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I am in the process of getting enrolled in the Home Affordable Modification Program through my bank to lower my mortgage payment, which is high because I got my house back in 2007 and haven't refinanced since. There is a number of reasons why I haven't done regular refinancing but that should be outside the scope of this inquiry.

I bought the house on an 80/20 loan, which means I have two mortgages on the house. The bank through which I am doing the HAMP is the 80 (primary) loan. That interest rate is relatively high but the 20 is even higher.

When I talked to my account manager who is helping me with the HAMP, I asked if they could buy out the 20 loan and bundle it into the deal but he said he wasn't sure.

I have several questions regarding this prospective modification:

  1. Will it adversely affect my credit score and for how long?

  2. Should I call the 20 loan servicer and request that I enroll into HAMP for their loan as well separately from the primary loan?

  3. Is there a way to somehow bundle the two loans together once I am enrolled in HAMP not trough either servicer but the government program administration agency that oversees the HAMP program? Or is there any way to bundle them together? HAMP modification does not do cash back like a real refinance deal.

  4. My house is currently worth about twice the amount of outstanding loan on it so there is tons of equity that I would eventually like to draw from when I become (for reasons not to be elaborated here) eligible to refinance. Will the HAMP enrollment undermine my prospects for refinancing in the future and pulling equity cash out?

  5. Will HAMP enrollment make me subject to some government scrutiny that I am currently not subject to, because I am receiving government assistance? Sort of like unemployment benefit recipients have to do job searches etc. IOW, are there government strings attached to this deal.

  6. Any other aspects I haven't specifically listed?

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Here are your answers to the best of my knowledge...

  1. Yes it will adversely affect your score for years but it wont be as bad as a short sale or foreclosure. Think somewhere between 90 days late payment and short pay settlement.

2.You can try but HAMP's typically don't do 2nd mortgages. So I doubt that will work.

  1. No they HAMP program has strict guidelines and I have modified a lot of loans thru HAMP and never have I seen them bundle loans together. They are not setup like that. You are better off doing a completely separate mod on the 2nd or trying to do a short payoff on the second. Many second loans will settle for pennies on the dollar because they know they can be knocked off with a BK if their is no equity to cover them.

  2. After reading this statement you cant do step 3. Your 2nd will check and see what equity you have and if you have equity the banks will get it before you do. You seem to look at a HAMP modification like a refi and it is COMPLETELY different. A HAMP mod will sometimes reduce the loan amount to bring the house back into alignment with house prices. That wont be the case with yours because you have equity so you would just get the benefit of a lower payment.

  3. No, other than they will want to see your Income tax return before they give you the mod.

  4. Hope all this helps Good Luck!

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