HAMP Tips: Making Home Affordable

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Are you looking for a mortgage modification? Here are some tips to help you figure out if you qualify for the federal Home Affordable Modification Program (HAMP).

Step 1.

Check to see if Fannie Mae or Freddie Mac owns your loan.

Check to see if your servicer participates in HAMP (click on show all services).

If Fannie or Freddie holds your loan or if your servicer participates in HAMP, ask your servicer how to submit a HAMP application.

Step 2.

Generally, here's what you need to do to apply:

• Alert your servicer that you want to apply.
   
• Fill out two forms:
  1. Request for Modification and Affidavit Form (RMA)
  2. The 4506T tax form
      
• Submit your two forms, along with these documents:
  • Two most recent bank statements
  • Two most recent paystubs
  • Most recent, signed, tax returns
  • Explanation, in writing, of anything that might make your application appear to be incomplete. (For example, if you don't have a bank account, you need to inform the servicer in writing so they understand why there are no bank statements).

Step 3.

Follow up with your loan servicer at least once a week after you apply to check the status. Ask if they are waiting for anything to complete your application. Ask which department the application is with.

Typically, the application will move from a loss mitigation or retention department to a loan negotiator and/or underwriter. From there it might go to a quality control department. Then, finally, it might go to the investors for approval.

If your application is stalled in “loss mitigation,” it is likely because they are not marking the application as “complete.” You need to check in to ensure that they have everything they need to move your application through the process.

What can I do if I'm denied?

If you get a letter stating that you are ineligible, ask why. Your servicer is required to provide the reason you were turned down. Denials often occur due to errors.

If you get notice that you did not qualify because your existing payment is already less than 31% of your gross income and you know that isn’t true, dispute or appeal the decision. Inform the servicer that it appears the inputs were incorrect. Then work with them to get them necessary paperwork so that your appeal can move forward.

There are valid reasons for a denial, but errors often occur. So check the reason for denial and follow up with your servicer to correct any errors. This is the best way to ensure that your servicer complies with the HAMP guidelines. Learn more about the HAMP guidelines and rules: The “Supplemental Directives” include important additions to the Handbook.

What are some common mistakes that result in denials?

• Not submitting a complete application
   
• Not signing tax returns (These should be signed and dated even if you filed them electronically.)
   
• Not properly documenting income
  • If you are self-employed, you will need to submit profit and losss statements.
  • If you receive benefits or alternative sources of income (alimony, child support, rental income), these must be documented adequately.
  • Getting frustrated when the servicer does not have a complete packet even though you have faxed documents 3 times. The purpose of checking on the status each week is to ensure someone is looking at your application and that it moves along. For example, you faxed documents. The signature page of your tax return did not get into their system when it was scanned in. Your application will not move, and eventually you will be declined for "failure to return requested documents." It is frustrating, but you must check the status and submit what is requested.
  • Assuming that you don't need to submit everything requested because it doesn't make sense. For instance, if you provide your complete tax returns for the past two years, you may assume you don't need to provide the 4506T (request for transcript of tax return). This is not the case. Your application will generally not be marked complete unless you provide everything required, even if it doesn't seem necessary. If there is anything requested that you cannot provide, you must provide, in writing, an explanation to be included with the application.

More information about the Making Home Affordable Program.

October 2010
PTLA # 675