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What is the Home Affordable Modification Program?


What is the Home Affordable Modification Program?

The Home Affordable Modification Program (HAMP) is a federal mortgage modification program targeting homeowners at risk of foreclosure.

First announced in March 2009 as part of the broad Making Home Affordable program, HAMP is designed to help homeowners who are employed, but who are struggling to make their mortgage payments due to a financial hardship.

HAMP was originally meant to help up to four million homeowners permanently modify their mortgages. But since the program began, only 1.4 million permanent loan modifications have been made through HAMP, according to the latest data from HUD.

The deadline to modify your mortgage under the Home Affordable Modification Program is Dec. 31, 2015. 

Do I qualify for HAMP?

HAMP aims to modify the terms of a distressed homeowner's mortgage in order to make their monthly payments more affordable. It does so by lowering mortgage rates, lengthening terms and offering principal forbearance. According to recent data, HAMP lowers mortgage payments by a median of $490 per month.

Here's the full list of HAMP requirements:

  • You must be struggling to make mortgage payments due to a financial hardship
  • You must be delinquent or in danger of falling behind on your mortgage
  • You must use the property as your primary residence or as a one-to-four unit rental property
  • You must owe no more than $729,750
  • You must have taken out your mortgage before January 1, 2009
  • You must not have been convicted of a crime within the last 10 years in connection with a mortgage or real estate transaction
  • You must have a total housing expense -- including principal, interest, property taxes, insurance, and homeowners' association dues -- that exceeds 31 percent of your gross income

5 ways to prepare for a HAMP modification

Once you determine that you're eligible for HAMP, it's time to start preparing. Here are five tips to help you maximize your chances of a permanent mortgage modification:

No. 1: Understand the odds

Only 1.4 million permanent HAMP modifications have been made to date out of a projected 4 million.

Why hasn't HAMP gained more traction?

For one, HAMP is voluntary. Only Fannie Mae and Freddie Mac lenders are required to participate. Other lenders only participate if they want to, and they can design different modification strategies or rules as they see fit. Lender participation has also suffered due to constantly changing rules which make it difficult for mortgage lenders to update their procedures and train their employees accordingly.

No. 2: Document every step

Two almost-universal experiences related by those seeking HAMP modifications: the constant miscommunication and the repeated loss of documents.

Here are some ways you can help your cause and speed up the process:

  • Keep a file of everything you send and when you send it
  • Update and organize your file every week
  • Call the lender weekly to get the status of your modification
  • Make sure your trial payments are made on time, every time

No. 3: Understand the latest loan modification guidelines

Your lender's loan modification employees may not be well-versed in the latest guidelines, so don't rely on their knowledge. It is very common for applicants to get different interpretations of the same rules from different employees within the same company. The Government Accountability Office (GAO) recently reported that loan modification guidelines were being applied very unevenly across the nation's lenders.

No. 4: Reapply if you are denied

HAMP guidelines don't include provisions for any appeal process. However, you are allowed to reapply if your circumstances have changed after your denial.

No. 5: Stay positive

If you can jump through the hoops, a mortgage modification can be worth the hassle. A successful loan mod can save you a lot of money, not to mention your home.

Can I get a mortgage modification? 

Borrowers in the following situations may have greater success when asking their mortgage lender for a loan modification:

  • Borrowers who are underwater on their home loans. If the lender cannot recoup their money in a foreclosure sale, it has more incentive to work things out with you.
  • Borrowers who live in non-recourse states. Those in non-recourse states have better luck with modifications because lenders cannot sue them for deficiencies. The specific statutes can be complicated and may differ by type of loan, but according to the Federal Reserve Bank of Richmond, Alaska, Arizona, California, Iowa, Minnesota, Montana, North Carolina, North Dakota, Oregon, Washington, and Wisconsin are non-recourse states.
  • Borrowers in a position to file for bankruptcy to avoid deficiency judgments. An hour with a good bankruptcy lawyer can pay big dividends.
  • Those who have resolved their problems. For example, those who find new jobs, or who have enough income to make a reasonably modified payment.
  • Those who can document a genuine hardship. This could include catastrophic medical bills, for instance. On the other hand, if your difficulties are due to bad money management, the mortgage lender has little reason to believe that a modification will stick. Here's how not to write a loan modification hardship letter.
  • Borrowers with no assets. Or assets like retirement funds that are protected in bankruptcy proceedings.

Can I modify a first and second mortgage through HAMP?

In order to modify both a first and second mortgage through HAMP, you must meet three additional requirements, according to MakingHomeAffordable.gov:

  1. You must have modified your first mortgage under HAMP
  2. You must not have missed three consecutive monthly payments on your HAMP modification
  3. You must not have been convicted of a crime within the last 10 years in connection with a mortgage or real estate transaction

Can I modify a rental-property loan through HAMP?

The general answer is "yes," mortgages on one- to four-unit rental properties are eligible. Your rental property may be eligible for a HAMP modification if it is rented or available for rent year round, according to MakingHomeAffordable.gov. But a vacation home or a home you rent to tenants for only part of the year would not be eligible.

Am I eligible for HAMP despite my recent bankruptcy?

According to the Justice Department, you're eligible for HAMP even if you have received a chapter 7 bankruptcy discharge. Of course, you must meet all other HAMP requirements.

HAMP Timeline

  • March 2009: HAMP is announced
  • April 2009: HAMP launches
  • July 2009: FHA launches the FHA Home Affordable Modification Program
  • January 2012: HAMP deadline extended to December 31, 2013
  • January 2012: Eligibility for HAMP expands – including more flexible debt-to-income criteria and preventing foreclosures of rental properties -- to reach a broader pool of distressed borrowers and increases incentives for servicers to provide modifications
  • June 2012: The Obama administration introduces HAMP Tier 2, expanding HAMP to borrowers who did not meet eligibility requirements under HAMP Tier 1
  • May 2013: HAMP is extended until Dec. 31, 2015
  • December 2014: The Treasury and HUD announce all homeowners in HAMP will be eligible to earn an additional $5,000 in their sixth year of modification

More help from HSH.com

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  • VA Funding Fee: 5 facts you need to know

    One slight drawback of securing a VA loan is that borrowers often have to pay a fee, known as the “VA Funding Fee.” Here are five facts you need to know about the VA Funding Fee and how it works.
  • Advantages of FHA mortgages in 2016

    FHA loans have become more affordable in 2015, thanks to a drop in the annual mortgage insurance premium that the Federal Housing Administration charges.
  • How many times can I use my VA home loan?

    There are three ways you can restore your VA eligibility so that you can take advantage of it more than once.


  1. Roberto Vejar December 09, 2015 9:24 pm

    We got a CHASE loan mod about 5 years ago. CHASE loan mod agreement was for $512,000.00, the interest rates below will be applied: Years 1 -5 at 2% Year 6 at 3% Year 7 at 4% and Years 8-27 a fixed rate of 4.5% and a balloon payment of $120,000.00 at the end of the 27th year Soon after we got the CHASE loan modification, we entered into Chapter 13 to get rid-off the second mortgage and existing credit card debts. The mortgage payment have increase and will continue so for the next three years, What will be the best option for us?, Is HAMP an option to apply for a Re-Mod loan or just do a Short selling? Please advice, thanks.

    1. roberto vejar December 25, 2015 10:16 am

      Thanks for the response back. Your commented that we're not "underwater" due to the market value of the house, therefore there's no need for a short sale, but What about the balloon payment?. The total mortgage debt should be the $512,000 plus the balloon payment of $120,000 = $632,000 vs $525,000, Am I wrong on this? or How the balloon payment is being accounted?

        Reply »  
      1. Editorial Team December 28, 2015 7:47 am

        Hi Roberto -- At the 27th year, your loan will have $120,000 remaining (of the original $512,000), which the lender wants to see returned in a lump sum (the balloon payment). It is not added on top of the balance; it is a portion of it, and is the remainder after you have made payments for 27 years.

    2. Editorial Team December 10, 2015 12:01 pm

      Roberto, Given your non-conforming loan size, I don't think HAMP will be an option since HAMP only applies to loans guaranteed by Fannie Mae or Freddie Mac. In the separate email you sent us, you said the loan mod was for $512K and the current value of the home is $525K. By those numbers, you are not underwater and do not need a short sale. Thanks for commenting, Tim Manni, HSH.com

        Reply »  
  2. Verlyn Smith December 01, 2015 9:02 pm

    We received a modification on our home in 2012. Countrywide was the first lender which then became Bank of America. After the modification the loan was sold to Greentree. Shortly after we noticed an increase in the monthly payment for MPI. We asked Greentree why the insurance was added and why were we paying the extra costs. We never did get a reply and didn't follow up because Greetree would never respond back. A few months ago our loan was once again sold to Ditech. I noticed that the mortgage payment was a little bit lower. If we didn't have MPI with the original note can the new lender add it and if not how can we make Greentree go back and refund all of the payments for the MPI?

  3. Tiffany November 19, 2015 12:37 pm

    A loan modification is an agreement between the lender and the borrower to modify the loan terms [usually lowering the monthly payment and/or the interest rate]. There is no requirement for the lender to modify the loan. In general, a loan modification is a voluntary restructuring of debt by the lender to make it possible for a borrower to remain in the home and to make payments to the lender under new terms. A borrower must demonstrate hardship in order to qualify for a loan modification. The lender must be willing to voluntarily modify the loan after reviewing the borrower%u2019s application. In most cases, in addition to past hardship, the borrower must demonstrate the ability to make payments to the lender before a loan will be modified.

  4. Kirsten Harless November 18, 2015 2:09 pm

    I received a packet from my lender today, November 18, that I am eligible for a HAMP trial period. I am to sign an acceptance letter and return it to my lender by the end of the month (the 30th I believe). The packet states my first trial period payment is due January 1, 2016, and must be made in the month it is due. So what about the payment (the existing) I would normally make on the 1st of December? Do I make that payment or wait until Jan 1 and start with the new amount?

  5. George Stephens October 18, 2015 2:53 pm

    I recently came off chapter 13 bankruptcy. I had my house built in 1993, and never refinanced or got a second mortgage. My current interest rate is 8%. I owe about 37,000 on my house and it value is about 100,000. Can I get a modification under the HARP program to lower my interest rate and my monthly loan amount?

    1. Editorial Team October 19, 2015 10:05 am

      George, Thanks for your comment. For starters, "HARP" is the refinance program, "HAMP" is the modification program. Since it sounds like you want to refinance to a lower rate, you are going to want to start researching the HARP program. Since we are not a mortgage lender, you will need to reach out to your servicer first and see what they say. According to our article, http://www.hsh.com/finance/refinance/what-is-harp-do-i-qualify-for-a-harp-loan.html, the "requirement that the borrower (on the new loan) meet the standard waiting period and re-establishment of credit criteria in the Selling Guide following a bankruptcy or foreclosure. The requirement that the original loan must have met the bankruptcy and foreclosure policies in effect at the time the loan was originated is also being removed. This indicates that you should be eligible. Freddie Mac usually follows the same policies as Fannie Mae, but there may be some differences." But also remember, lenders often "overlay" their own requirements and restrictions on top of what Fannie and Freddie require. That's why it's important to shop around, you're likely to get different answers from different lenders. Thanks for writing in, let us know if you have any additional questions. -Tim Manni, HSH.com

        Reply »  
  6. becki busk October 13, 2015 12:40 pm

    We have an existing modification based on my income as my husband was unemployed at the time. I wasn't required to produce my income because I am not on the mortgage. Now he is employed again with a minimum wage job versus his original income when he bought the property which was in excess of 60k per year. Is it possible to redo the mortgage under his income and get me out of this payment?

    1. Editorial Team October 14, 2015 2:09 pm

      Becki, Thanks for writing in. We'd like to offer some assistance but your comment is confusing. How was your income used for the modification if you were not on the original mortgage? Doesn't seem possible. Either way, this is something you need to discuss with your loan servicer. Thanks, Tim Manni, HSH.com

        Reply »  

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