I recently mediated a loan modification for a client, and was amazed at the results that can be obtained under HAMP Tier 2. Prior modification programs did help a lot of homeowners stay in their homes, but the constraints on the prior HAMP programs left a lot of distressed home owners out in the cold. HAMP previously required a 31% payment ratio to income and did not allow for principal reduction. Tier 2 broadens modification terms to allow for up to a 42% ratio to income and, best of all, can include principal reduction for loans that are not held by Fannie Mae or Freddie Mac. The result in my recent mediation showed the power of this program. The homeowner received a substantial principal reduction, a reduced interest rate, and a much, much lower payment. Tier 2 made the difference between being able to stay in the home or losing it to foreclosure. Results like this make me smile!