In 2009, the federal government unveiled the Making Home Affordable program to help homeowners stay in their houses and avoid foreclosure. One of the major components of the Making Home Affordable initiative is the Home Affordable Modification Program (HAMP). The goal of HAMP is to induce lenders and servicers to modify homeowners' loans so that payments become more affordable.
(The other major component of the Making Home Affordable initiative is the Home Affordable Refinance Program (HARP). To learn more about that program, see The Home Affordable Refinance Program.)
Eligibility for HAMP
You may qualify for HAMP if all of the following are true:
- The unpaid balance of your loan is equal to or less than $729,750 (this amount is higher if your property consists of two to four units).
- Your loan was originated before January 1, 2009.
- The property has not been condemned.
- If the mortgage is on your primary residence, you are at risk of imminent default.
- If the mortgage is secured by property that is not your primary residence, you are in default on the loan.
- You've experienced a financial hardship.
- You can show (by way of a tax return and wage stubs) that you have enough steady income to make the payments under a modified loan.
- Within the last ten years, you have not been convicted of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.
HAMP Program Expanded in June 2012
The Obama administration expanded the HAMP program, effective June 1, 2012. In the expansion, the government eliminated some of the previous qualification requirements. For example, you can now get a HAMP modification for a home that is not your primary residence, and the government got rid of debt-to-income ratio requirements. It also extended the program to people who defaulted on previous HAMP modifications.
This means that you should consider reapplying for HAMP if:
- you want to modify the loan on a home that you rent or intend to rent
- you didn't qualify for HAMP in the past because your debt-to-income ratio was 31% or lower
- you defaulted on your trial-period payments (see below), or
- you got a permanent HAMP loan, but defaulted on payments.
If your lender agrees to a loan modification under HAMP, you start with a three-month trial period. If you make the payments on time during this period, the loan agreement becomes final.
Applying for HAMP Loans
Banks are not always diligent in reviewing HAMP applications as required by the program. This means your best chance of getting a modification is to follow up on your application, and hound the bank to follow the program rules.
To do this:
- Send your HAMP application by certified mail with return receipt, fax with confirmation, or some other method that provides you with proof that the servicer got your application.
- The lender is supposed to confirm that it got your application within ten days, and then evaluate it within 30 days. If you don't hear from the lender during these time frames, follow up.
What Happens to a Pending Foreclosure?
Unless your sale is scheduled within seven days, when you apply for a HAMP modification, the lender is supposed to freeze all foreclosure proceedings until it evaulates your application. Be sure to get written confirmation that the lender has postponed any scheduled sale -- some homeowners have complained that lenders continued with a foreclosure even when the homeowner applied for HAMP more than seven days from the sale date. If you can't get written confirmation, contact an attorney.
When Does HAMP End?
HAMP is set to expire on December 31, 2015.
To learn more about HAMP, visit the federal government's Making Home Affordable website at www.makinghomeaffordable.gov. To learn about other goverment programs for struggling homeowners, visit Nolo's Government Foreclosure Prevention Programs area.