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Has HAMP Helped Distressed Homeowners?

The Treasury Department's most recent Making Home Affordable Program Performance report, released monthly, showed that servicers have, indeed, made progress in using HAMP, particularly in the area of income calculation.

For example, the Treasury found that more than 1 in 4 calculations of a borrower's income performed by Wells Fargo when evaluating HAMP applications was at least 5% off the mark in the first quarter of 2011. Now, just 1 in 50 are off by that much.

Wrongly Denied?

Could the Ugaros have been mistakenly denied a HAMP modification? That's unclear. But the couple does appear to meet all the main eligibility requirements of HAMP.

Their home is their primary residence, their mortgage was originated before 2009 and they owe less than $729,750 on their mortgage. (They owe about $230,000.) Anthony's layoff and heart disease diagnosis also qualifies as a hardship.

They seem to qualify for a HAMP modification financially, too. The Treasury's latest performance report said that the average household's median mortgage payment before receiving a permanent modification equaled 45.4% of the household's monthly income. When they applied, the Ugaros' $2,400 monthly mortgage payment was between 50 and 60% of their $4,300 monthly household income.

If anything, the Ugaros would appear to have not been making enough money to qualify, but they were told the opposite for their second denial -- that they made too much. That makes Wells Fargo's decision on their applications difficult to digest for the couple.

A Wells Fargo representative told AOL Real Estate that the Ugaros' income was, in fact, not a factor in denying them a modification, but didn't offer further explanation.

"We are attempting to reach the Ugaros to discuss their current situation and will try to work with them on potential options for assistance," said Vickee J. Adams, vice president of external communications at Wells Fargo.

Calculated income is just one factor included in a "net present value test," which can make or break a modification for HAMP applicants. The test evaluates whether or not a mortgage's investor -- which often is not actually the mortgage's servicer -- is likely to make more money through a loan modification. (Mortgage investors can include hedge funds, institutions, pension funds and mutual funds, among other entities.)
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