The Home Affordable Modification Program, otherwise known by the acronym HAMP, is about to see some changes. The administration is changing the requirements that homeowners need to meet in order to get a trial mortgage modification. This comes, at least in part, as a response to the relatively low ration with which people enrolled in the temporary modification program wind up getting those modifications made permanent.

The new requirements

Starting June 1, if you want to get a trial modification through the HAMP program you’re going to have to submit some documents up front. You’ll need to be able to provide two paycheck stubs, your application form for the program, and an affidavit that proclaims hardship. You’ll also need to allow the home loan servicer access to the data in your tax returns.

How is it different?

Up to this point, the current practice has been for loan servicers to grant the trial modification based on the statement of income that the homeowner provides to the servicer over the phone. While the trial modification is in effect, the servicer then requires that the homeowner get the necessary documentation together to be reviewed.

Why the changes may help

Once the documentation is assembled, the application can be considered. If everything is in order and the homeowner meets the necessary requirements, the home loan modification can be made permanent.

It’s in this area of paperwork that things seem to be getting stalled, however. Consumers are having difficulty with being able to provide the necessary documentation. In other cases, the loan servicers appear to be losing the documentation that’s been submitted by the homeowners. In a significant number of cases, as well, it would seem that the homeowner could not provide any necessary verification of their income in order to get the modification to their home loan made permanent.

The administration has even pointed to the issue of documentation as a reason why so many trial modifications are never made permanent. They claim to be learning the lessons of the past, and these new upfront documentation requirements are how they’re proposing to fix this problem.

How it will work now

People who try to enter the HAMP program after June 1 will have to submit the required paperwork. Once it’s approved, they will then need to make three modified payments in a row on time. Once they’ve done that, the modifications will be made permanent automatically. In this way, the second step of having to submit paperwork after the trial starts is eliminated.

It’s also hoped that this new process will help eliminate some of the confusion that may have take place during the early days of the program.

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