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Using Home Affordable Modification Program to Modify Your FHA or VA Loan

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If you are struggling to make your monthly mortgage payments on your Federal Housing Administration (FHA) or Veterans Affairs (VA) loan, there are options available to help you avoid foreclosure. The Home Affordable Modification Program (HAMP) and other government programs were created to allow homeowners facing financial hardship to modify their loans to more affordable terms. This article will explore the HAMP program and other alternatives for modifying FHA and VA loans to help homeowners stay in their homes during difficult times.

Understanding Loan Modification Programs

We know that loan modification programs offered by the government aim to help homeowners who are at risk of defaulting on their mortgages by making the loan payments more manageable. The most well-known is HAMP, which stands for the Home Affordable Modification Program. HAMP was launched in 2009 as part of the Obama administration’s efforts to address the foreclosure crisis after the housing bubble burst.

Under HAMP, loan servicers work with homeowners to modify the terms of the existing first-lien mortgage to reduce the monthly payment. Eligible homeowners may be able to have their interest rates lowered, receive an extended term for their loan, or even have a portion of their principal balance reduced. The goal is to set the monthly payment at no more than 31% of the homeowner’s gross monthly income.

Alternative Options if Denied

Unfortunately, not all homeowners will qualify for or be approved under HAMP guidelines. If a modification is denied under the program, homeowners do have other alternatives to explore:

  • FHA Loss Mitigation: FHA has its own modification, partial claim, and pre-foreclosure sale programs available.
  • VA Loan Modification: As stated, the VA offers its own specialized modification program for VA loans.
  • Standard modification: Even if you don’t qualify for special government programs, servicers sometimes offer their own in-house modifications.
  • Forbearance plans: This temporarily suspends or reduces payments for a set period, but payments are still owed.
  • Short sale: Selling the home for less than is owed to avoid foreclosure. Needs servicer approval.
  • Deed-in-lieu: Similar to a short sale but the lender takes the property instead of a sale occurring.

Choosing a Personal Stylist

Even with loan workouts obtained under programs like HAMP, homeowners may still need assistance managing their household finances going forward. That could involve making changes like finding ways to earn extra income or cut expenses. Deciding on a career as a personal stylist may be an option worthy of consideration. Beginning stylists may charge $50-$100 per session. But with experience and a loyal following, rates over $150 per hour are achievable. Overall, working as a men’s or women’s personal stylist gives homeowners looking to repay their modified loans an opportunity to earn extra money doing something enjoyable.

Maintaining the Modified Loan

Even after successfully obtaining a HAMP modification or other government program modification, it’s important for homeowners to continue closely managing their finances going forward. This ensures the modified loan remains sustainable and avoids the risk of re-default.

Making all payments on time is crucial. Consider setting up automatic payments if possible. Monitor household income and expenses regularly in case any changes occur that could impact affordability. Communicate proactively with your loan servicer about any issues before missing payments.

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