Second modification on existing HAMP? We received notice to foreclose. We are 2 months behind in payments.

We are 2 months behind on our HAMP approved mortgage due to loss of employment December 2010. We are not making our expenses. We are not eligible for unemployment. Can our existing HAMP be modified a second time based on hardship?
Thank you.

Mortgage Loan Modification Answer:

Unfortunately, most banks will not entertain a new loan modification application until after 12 months of "on-time" payments on your current loan modification rate and terms.

There are two things that may make it difficult for you to be able to re-apply for another loan modification:

1. It sounds like you have fallen behind on your current HAMP loan mod payments. That will pose a problem in re-applying.

2. Your most recent approval was less than 12 months ago.

You now have to make the tough decision to seriously entertain a short sale of your property. This would be the least damaging solution with regards to your credit. If the property is your primary residence and you only have a first mortgage, your lender is not allowed to file for a deficiency judgment and you are exempt from IRS tax liabilities due to the Debt Forgiveness Act.

Starting from a blank slate may be the best thing for you. Renting is a fantastic option as it is often less expensive than paying a mortgage, and there are no property taxes, insurance, and maintenance expenses to worry about. It could just be the break you need at this time.

Your credit can always be repaired and when you find new employment, your financial situation will be much less daunting without the burden of an unaffordable mortgage payment.

All the best to you and your family!

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