posts — Last Post 04/17/14, 10:19PM

Real Estate Finance & Legal

Financial, Tax, and Legal

Tax, Legal Issues, Contracts, Self-Directed IRA

2784 topics, 19995 posts — Last Post 04/18/14, 01:13AM

Property Insurance

309 topics, 2045 posts — Last Post 04/17/14, 07:41PM

Personal Finance Discussion

328 topics, 2730 posts — Last Post 04/17/14, 04:56PM

Loans, Mortgages, Credit Lines

Private & Conventional Lending Discussion

2830 topics, 19679 posts — Last Post 04/18/14, 12:10AM

Creative Real Estate Financing

1207 topics, 8762 posts — Last Post 04/17/14, 03:35PM

Crowdfunding Real Estate

35 topics, 455 posts — Last Post 04/14/14, 02:14PM

Real Estate Professionals

Real Estate Professionals

Real Estate Agents

1206 topics, 7957 posts — Last Post 04/17/14, 09:20PM

Bankers, Lenders, and Mortgage Brokers

441 topics, 1919 posts — Last Post 04/17/14, 01:58PM

Contractors

268 topics, 1681 posts — Last Post 04/17/14, 10:53PM

Local Real Estate

Local Real Estate

Local Real Estate Networking & Recommendations

1984 topics, 11587 posts — Last Post 04/18/14, 03:58AM

Americans & International Real Estate

161 topics, 566 posts — Last Post 04/14/14, 11:19AM

Foreigners Buying in the USA

62 topics, 409 posts — Last Post 04/10/14, 06:27AM

Canadian Real Estate

64 topics, 427 posts — Last Post 04/17/14, 03:22PM

Marketplace

Real Estate Marketplace

Real Estate Marketplace

15004 topics, 53909 posts — Last Post 04/18/14, 03:00AM

Real Estate Events and Happenings

163 topics, 2483 posts — Last Post 04/18/14, 12:38AM

Off-Topic

Off Topic

Off-Topic

2902 topics, 32399 posts — Last Post 04/16/14, 03:07PM

Housing News & Real Estate Market

914 topics, 8351 posts — Last Post 04/17/14, 08:41AM

BiggerPockets Real Estate Investing Summit

97 topics, 1751 posts — Last Post 04/10/14, 02:27PM

BiggerPockets Resources

Forums » Get Foreclosure Help - Help Stop Foreclosure Forum » FHA New Principal Reduction Guidelines – FHA Enhances Their Loan Modification Options

FHA New Principal Reduction Guidelines – FHA Enhances Their Loan Modification Options

7 posts by 2 users

Signup


Obama administration releases new principal reduction guidelines designed to help struggling homeowners with Federal Housing Administration (FHA) insured mortgages.

"Tens of thousands of FHA borrowers will now be able to modify their mortgages," said HUD secretary Shaun Donovan

On May 20, 2009, the president signed the “Helping Families Save Their Homes Act of 2009.” This new law provides the FHA with additional loss mitigation authority to assist FHA mortgagors under the Making Home Affordable Program (MHA).

When MHA was initially introduced to the public back in February 2009, MHA excluded FHA insured mortgages, with the understanding that the FHA would create its own standalone program.

Effective August 15th 2009, mortgage services are now allowed to modify FHA mortgages, under the Home Affordable Modification Plan (FHA-HAMP). This will provide homeowners in default a greater opportunity to reduce their mortgage payments to a sustainable level while following the fundamentals of MHA designed to help homeowners retain their homes and prevent the destructive impact of foreclosures on families and entire communities.

Basic Guidelines

The new FHA-HAMP authority will allow use of a partial claim up to 30% of the unpaid principal balance as of the date of the default combined with a loan modification. Like the broader Obama program, the FHA seeks to reduce mortgage-related payments to 31% of monthly income. But it gets there in a different way, by focusing on changes in the principal amount rather than only evaluating the interest rate. The maximum partial claim (principal reduction for payment purposes) consists of the sum of (i) arrearages, (ii) legal fees and foreclosure related costs (iii) principal reduction. The arrearages included in the partial claim cannot exceed 12 months PITI. Combining each of the above the maximum partial claim amount is 30% of the outstanding principal balance as of the date of the default or modification.

Although rate reductions and extended mortgage terms are as outline in the modification agreement, and appear to be permanent, the principal reduction is only a deferment of debt and required to be paid back if at all possible when the subject property is either refinanced or sold. There doesn’t appear to any stipulations on any required timelines and only suggests that if and when values increase and the option is initiated by the borrowers.

To be eligible, the front end debt to income ratio must be as close as possible, but not lower than, 31 percent. The front end ratio is defined as the total monthly mortgage payment (PITI) for the modified mortgage divided by the borrower(s) gross monthly income. The back end debt to income ratio must not exceed 55 percent and is defined as the total monthly mortgage payment plus all recurring monthly debt dived by the borrower(s) gross monthly income.

FHA-HAMP can be utilized only if the borrower does not qualify for current loss mitigation home retention options (priority order FHA Special Forbearance, Loan Modification and Partial Claim).

To confirm the borrower(s) is capable of making the new FHA-HAMP payment, the borrower(s) must successfully complete a trial payment plan. The trial payment plan shall be for a three period and the borrower must make each adjusted scheduled payment on time. If the borrower does not successfully complete the trial period, the borrower is no longer eligible for FHA-HAMP.

Disposition options (pre-foreclosure sales and deed-in lieu of foreclosure) are still available to the servicers/mortgagees immediately upon default, if the cause of default is incurable, i.e. the borrower has no realistic opportunity to replace the lost income or reduce expenses sufficiently to meet the mortgage obligation.

Under FHA-HAMP, the Mortgagees may receive an incentive fee up to $1,250. This total includes $500 for the partial claim and $750 for the loan modification.

It has been reported that an estimated 15% of all FHA insured loans are 30 days or more past due on at least one mortgage payment. Although most FHA modification guidelines stay intact, the new action allows for additional borrower(s) qualification opportunities to reduce monthly obligations while they proceed to build financial stability.



Real Estate Investor · Audubon, Pennsylvania


Christina,

Could you be so kind as to post a link to the source of the stuff you posted here?

Thanks.


Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...



The Full Report can be found at [LINK REMOVED]

Otherwise it is a lot work to gather all the information rolled out - it is found on various HUD links.

Or I can send it to you let me know...



Real Estate Investor · Audubon, Pennsylvania


Hi Christina,

Thanks for posting the link. I didn't realize it was to a collection at your website; the moderators have cleaned up the forum, and links that seem promotional get removed. But I can check it out in the site you have in your signature.


Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...



Here are the links...some can't get you there directly - you will need to find the release within the roll of word doc's and PDF's. The only other item I couldn't find the link to is the graph and stats on the trial run. The following are the links to the role out letter and guides - full guidelines, required affidavit and so forth.

If you are really interested in the trial stats I will keep looking...

For convenience we normally put it all together - but this should get you what your looking for -

http://www.hud.gov/news/release.cfm?content=pr09-137.cfm
http://www.google.com/search?sourceid=navclient&ie=UTF-8&rlz=1T4ADBR_enUS319US319&q=hud+hamp+guidelines
https://www.hmpadmin.com/portal/docs/mod_docs/hamphardshipaffidavit.pdf
mailto:[email protected]
www.hud.gov/offices/adm/hudclips/letters/mortgagee/.../09-23ml.doc



Real Estate Investor · Audubon, Pennsylvania


Thanks!


Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...



FYI Freddie and Fannie offer the new HAMP alternative but the big boost was for FHA insured homeowners.





Sign up