The Obama mortgage modification/bailout plan known as HAMP, has a small number of reasonably easy to meet criteria that must be met to potentially receive a mortgage modification and lower your mortgage payments.
First, there's your debt to income (DTI) ratio.
The magic number is 38%, as your DTI must be at or below that percentage.
Simply take all your monthly mortgage debts, and these debts include the mortgage payment, monthly property taxes, insurance and any homeowner's fees, and then divide that number into your household's gross monthly income.
The resulting percentage needs to be 38% or less.
For example: if your mortgage and associated expenses are $2,000 per month, and your gross household income is $5,500, then take 2000/5500 and you have a 36.
3% DTI, which is good as you're under the maximum of 38% and can move on to the next qualifying factor.
Something else to know is that if you receive a loan modification under HAMP, the modification will actually lower your DTI to 31%, through a reduction in your interest rate and/or extending the loan term to 40 years.
In some rare cases, a principle balance reduction can also be done.
The next criteria is that you must also be living in the home (this is referred to as "owner occupied").
You can't live in one home and try to get a loan modification under this program for an investment property or a second home.
Another criteria is you must be experiencing some type of financial hardship.
You can not be going along just fine financially and decide you would like a lower mortgage payment "just because" and think you will get a loan modification.
That won't happen as your application without a valid financial hardship will be turned down.
An easy to meet criteria for many homeowners is the loan amount itself, which must be equal to or less than $729,750.
The last of the major HAMP criteria is also easy for most homeowners to meet and that is the loan must have been originated prior to January 1st, 2009.
Now, here is the real kicker, even though these are pretty easy guidelines to know, understand, and meet, and even though the majority of homeowners should qualify, we are still seeing the banks refuse to do a loan modification for people who should qualify.
Some banks have refused to sign up for the Obama bailout program, while others simply stall, lose your paperwork, and offer such horrible customer service that homeowners get frustrated and give up.
This goes back to an earlier article that I wrote in that you must be adamant that you know that this is something that can be done.
You have to be very direct with the bank and not take any grief from them.
Keep a log of every phone call you make to the bank and what transpired during that call.
If the clerk you're dealing with is not giving you the answers you need, move on to a manager and if necessary, send valid complaints (signature required) to the banks upper management with a "CC" and copies to the; FTC, FDIC, the Treasury Dept/Office of the Comptroller of the Currency (Treasury/OCC), and your State Attorney General.
Your attitude needs to be that you're going to get this done; you want to stay in your home.