What is a traditional modification and how does it differ from the HAMP and MHA modification program

If you are wondering what are the differences between a traditional modification and a government Home Affordable Modification Program "HAMP", or the Making Home Affordable "MHA" program, this article will shed some light on the slight differences.



1)Traditional modification: The lenders own version of assistance; it may also be called a "in-house modification". You may need to come up with more upfront funds or what is called "good faith deposit" in order to be approved for this type of modification. The interest rate maybe not be, as low as the government program and your interest rate may not be fixed for the life of the loan.



2) HAMP modification: The government’s version of a loan modification. You may also here this be called the "Making Home Affordable Modification". This modification will have some incentives for the home owner(s). A rate as low as 2%, extension of term to 40 years, monthly incentive going towards a principal reduction. For more information visit www.makinghomeaffordable.gov.

If you do not qualify for either of these programs most lenders have other loan workout options. The best thing to do is visit their website or call your lender and ask what other options are available. Some of these could be:



Special forbearance repayment plan

Partial claim cash for keys

Restructure Forbearance

Reinstatement Partial reinstatement

Deed in lieu Short sale



Since the trend lately seems to be for lenders to use their own in house loan modifications then use the Hamp program, even though there are incentives for the lenders and borrowers. Make sure you ask as many questions when applying so you know what program may best suit your needs. Not every lender will have the same type of loan modification, even though loan modifications do not vary, the guidelines on how you are approved can vary due to the investor who owns your mortgage. When talking to friends or family who may have gotten a loan modification, it is important to remember you cannot compare their results to yours. Each person’s financial picture will be different and the owner of the mortgage will vary too much for you to compare results.