Home Affordable Modification Plan (HAMP)

The Obama Administration established the Making Home Affordable Program (MHA), which offers a wide range of Home Loan Modification programs. The MHA is a general plan to help homeowners avoid foreclosure and encompasses everything from avoiding foreclosure by lowering payments, to helping homeowners walk away from mortgages they can no longer afford.

Home Affordable Modification Program or HAMP is one of the programs under MHA. HAMP is designed for homeowners who are employed but making their mortgage payments continues to be a struggle. If you meet the qualifications, HAMP can lower your monthly mortgage payment up to 31% of your monthly gross income, which could drastically reduce your monthly mortgage payment.

According to MHA, you may be eligible for HAMP if you meet all of the following criteria:

• You occupy the house as your primary residence. • You obtained your mortgage on or before January 1, 2009. • You have a mortgage payment that is more than 31 percent of your monthly gross (pre-tax) income. • You owe up to $729,750 on your home. • You have a financial hardship and are either delinquent or in danger of falling behind. • You have sufficient, documented income to support the modified payment. • You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

Since HAMP became available in March 2009, loan servicers completed more than 993,000 permanent modifications, which is considerably less than the 3 to 4 million originally estimated. The Treasury expanded the Home Affordable Modification Program in January by lowering the debt-to-income ratio requirements, as well as allowing some real estate investors into the program.

In a continued effort to stimulate recovery efforts and create opportunities for more struggling homeowners to take advantage of the program, the Making Home Affordable program is currently undergoing modifications to HAMP. Mortgage servicers received information in February about the program enhancements however; the expanded program is not expected to be available for homeowners until June 2012 at the earliest. “As the expanded program criteria becomes available this summer, we expect additional borrowers to become eligible for the program,” a Treasury spokesperson said.