Making Home Affordable Program for Homeowners in Bankruptcy

Augusta Mortgage Modification Attorney

The Making Home Affordable Program is a critical part of the government’s effort to stabilize the housing market and help struggling homeowners get relief and avoid foreclosure. The Program includes opportunities for homeowners in bankruptcy to modify their mortgage to make their payments more affordable through the Home Affordable Modification Program (HAMP). This program is available to debtors filing Chapter 7 bankruptcy, Chapter 11 bankruptcy and Chapter 13 bankruptcy.

Homeowners who’s monthly mortgage payment exceeds 31 percent of their verified gross (pre-tax) income may apply for a HAMP modification before or after filing bankruptcy. To qualify for a HAMP, the homeowner must:

1. Own a one to four-unit home that is their principal residence;
2. Have received their mortgage on or before January 1, 2009;
3. Have a mortgage payment (including taxes, insurance, and homeowners’ association dues) that is more than 31 percent of their gross (pre-tax) monthly income;
4. Owe an amount that is less than or equal to $729,750 on their first mortgage for a one-unit property (there are higher limits for two- to four-unit properties); and
5. Have a documented financial hardship.

To apply for HAMP, homeowners must submit an initial Package to their mortgage servicer, which includes:

1. A complete Request for Modification and Affidavit
2. A complete Tax Authorization Form (IRS Form 4506T-EZ)
3. Proof of Income.

These forms and a Proof of Income checklist are available on the Making Home Affordable Web site – www.MakingHomeAffordable.gov. Homeowners may also obtain copies of these forms from their bankruptcy trustee.

Mortgage servicers will determine whether homeowners qualify for a modification under HAMP. Homeowners who qualify must complete a trial period of three or four months to demonstrate that they will be able to make reduced payments on time before their mortgage will be permanently modified.

Homeowners should discuss HAMP with their bankruptcy attorney before making an application for a HAMP loan modification. Individuals who have filed bankruptcy can review frequently asked questions for more information. Contact our office today to schedule a consultation about mortgage modification.