(HAMP), The Government’s Home Affordable Modification Program
Introduced the Home Affordable Modification Program (HAMP) in 2009, this was the Government’s New Program which was intended to help homeowners who lived in the states that was hit the worst by our economic crisis as a response to the mortgage crisis. This program being only one part of the Emergency Economic Stabilization Act, which was introduced in the year of 2008, and includes several other parts, such as the Hardest Hit Fund (HHF) and the Making Home Affordable Program (MHA), both of which were established to coincide with one another and fell under the Troubled Asset Relief Program (TARP). All of which, were a part of the 2008’s Emergency Economic Stabilization Act. At the time, the Home Affordable Modification Program (HAMP) was scheduled to expire as of December 31st, 2016, which will be the last day anyone can apply for it. Also, all modifications must be completed on or before the set date for the Modification Effective date of September 30th, 2017. However, there has been an extension on the HHF (Hardest Hit Fund), which now has an expiration date for the year of 2020.
The reason for the HAMP program was to help homeowners who were financially struggling, and in order to avoid a foreclosure they would be able to modify their loans, bringing them down to a more affordable level, one that they would be able to afford over the period of their loan pay-off. This was able to happen due to lowered interest rates, fixed interest rates, a reduction on the principal amount, or with a forbearance, and included a term extension. This program was design to provide a clear view on the loan modifications guidelines, and included different types of incentives for its borrower’s, as well as investors and servicers.
When the program first began, the property associated with the loan modification stipulated that it had to be one’s primary residence, however, HAMP revised the program in June of 2012, creating the Tier-2 Modification Program. Which permitted the modification loans for property that were not owner occupied, and allowed more than one loan on modified properties. Now, the pre-existing rules of property occupied by owners falls under what is referred to as the Umbrella of Tier-1 Modifications.
Here are the requirements for eligibility for the HAMP program
The following is a list of the verification and eligibility requirements:
- Loans were applied for on or before 01/01/2009.
- First-lien loans that have a principal balance which is unpaid to the amount of $729,750.
- Properties having 2-4 units are allowed higher limits.
- The property must be in livable condition.
- Borrower’s debt must meet standards showing financial hardship. Income ratio determines if loan will be a Tier-1 or a Tier-2 Modification.
- A borrower will have to document their income by providing proof of income, such as pay-stubs, statements of profits and losses, and etc., a signed IRS 4506-T, and a signed affidavit of their financial hardship.