In Bulletin 2011-16 dated September 12, 2011, the Federal Home Loan Mortgage Corporation (Freddie Mac) published the requirements for its Standard Modification program. For the debtor looking to save a house, before contemplating bankruptcy, the debtor might look into the Standard Modification, which serves as a workout option for borrowers who are ineligible for the Home Affordable Modification Program (HAMP) or previously defaulted on a HAMP or other modification.
Treasury Department data released in August 2011 indicated, since HAMP launched in March 2009, more than 1.6 million trial modifications have been extended. However, over 760,000 were canceled due to re-default.
The Standard Modification is effective for borrower evaluations commencing January 1, 2012. Freddie Mac desires servicers to commence determining borrowers for a Standard Modification as soon as services are operationally ready. Trial period plans under Standard Modification may commence on or after October 1, 2011.
A borrower may qualify for a Standard Modification if the borrower:
(1) documents an eligible hardship such as a car accident that leads to permanent disabilities causing or expected to cause a long-term or permanent decrease in the borrower’s income or increase in the borrower’s expenses;
(2) is 60 days or more delinquent or, if currently paid up on the mortgage or less than 60 days delinquent, lives in the property as the borrower’s primary residence and is determined to be in “imminent default” pursuant to particular guidelines;
(3) has verified income available to make the modified mortgage payment; and
(4) must have been determined ineligible for HAMP or received but defaulted on a HAMP trial period plan, HAMP modification or other modification.
Under the first requirement, unemployment is not an eligible hardship. Though people may take years to find a job, being unemployed is considered a temporary hardship. On the third requirement, unemployment insurance is not considered eligible income because is only for a certain period of time. Independent contractor income may also not be eligible income if it is not stable.
When worried about losing a house, speak to an experienced NY bankruptcy attorney who keeps updated on loan modification options.