Income level Required for HAMP Loan Modification

by Jerry
(Lewisville, Texas, USA)


I am told that our income is just over the guideline to allow a Hamp modification. What is the maximum amount?

Mortgage Loan Modification Answer:

According to HAMP guidelines, it's not so much the level of your income but the ratio of the total of your (PITIA) principal, interest, property taxes, insurance, and homeowners association dues, if any, in relation to your income. Take your monthly PITIA and divide it by your total gross monthly income. This is called the front-end ratio.

If your front-end ratio is lower than 31%, you will not likely get approved for a HAMP loan modification as most lenders are not obligated to lower your monthly mortgage payments below the 31% which is required by the HAMP program. They can if they want to, but are not likely to do so because they do not receive any additional financial incentives from the government for doing so.

Please ask your lender to clarify their reason for denial of your application.

Please feel free to post again if you have any further questions.

All the best of luck to you.

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Jul 28, 2010
Mortagage Modification Income
by: Dean - St Louis

Yes, the 31% front end ratio is correct. Be aware that some lenders base this on gross income on your paycheck stub and some on net income on your paycheck stub ( I have seen both). Don't know if there is a requirement under HAMP to use one or the other. Also I have seen some lenders take 31% of income and add escrow to it. (Anyone have an answers to these?)

In addition, your financial statement starting with your net paycheck income less expenses less the 31% of gross income (I always use gross for this) must be a positive number. In other words, your expenses with your anticipated modified mortgage payment can not exceed your net paycheck income.

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