'Permanent' HAMP rates aren't
Thousands of homeowners who modified their mortgages through the Home Affordable Modification Program, or HAMP, with annual interest rates as low as 2 percent will soon see their mortgage payments climb.
The "permanent" modifications offered through the government program expire after five years. That means the interest rates on more than 30,000 mortgages modified through HAMP in 2009 are scheduled to increase this year, according to a report by the Special Inspector General for the Troubled Asset Relief Program. This will be the first round of increases and might catch many homeowners by surprise.
Able to repay?
"While homeowners will receive reset notices, they will need to assess whether they can afford the new payments," says Alys Cohen, a staff attorney for the National Consumer Law Center. "Many of them may be able to, and those who cannot will need to seek an additional modification."
Next year, nearly 300,000 homeowners will be hit with a rate increase. The increase can be up to 1 percentage point per year until it reaches the level of the 30-year fixed interest when it resets.