Second Lien Modification Program (2MP)

The 2nd Lien Modification Program (2MP) offers homeowners a way to modify their second mortgages to make them more affordable when their first mortgage is modified under HAMP.  The program is currently set to end on December 31, 2012.

2MP offers homeowners, their mortgage servicers, and investors an incentive for modifying a second mortgage. Servicers and investors may also receive an incentive for extinguishing a second loan by forgiving all of the debt a homeowner owes.

Under 2MP, a mortgage servicer may:

• Reduce the interest rate to 1 percent for second liens that pay both principal and interest (amortizing);
• Reduce the interest rate to 2 percent for interest-only second liens;
• Extend the term of the second lien to 40 years (to match the first mortgage modification).

If part of the principal was postponed through forbearance on the first lien, a servicer must forbear the same proportion on the second lien.

If the principal was forgiven on the first lien, in accordance with the Principal Reduction Alternative program, a servicer must forgive the same proportion on the second lien, although a servicer may, in its discretion, forgive a larger portion or the entire second lien and will receive incentives for doing so.

A second lien is eligible for 2MP if:

o    the corresponding first lien has been modified under the Home Affordable Modification Program and the second lien servicer is participating;

o    the loan was originated on or before January 1, 2009;

o    the unpaid principal balance (at consideration for the modification) is not less than $5,000 or a pre-modification scheduled monthly payment is not less than $100;

o    the loan has not yet been modified under 2MP;

o    it is not subordinate to a second lien or is not a home equity loan in first lien position;

o    it is not a second lien on which no interest is charged and no payments are due until the first lien is paid in full; and

the second lien servicer is in possession of a fully executed 2MP modification agreement or trial period plan by December 31, 2012; or the second lien is not insured, guaranteed, or held by a Federal government agency (e.g. FHA, HUD, VA, and Rural Development).