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.)
You may qualify for HAMP if all of the following are true:
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:
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.
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:
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.
HAMP is set to expire on December 31, 2016.
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.