An Overview of the Home Affordable Modification Program
    Posted on 10/03/2022

The Home Affordable Modification Program (otherwise known as HAMP) is a financial initiative enacted by the U.S. Department of Treasury as a part of the Making Home Affordable Program. In essence, it was crafted to help homeowners struggling with their finances by lowering the cost of loans, in order to help them avoid foreclosure. The program consists of strong guidelines that the whole mortgage industry can make use of. Included in HAMP are incentives for loan servicers, borrowers, and even investors. Before the creation of HAMP, institutions in the mortgage and lending industries did not have a uniform way to manage homeowners who wanted to continue paying their bills, but needed some form of financial assistance.

What is Necessary to Qualify for HAMP?

In order to be considered as eligible for HAMP, you must meet the following requirements.

-Your mortgage was obtained either on or before the date of January 1st 2009

-The debt you owe in regards to your single (main) property/rental property is $729,750 or less.

-The debt owed for a double unit rental property is $934,200 or less, $1,129,250 or less for a triple unit rental property, or up to $1,403,400 for a quadruple unit rental property.

-The property in question has not been deemed as condemned.

-You have undergone extreme financial duress, are behind or very close to behind on (several) mortgage payments.

-You have a legitimate and verifiable source of income to pay for a modified payment plan.

-No conviction within at least the past 10 years of any felony related to real estate. 

A Brief Overview of HAMP and its Causes

The way HAMP basically works is by encouraging the participation of loan and mortgage servicer providers to alter existing mortgages in an attempt to assist those struggling property owners by lowering the cost of monthly payments. This is all done so that foreclosure is avoided. The requirements listed above are what anyone who is interested in HAMP must meet. For financially struggling families who enter into the program, they can typically lower their monthly payments by a median of $530, which is obviously a considerable amount. Private lenders are also encouraged (i.e. incentivized) by the program to alter mortgages, all at no cost to taxpayers.

When the housing crisis struck the country, the mortgage industry was needless to say pretty unequipped to handle the financially devastating situation. In a market that was being severely affected by increasing amounts of foreclosures, servicers did not have the adequate resources to properly manage or do what needed to be done. Simply put, the mortgage industry lacked the competence to deal with widespread foreclosure and its various associated issues which is why the Department of Treasury had to step in to rectify the situation.    

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