Loan Modifications under HAMP Tier 2

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

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Law Office of Ray Garcia, P.A.

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