The U.S. Department of the Treasury recently released its Home Affordable Modification Program Guidelines, which include eligibility requirements to determine which homeowners qualify for relief under the plan. Following are the eligibility requirements as specified in the guidelines:

• Mortgage must have originated on or before January 1, 2009.

• Home must be an owner-occupied primary residence (verified with tax return, credit report, and other documentation such as a utility bill) – this program is not designed for investor-owned properties.

• Home must be a single family 1-4 unit property (including condominium, cooperative, and manufactured home affixed to a foundation and treated as real property under state law).

• Home may not be vacant or condemned.

• Borrowers in bankruptcy are not automatically excluded from consideration.

• Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.

• First lien loans must have an unpaid principal balance (prior to capitalization of arrearages) equal to or less than:

1 Unit: $729,750
2 Units: $934,200
3 Units: $1,129,250
4 Units: $1,403,400

• Foreclosure actions are suspended during the trial period or while borrowers are considered for alternative foreclosure prevention options. If homeowners fail to qualify, foreclosure proceedings may resume.

• No minimum or maximum LTV ratio for eligibility purposes.

• Loans are eligible for only one loan modification under the program.

• Subordinate liens (such as second mortgages or home equity loans or lines of credit) are not included in the Front-End DTI calculation, but they are included in the Back-End DTI calculation.

• Servicers should follow any existing express contractual restrictions with respect to solicitation of borrowers for modifications.

Applicants will be accepted into the program until December 31, 2012 (the program expiration date), but incentive payments will continue up to five years after the date of entry into the Home Affordable Modification Program. Monitoring will continue through the life of the program.

Keep in mind that these eligibility requirements are simply government guidelines. Avoid the temptation to qualify or disqualify yourself based solely on what the eligibility requirements indicate. Consult a loan modification specialist who works with lenders on a daily basis to review your situation and determine whether you are likely to qualify. Sometimes the only way to determine whether you qualify is to actually submit your loan modification application.

Ralph R. Roberts, GRI, CRS Award-Winning REALTOR® and Author Loan Modification For Dummies (avail. Summer 2009)