Basics of the Home Affordable Modification Program

Home Affordable Modification Program (HAMP)

Launched in 2008, the Home Affordable Modification program was created to assist low and middle income communities secure a safe, clean and affordable home. The home loan modification service specifically allows homeowners on the brink of foreclosure to modify their mortgage loans to a more flexible, efficient and realistic payment schedule. HAMP is fitted with an elaborate list of guidelines for homeowners and service providers to make the process smoother.

What You Need To Know About HAMP

The HAMP facility can be used by homeowners to negotiate a reduced principal amount, a lower or fixed interest rate or an extended repayment period with the financier. The facility does not write off mortgage loans, unless under special circumstances. Before applying for the facility, consult a loan modification professional to know what options are available to you.

When the program was first rolled out, it was only applicable for mortgages where the property was the homeowner’s primary residence. This meant that homeowners who lived somewhere else other than on the property they required assistance on could not qualify for the facility. The guidelines were revised in 2012 to include properties that were not primary residence to be eligible for the facility.

Financial incapacity has to be proven by the homeowner in order for them to qualify for the loan modification mitigation. Homeowners are required to provide proof of income or lack thereof and updated tax records. Additionally, the homeowner should swear an affidavit as to his reasons for financial hardship. The mortgage loan to income ratio of the homeowner is also considered as a factor of the loan modification cost. The ratio varies depending on which category the homeowner falls as per the HAMP guidelines.