Loan Modifications under HAMP Tier 2

May 6, 2015
Law Office of Ray Garcia, P.A.

As of June 1, 2012, the Obama administration expanded the HAMP program to borrowers who did not meet the eligibility requirements under HAMP Tier 1. HAMP Tier 2 is available to homeowners who want to modify a rental property, did not qualify for HAMP because their debt-to-income ratio was 31% or lower, received a HAMP trial period plan but defaulted in their trial payments, or received a HAMP permanent modification, but defaulted in their payments within a ninety (90) day time frame and lost good standing.

For HAMP Tier 2 modifications, the loan is modified by capitalizing the arrears, adjusting the interest rate to the current PMMS rate plus a “risk adjustment” expressed in basis points, extending the loan term to 480 months, and principal forbearance or principal reduction. Under HAMP Tier 2, a modification must have at least a 10% monthly principal and interest reduction and the resulting payment must fall within a range of 25% to 42% of the borrower’s gross monthly income. In addition, the modification must result in a positive Net Present Value (NPV) for the investor. For more information regarding loan modifications under HAMP Tier 2, please feel free to contact our office at 305-227-4030 or email us at legal@raygarcialaw.com.

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Law Office of Ray Garcia, P.A.

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