HAMP v. In-House Mod

A bank needs to put any HAMP eligible loan through a HAMP modification review prior to successfully foreclosing on any residential property. This is both good and bad. It's good because it gives the courts the power to slow down a foreclosure until they're certain the bank has reviewed a person's unique situation for a HAMP mod. It's bad because HAMP is a slow, drawn out process. While a homeowner is under review for a modification missed payments, interest and attorneys fees can still be added to the total amount due on the mortgage. The more that is owed on the mortgage the more difficult it is to get modified.

Time Before Response

HAMP mods require the bank to follow government created guidelines before offering the modification. In-House mods vary by bank but instead of requiring the extensive paperwork necessary for a HAMP mod an In-House mod may require very little paperwork. I've seen a few In-House mods that were actually "blind" meaning without any paperwork.

How the Modification is Structured

HAMP mods are required to be as close as possible to 31% of the household's pre tax income. The net present value of that loan is then compared to the net present value of the foreclosure. The bank is permitted to do whichever one has a higher net present value. In-House mods follow no set structure. Since they cost less to offer (less employee time and lawyer time spent on the loan) banks are quicker to offer them and sometimes offer better deals than the homeowner would receive under HAMP.

Reaching Permanent Status

HAMP trial mods come with a 3 month trial period. At the end of the trial period homeowners must resubmit certain documents prior to the loan going Permanent. Sometimes this can take months other times it can be quick. In-House mods are almost always (99% of the time) Permanent instantly. There is no trial plan period.

Documents Required

HAMP mods always require the following: Financial Worksheet, Hardship Affidavit, Bank Statements, Pay Stubs or Profit and Loss Statement, 4506-T and Tax Returns. You may also be required to submit proof of rental income, proof of occupancy and a number of other government required documents. As with any government program there is a lot of paperwork. In-house mods can require nothing and can require everything listed above for HAMP mods. They're not part of a government program and therefore the bank can make their own requirements.