Important: All results are guesses for educational purposes only. There is no warranty for this software or any of its results. Guesstimates provided here are based on independent research of documents made public by the US Treasury from 2009. Guesstimates may not match official calculations. Guesstimates do not carry the approval or endorsement of any government agency or bank and should not be used for any official purposes.
Unpaid Loan Balance, i.e. what is owed on the home
(Max Eligibility: up to $729750 for a 1 unit to $1.4M for a 4 unit)
Months Remaining on Loan
Current Interest Rate for Loan in %
(for ARMs use the reset rate instead of the low fixed/teaser rate)
Freddie Mac 30YR FRM Avg rate in %
Re-enter by hand from the table below, or make a guess at the future
Freddie Mac copyrighted loan market data provided "as is", under a public syndication policy of Freddie Mac and with no warranty of any kind.
See how to add Freddie Mac data to your website
Outputs
Target monthly payment level
(Treasury's policy target; % of income)
$
Modified Interest Rate (first 5 years)
%
Modified Monthly Loan Payment (first 5 years)
$
Length of Modified Loan (months)
Months for which rate changes will occur
New Rates beginning on these months (%)
New Monthly Payments ($) beginning on these months
Balloon payment at end of loan
$
These results are provided "as-is" and with no warranty of any kind, and represent a reasonable guess of how to calculate Treasury Supplemental Directive 09-01 but may not match what Treasury is actually using. Besides rounding and differences in interpretation, they may have changed the rules. Procedures and calculations are subject to change and should not be relied upon for any particular case. Actual results may vary. If you need advice specific to your case, please consult a legal or financial professional.
Steps described in Treasury Supplemental Directive 09-01 for implementing HAMP
Capitalize accrued interest and certain costs. To do this, make sure the unpaid balance includes all unpaid interest and other fees that can be assessed against this loan. Interestingly, late fees are not to be included in the unpaid balance when making the calculations. (So what happens to the late fees?)
Convert ARM loans to fixed rate, fully amortizing loans. Reduce the interest rate from the current rate by 0.125% drops to as low as 2.0% to try to reach the target monthly payment level. If the resulting rate is below the Freddie Mac 30 YR rate then bump up the interest rate 1.0%/year after year 5 until that rate is reached. If the resulting rate is higher than the 30YR then keep the rate steady where it is.
If necessary, extend the term and recalculate as up to a 480 month (40 year) loan
If necessary, provide for non interest-bearing principal forebearance to achieve the target monthly mortgage payment ratio, i.e. a non-interest bearing balloon payment.
Although in some cases the modifications suggested by the Treasury program descriptions look quite good for the distressed homeowners, they may also be bad for the lender. Modifications do not have to be made if computer modelling shows the lender could realize more money through foreclosure or foreclosure alternatives like cash-for-keys.
Example: before 12/31/2012, If you owe $300,000 and the property sells for $200,000. The $100,000 difference in reported income is NOT taxable in most cases*
Short Sale or Foreclosure Before December 31, 2012
Short Sale or Foreclosure After December 31, 2012
100K @ 0% = $0 in additional taxes owed to the IRS*
$100K @ 35% tax bracket = $35K in taxes owed to the IRS*
So what are other homeowners doing?
Many homeowners that are considering a short sale or a loan modification have decided that instead of waiting for the market to come back they are opting to sell their house now and get out while the getting is good! If you owe more than your house is worth, it will take years to break even. If you decide to sell your house BEFORE you break even, there will be debt that is settled by the lender. Pursuit of a short sale AFTER this deadline expires will be subject to additional tax liability.
WARNING: To date, only 1.6% of applicant borrowers have received permanent modifications. Loan Modifications taking over 360 periods and having ending balances...are flat rejected. They will keep your money during the trial period and add it to back end of the loan.
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