What are the common pitfalls and challenges of partial claim and HAMP?

1 Eligibility criteria

One of the first challenges of partial claim and HAMP is meeting the eligibility criteria. For partial claim, you must have an FHA-insured loan, be at least four months behind on your payments, and show that you can resume paying your mortgage after receiving the loan. For HAMP, you must have a loan originated before January 1, 2009, owe no more than $729,750, and have a financial hardship that makes your current payment unaffordable. If you do not meet these criteria, you may not qualify for either program, or you may have to explore other alternatives.

2 Paperwork and documentation

Another challenge of partial claim and HAMP is completing the paperwork and documentation required to apply. For partial claim, you must submit a loss mitigation application, a financial statement, a hardship affidavit, and proof of income and expenses. For HAMP, you must submit a request for modification and affidavit, a tax authorization form, and proof of income. You must also keep copies of all your documents and follow up with your servicer regularly to check the status of your application. If you miss any deadlines, provide incomplete or inaccurate information, or fail to communicate with your servicer, you may lose your chance to get help.

3 Impact on credit and taxes

A third challenge of partial claim and HAMP is the impact on your credit and taxes. For partial claim, you will have a lien on your property until you repay the loan, which may affect your ability to refinance or sell your home. You will also have to pay interest on the loan, which may add to your debt burden. For HAMP, you may see a temporary drop in your credit score, as your loan will be reported as modified or in a trial period. You may also have to pay taxes on the amount of debt that is forgiven or reduced by the modification, unless you qualify for an exemption.

4 Success rate and sustainability

A fourth challenge of partial claim and HAMP is the success rate and sustainability of the programs. For partial claim, you will have to resume paying your original mortgage payment plus the partial claim loan payment, which may still be unaffordable for some borrowers. You will also have to keep up with your payments for at least three months to avoid foreclosure. For HAMP, you will have to complete a trial period of three or four months before your modification becomes permanent, and you will have to comply with the new terms for the life of the loan. Some borrowers may not be able to sustain the modified payments, especially if they face additional hardships or expenses.

5 Alternatives and options

A fifth challenge of partial claim and HAMP is knowing your alternatives and options. If you do not qualify for either program, or if you find them insufficient or unsuitable for your situation, you may have other ways to avoid foreclosure. For example, you may be able to refinance your loan, sell your home, request a forbearance, or negotiate a short sale or a deed in lieu of foreclosure. You may also be able to seek legal advice, counseling, or mediation to help you resolve your mortgage issues. You should always compare the pros and cons of each option, and seek help from reputable sources.

6 Tips and best practices

A sixth challenge of partial claim and HAMP is following the tips and best practices to maximize your chances of success. For both programs, you should contact your servicer as soon as possible, explain your situation honestly, and cooperate with their requests. You should also review your budget, cut down on unnecessary expenses, and save as much as you can. You should also monitor your credit report, keep records of all your communications and transactions, and avoid scams and frauds. You should also seek guidance from HUD-approved housing counselors, who can help you understand your options and rights.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?