The Home Affordable Modification Program, or HAMP, is a government program that can help you obtain a more affordable mortgage payment to work with. With a loan modification, the lender agrees to change the terms of your loan. After you enter into this program, you may wish to sell your home at some point in the future.
When you enter into the Home Affordable Modification Program, you are still working out a deal with your lender directly. The program simply provides the incentive for the lender to modify your loan for you. The deal is still between you and your lender. This means that when you work out the loan modification with your lender, you should pay special attention to the terms of the deal. In some cases, the deal may have restrictions on when you can sell.
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In some cases, a lender may not want you to sell immediately after agreeing to a loan modification. This is because the lender had to concede some profit on the front end of the transaction to get you a lower monthly payment. If you immediately turn around and sell your house, the lender will not recover these costs in time. Because of this, lenders sometimes require you to live in the house for one to five years after the modification.
Selling the House
If the contract that you sign for the loan modification does not have any specific wording dealing with selling your house, you are then entitled to sell the property. At that point, you can sell the property and use the money to pay off your mortgage. If you are in a loan modification, you should not also expect to sell your home through a short-sale arrangement. Your lender has to accept a short sale and may be unwilling to work with you if it has already agreed to a modification.
If you know that you want to sell your house, entering into a loan modification may not make sense on your part. A loan modification is a process that can help you over the long-term if you want to stay in your house. If you want to sell your house in the immediate future, it might make sense to simply try to make the payments while you have the house on the market. This way, you will not have to worry about any restrictions.
- Justice.gov: Home Affordable Modification Program for Homeowners in Bankruptcy
- Bargaineering; Making Home Affordable Mortgage Refinance &amp; Modification Program; Jim Wang; April 2009
- Making Home Affordable: Home Affordable Modification Program (HAMP)
- Loansafe.org; Can I Sell My Home During a Loan Modification?; April 2010