How to Apply for a Loan Modification under HAMP

The Home Affordable Modification Plan, or HAMP, is a program that was enacted under President Obama and is designed to assist distressed homeowners. If you are at risk of losing your home, the HAMP program could potentially benefit you by modifying your existing loan. Here are the basics of how to apply for a loan modification under HAMP. 

Determine If You Qualify

Before you apply for the loan modification program, you need to determine whether you are eligible. In order to qualify under this program, you have to be seeking help for a loan on your primary residence. The loan must have originated before January 1, 2009. The loan amount has to be less than $729,750 for a single family unit. In addition to having to meet property requirements, you have to prove that you are in a negative financial situation. If your mortgage payment is more than 31% of your gross monthly income, then you are able to apply for this program.

Contact Your Lender

Once you have determined that you meet the qualifications to apply for this program, you will need to contact your lender. Talk to a representative from your lender and ask if you can be considered for HAMP. They will then help you begin the process of applying for the loan modification program.

Documenting Hardship

In order to be approved for this program, you will have to be able to prove that you have a financial hardship. This will involve your having to complete an affidavit of hardship. You will also have to write a hardship letter detailing why you are unable to afford your mortgage. You want to give as much detail as possible and provide specific reasons for your troubles. If the reasons behind your inability to pay are determined not to be good enough, you may not qualify for the program.

Prepare Documents

In addition to writing a hardship letter, you will have to prepare several financial documents for review. You will need to create a personal balance sheet that shows your income and expenses over the last year. You should also complete a Borrower's Statement to provide vital financial information to those that will review your application.

Provide Documents

You will need to provide these financial documents to your lender. In addition to that, you will have to come up with other important financial documents for them. You will need to give them your two most recent bank statements. You will also need to provide them with documentation that proves how much money you make. This could include a recent pay stub, a W-2 or another income document.

Target Payment

You will also need to assess your situation and determine how much you would like your new mortgage payment to be. You need to be as realistic as possible in order to make the program work.