May 27, 2018

HAMP Borrowers Face Rate Increases

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HAMP Borrowers Face Rate Increases

With the five-year anniversary of the federal government’s Home Affordable Modification Program coming up, home owners who received loan modifications through the program should expect to face a mortgage-rate increase soon. Rates will rise in increments of up to 1 percent a year.

"When these loans were modified, the interest rate was reduced to a below-market rate [as low as 2 percent] for a set period of time [generally five years]," writes Laura Haverty on Fannie Mae's Housing Industry Forum. The interest rate will increase annually by a maximum of 1 percent per year until it reaches a “cap” rate that was set as part of the modification agreement. Once the interest rate reaches that cap period, it will remain fixed for the life of the loan.

The payment changes are set to take place to many borrowers’ accounts by April 1.

Source: “Reminder HAMP Home Owners: Your Mortgage Rate Will Increase,” HousingWire (March 12, 2014)

Read more:

Report: Default Rate on HAMP Mods High
Treasury Department Extends Mortgage Relief, Refinancing Program
Federal Agencies Crack Down on HAMP Fraud