Many HAMP loans will receive an interest rate increase in 2014
Did you receive a mortgage loan modification through Fannie Mae’s HAMP program between 2008 and 2011? If, so you may be receiving an interest rate increase after five years from your loan modification date.
Many homeowners were facing foreclosure during the period between 2008 and 2011, due to the banking crisis, the housing bubble and the economic downturn of the US economy. During this time, many Americans received help through the federal mortgage program called HAMP – Home Affordable Mortgage Plan.
Fannie Mae just announced a reminder to all homeowners who received a loan modification during 2008 – 2011 through the Home Affordable Mortgage Plan that an interest rate increase will be coming. The five year anniversary of the program is upon us, and Fannie Mae reminded their servicers that they need to implement these payment change notifications by April 1, 2014.
According to a new report from the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), of the 894,302 homeowners with active HAMP permanent modifications, an overwhelming 88 percent are scheduled to see mortgage rate increases.
When these loans were modified under the Home Affordable Modification Plan (HAMP), they received interest rates that were well under the market rate for a set period of time. These loans will begin to receive a rate increase of up to 1 percent each year, until it reaches a cap rate which is based on the Freddie Mac Weekly Primary Mortgage Market Survey Rate for 30 year fixed rate conforming mortgage loans as of the date that the modification agreement was prepared. The increases will take place between 2014 and 2021.
If you as a homeowner have difficulty paying the increased interest rate, consider contacting a certified housing counselor from Michigan State University Extension to assist you in meeting the new budget demands of the loan.