Blog Series Part 3: Why Was My Mortgage Ineligible
IndyMac Mortgage Services is continuing its blog series, Denied for HAMP: What Does This Mean?, by examining the variety of reasons you may have been denied for the Home Affordable Modification Program based on eligibility guidelines relating to your mortgage. As we address the three main reasons your mortgage may have not met these requirements, we will also present alternative workout options that may be available to you, following a HAMP denial.
It is important to remember that, just as your property must follow certain guidelines in order to meet eligibility requirements, so must your mortgage. Borrowers should ask three main questions about their mortgage when applying for the Home Affordable Modification Program:
- Did my mortgage originate after 1/1/2009?
HAMP will only apply to home loans that were originated prior to the date of January 1, 2009. Mortgages that were not originated on or before January 1, 2009 will not be considered eligible.
- Is my mortgage a 1st lien mortgage?
Only 1st lien mortgages can be considered for a possible modification. If your mortgage is not a 1st lien mortgage, you will not be eligible for HAMP.
- Is my Unpaid Principal Balance (UPB) greater than the HAMP limit?
The unpaid principal balance (UPB) is the current amount you owe on your mortgage. For your mortgage to be considered eligible, your unpaid principal balance cannot be greater than the maximum amount allowed by HAMP.
This maximum amount will vary based on how many living units your home has. Therefore, your UPB cannot be greater than:
- $729,750 for a one-unit property
- $934,200 for a two-unit property
- $1,129,250 for a three-unit property
- $1,403,400 for a four-unit property
If your UPB is greater than the maximum amount that HAMP will allow for your home, you will not be eligible for a loan modification.
What happens if I am denied for HAMP because of the terms of my mortgage?
If you are denied for HAMP because your mortgage did not meet the guidelines or eligibility requirements there are other options that may be available to you. These options vary by investor and state restrictions and may include a non-HAMP alternative modification program, repayment plan, forbearance plan, refinance, short sale, or deed-in-lieu of foreclosure. Details of each of these programs are outlined below:
Alternative Modification - This is an alternative to the Home Affordable Modification Program. To qualify, borrowers must meet investor guidelines, fully document income, and satisfy all requirements for the specific alternative modification program.
Forbearance Plan - With this option, a servicer may reduce your mortgage payments for a specific period of time, potentially allowing you to improve your financial situation and become current on your loan.
Repayment Plan - This option allows you to repay your delinquent payment amounts by spreading the amount over several months. Along with your regular monthly mortgage payment, a portion of the delinquent amount will be paid each month over the term of the plan.
Refinance – A refinance allows you to renegotiate the terms of your mortgage by paying off your existing loan with the proceeds from a new loan with a lower interest rate or other favorable terms.
Short Sale – This option allows you to sell your home at a market value when it is worth less than the total amount owed. The loan delinquency will register on your credit report as “Settled for Less than the Full Balance Owed.” While this option may adversely affect your ability to obtain credit in the future, it is usually less damaging to your credit score than a foreclosure. Consult a tax accountant, tax attorney, or real estate attorney for credit advice and tax implications before considering this option.
Deed-in-Lieu of Foreclosure – If you are unable to qualify for a short sale, you may be eligible for a deed-in-lieu of foreclosure, which is an option that will allow you to settle your outstanding loan obligation by transferring ownership of the mortgaged property to the lender. The property must be free of any other liens in order to be considered for this option. If a deed in lieu transaction is completed on your property, we will report that your loan was in default and resolved by acceptance of a deed in lieu of foreclosure. Please, consult a tax accountant, tax attorney, or real estate attorney for credit advice and tax implications before considering this option.
When considering any of these alternatives, it is important that you contact our customer contact representatives to review each option and find out which alternatives may be available to you based on your financial situation.
If you have any additional questions about HAMP, the mortgage requirements of HAMP, or what to do if you are denied for HAMP please feel free to contact one of our customer contact representatives at 1.800.781.7399.