The Home Affordable Modification Program—or “HAMP”—provided eligible borrowers with mortgage modifications. Because the program stopped taking applications as of December 31, 2016, if you default on HAMP you can’t reapply for the program.
First, a little history: In 2009, the federal government introduced the Making Home Affordable program to help homeowners stay in their houses and avoid foreclosure.
The main program under the Making Home Affordable initiative was the Home Affordable Modification Program (HAMP), which modified loans to make them more affordable and sustainable for the long-term. HAMP used to be the largest mortgage loan modification program in the country.
Under the original HAMP program (HAMP Tier 1), the loan servicer used a modification waterfall, which was a series of successive steps, to lower a homeowner’s total monthly mortgage payment—including principal, interest, taxes, insurance, and association fees—to 31% of the verified monthly gross income for all borrowers on the mortgage. The modification had to result in a positive Net Present Value (NPV) for investors.
On June 1, 2012, the Obama administration expanded the original HAMP program by eliminating some of the previous qualification requirements. This meant that borrowers who were ineligible for regular HAMP (Tier 1) could quality for a loan modification under HAMP Tier 2. For example, borrowers could qualify for a HAMP Tier 2 modification for a home that was not their primary residence or if they defaulted on a previous HAMP modification.
Unfortunately, as of December 31, 2016, the HAMP program stopped taking applications. (The only Making Home Affordable program still taking applications is the Home Affordable Refinance Program, which is scheduled to to end on December 31, 2018.)
If a borrower defaults on a HAMP Tier 1 trial period plan on or after December 31, 2016, the servicer may—but does not have to—evaluate the borrower for HAMP Tier 2 within 30 days of the default. The servicer may offer Streamline HAMP to borrowers who default on a HAMP Tier 1 or Tier 2 trial period plan on or after December 31, 2016, so long as the servicer documents its decision and the modification effective date is on or before December 1, 2017.
A HAMP permanent modification effective date must be on or before December 1, 2017. To meet this deadline, a borrower has to begin the three-month trial period plan no later than September 1, 2017, and due to servicer processing delays, a homeowner should plan on the trial period plan starting no later than August 1, 2017.
If you’re struggling with your mortgage payment, contact your mortgage servicer or a HUD-approved housing counselor as soon as possible. Other programs might be available to help you avoid a foreclosure.