When Is the HAMP Program Beneficial to You?
The Home Affordable Modification Program, called HAMP, provided individuals with aid in modifying their existing mortgage loan. This program was designed to provide homeowners with some financial relief to reduce the risk of foreclosure.
Is HAMP Available?
At the time of this writing, the Home Affordable Modification Program is no longer available as it was. The United States Department of Treasury established the program in March 2009. It was a part of the Making Home Affordable Program. It was effective on mortgages that were originated on or before January 1, 2009. The program was set to expire on December 31, 2016, with individuals able to apply for it through September 30, 2017. As of now, it is no longer available to individuals.
What Did the Home Affordability Mortgage Program Do?
The goal of this program was to encourage loan modifications for homeowners who were at risk of becoming delinquent on their loans. It worked to help reduce the frequency of missed monthly mortgage payments.
Who Was Eligible for HAMP?
Not all homeowners qualified for the home affordability mortgage program. To meet the requirements, individuals had to meet specific rules including the following:
- The loan had to be a first lien mortgage (second mortgages and home equity lines of credit did not qualify).
- It had the be a Freddie Mac or Fannie Mae loan.
- It applied to single-family homes, homes with up to four units, condos, cooperatives, and some manufactured homes.
- Individuals with an FHA or VA loan could use the program (but this was not a requirement of obtaining the modification).
- No vacant abandoned or condemned homes could obtain help.
- Modifications could happen only one time through the HAMP program.
If the home met these requirements, a homeowner could then work with their existing lender to adjust their mortgage under some key guidelines. HAMP was not easy to qualify for, but for individuals who needed it, it provides a lifeline of important support.
To be eligible for the modifications, the borrowers had to meet specific requirements as well. These included the following:
- Property owners that were current or no more than 60 days behind on their mortgage payments could be considered for a HAMP Trial Period. However, they must be determined to be in imminent default.
- Borrowers could be in bankruptcy or foreclosure, or in some type of pending litigation regarding the property, such as in a judgment from lenders.
- The key to obtaining these loan modifications was proving the borrower was struggling with some type of financial hardship.
- Borrowers had to have an expense-to-income ratio related to housing expenses of no more than 31 percent (applied to their gross monthly income).
- Individuals must still have some ability to make their monthly mortgage payments reliably after the modification occurs.
Why Did Borrowers Consider HAMP?
Borrowers were able to get help if they were struggling with financial hardship with the goal of avoiding foreclosure. This program was designed to help stop the flood of foreclosures entering the market after the housing crisis and financial difficulties that began in 2007. Individuals who qualified benefited by getting some type of modification to their loan. This may have included:
- A reduction in their interest rate
- Modifying the loan from an adjustable rate mortgage to a fixed rate mortgage
- Getting a principal reduction or a forbearance
- Getting a longer term to help reduce the monthly payment
Over its lifetime, HAMP saw several modifications to determine which type of properties qualified and to reduce some financial strain. Most importantly borrowers were able to modify their loans so they could remain in the long term.
Lenders benefited from these modifications as well. Lenders were able to secure the loans for borrowers facing immediate financial hardship but had the likelihood of maintaining their mortgage payments over their lifetime. This helped reduce the risk of foreclosure, an expensive process for lenders. Most importantly, it helped families remain in their homes.
What Options Are Available Now?
A home modification program is still an option for some homeowners. Other programs are available to help some borrowers such as the Fannie Mae and Freddie Mac Flex Modification Program. Many lenders offer modifications in-house as well. Borrowers who may be late on monthly mortgage payments or are facing financial hardship should consider speaking to their lender directly.
Additionally, the Home Affordable Refinance Program, or HARP, is available. This option remains in place and can help a homeowner to secure a lower interest rate on their loan, get into a shorter loan term, or adjust their loan from an adjustable rate to a fixed rate.
Individuals facing financial hardship should seek out solutions from lenders. While the HAMP program is no longer accessible, other solutions may be available to help borrowers to avoid foreclosure, late payments, or even the loss of their home.
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