The Home Affordable Modification Program (HAMP) was launched by the U.S. government in 2009 in response to the 2008 financial crisis, which led to a surge in home foreclosures. HAMP aimed to help financially distressed homeowners by encouraging mortgage servicers to modify loan terms to make monthly payments more affordable, typically targeting 31% of gross income.
Under the program, servicers followed a “waterfall” process:
- Capitalize missed payments and fees onto the loan balance, bringing the loan current.
- Lower the interest rate, sometimes as low as 2% for the first five years.
- Extend the loan term up to 40 years to reduce monthly payments.
- Forbear a portion of the principal, deferring payment until the loan is paid off or the home is sold.
For example, a homeowner with a $300,000 loan at a 6.5% interest rate and monthly payments exceeding 40% of their income could receive a rate reduction and term extension to lower payments to the affordable target.
HAMP officially ended new applications on December 31, 2016. While it helped millions avoid foreclosure, many found applying complex. However, its standardized modification framework shaped current mortgage assistance options, including lender-specific or proprietary modifications.
Today, homeowners facing mortgage difficulty should immediately contact their mortgage servicers to discuss loss mitigation alternatives. These may include proprietary loan modifications using similar tools to HAMP, forbearance agreements, or payment deferment options. Additionally, free counseling from HUD-approved housing counselors can assist in navigating these options.
To learn more about mortgage modifications and related topics, see our articles on Mortgage Loan Modification and Loss Mitigation.
Further authoritative guidance is available through the Consumer Financial Protection Bureau’s resources on mortgage assistance (https://www.consumerfinance.gov/owning-a-home/mortgage-help/).
By understanding HAMP’s legacy, homeowners can better navigate current relief options to maintain homeownership during financial hardship.