Homeowners who took advantage of the Home Affordable Modification Program™ (HAMP) may begin receiving notices that their monthly mortgage payments are about to increase. HAMP’s five year anniversary also means that interest rates on modified loans has been reset. Participants in HAMP initially received interest reductions at below-market-rates. Beginning this year, the rates will increase by a maximum of 1percent annually until the “cap” rate is reached[i]. After the cap is reached, interest rates will remain fixed for the life of the loan.
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HAMP Borrowers Face Rate Increases
[i] The “cap” rate was based on the Freddie Mac Weekly Primary Mortgage Market Survey Rate for 30-year fixed-rate conforming mortgage loans, round to the near 0.125%, as of the date of the modification agreement was prepared.