HUD recently implemented new changes to its FHA loan modification guidelines that will allow FHA borrowers to significantly reduce their monthly mortgage payments by seeking a loan modification through their current mortgage company or loan servicer. FHA will pay an incentive to loan servicers for each FHA loan modified under this program. The program, known as FHA's Home Affordable Modification Program (or FHA-HAMP) begins August 15, 2009. The program will permanently reduce a family's monthly mortgage payment through the use of a partial claim, which defers the repayment of mortgage principal through an interest-free subordinate mortgage. This subordinate mortgage will not be due until the first mortgage is paid off. The program will allow HUD to bring the borrower's payment down to an "affordable" level, by bringing the mortgage current and buying down the loan by up to 30 percent of the unpaid principal balance.
For more information, please see HUD's news release on FHA-HAMP Implementation here and FHA-HAMP Program Eligibility Criteria here.
