What is the Home Affordable Modification Program (HAMP)?
What is HAMP?
The Home Affordable Modification Program, or HAMP, was a U.S. government program designed to help homeowners avoid foreclosure by reducing their monthly mortgage payments. The program, which began in 2009 and expired on December 31st, 2016, was specifically implemented after the 2008 subprime mortgage crisis, in order to help struggling homeowners keep their homes.
How did the HAMP Program Work?
The HAMP program didn’t offer loans, refinancing, or mortgage insurance. Instead, it acted as a series of financial guidelines, along with certain incentives for mortgage servicers and investors to offer modified loans to borrowers. Some of these modifications included:
Increasing the term of a loan
Reducing the interest rate
Reducing the principal
Allowing forbearance (the ability to temporarily postpone payments)
Who Qualified for the HAMP Program?
The HAMP Program (which itself was part of Making Home Affordable, an initiative sponsored by the U.S. Treasury) was only available to homeowners in specific situations. This included those that:
Could demonstrate and document a tough financial situation
Could show that they were able to make modified, reduced mortgage payments
On average, HAMP was able to reduce monthly mortgage payments by an average of $530 per borrower -- which could seriously help families struggling to pay their bills to stay current on their home loans. Over the time that it was implemented, HAMP and similar programs, combined with private initiatives, lead to over five million mortgages being modified to help borrowers avoid foreclosure.
What Can Struggling Homeowners Do Now?
While HAMP is no longer operational, there are still many homeowners who may be struggling and might need a loan modification. For some of them, the government’s Home Affordable Refinance Program (HARP) will do the trick, though this program is somewhat limited in scope, since it only permits Freddie Mac and Fannie Mae-insured loans to be modified. If your loan isn’t insured by Freddie Mac or Fannie Mae, you might want to check with your lender, since many lenders have proprietary loan modification programs that can be used to prevent default and/or foreclosure.