As a trusted personal finance writer and mortgage specialist, Maryalene LaPonsie has interviewed hundreds of certified financial planners, CPAs and wealth advisors, and distills their expertise into accessible articles on topics ranging from retireme.
Maryalene LaPonsie Mortgages ExpertAs a trusted personal finance writer and mortgage specialist, Maryalene LaPonsie has interviewed hundreds of certified financial planners, CPAs and wealth advisors, and distills their expertise into accessible articles on topics ranging from retireme.
Written By Maryalene LaPonsie Mortgages ExpertAs a trusted personal finance writer and mortgage specialist, Maryalene LaPonsie has interviewed hundreds of certified financial planners, CPAs and wealth advisors, and distills their expertise into accessible articles on topics ranging from retireme.
Maryalene LaPonsie Mortgages ExpertAs a trusted personal finance writer and mortgage specialist, Maryalene LaPonsie has interviewed hundreds of certified financial planners, CPAs and wealth advisors, and distills their expertise into accessible articles on topics ranging from retireme.
Mortgages Expert Kennedy Edgerton Personal Finance EditorKennedy Edgerton is a personal finance editor, leveraging his passion for writing and personal finance to produce stimulating content that empowers readers to enhance their lives through advised decision-making. He has written for several publication.
Kennedy Edgerton Personal Finance EditorKennedy Edgerton is a personal finance editor, leveraging his passion for writing and personal finance to produce stimulating content that empowers readers to enhance their lives through advised decision-making. He has written for several publication.
Kennedy Edgerton Personal Finance EditorKennedy Edgerton is a personal finance editor, leveraging his passion for writing and personal finance to produce stimulating content that empowers readers to enhance their lives through advised decision-making. He has written for several publication.
Kennedy Edgerton Personal Finance EditorKennedy Edgerton is a personal finance editor, leveraging his passion for writing and personal finance to produce stimulating content that empowers readers to enhance their lives through advised decision-making. He has written for several publication.
| Personal Finance Editor
Updated: Jul 28, 2023, 6:56pm
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A defining feature of the 2008 recession was the staggering number of people who lost their homes. While there were 717,522 foreclosures in 2006, according to the Pew Research Center, that number ballooned to more than 2.3 million in 2008.
To mitigate foreclosures, the government created the Home Affordable Modification Program (HAMP) in 2009. The program reduced mortgage payments for homeowners facing financial hardship, and it was expanded in 2012 to incorporate more homeowners.
While HAMP is no longer available to new applicants, other options exist to help homeowners who are struggling to make their monthly mortgage payments.
HAMP was a federal government program. It was launched to fulfill the requirements of the Emergency Economic Stabilization Act of 2008. That law directed the Department of Treasury to modify troubled mortgages whenever possible.
As unemployment increased and home values plummeted, HAMP kept monthly payments affordable for millions of homeowners. However, in its first year, only 170,000 homeowners were approved for permanent loan modifications, according to testimony presented at an April 2010 congressional hearing.
In response to concerns that not enough borrowers were benefitting from the program, the federal government changed or eliminated some eligibility requirements to allow more people to qualify for assistance. By December 31, 2016, mortgage modifications had been approved for approximately 1.8 million homeowners through HAMP and other specialized programs.
After the HAMP expired, the government directed Fannie Mae and Freddie Mac to create a Flex Modification program for loans purchased by the two government-sponsored mortgage companies. Other modification options remain available through the Federal Housing Administration (FHA) and individual loan servicers, as well.
The goal of the program was to reduce a borrower’s monthly payment down to 31% of their gross monthly income. That was accomplished by using one or more of the following:
In addition, there were four components to the program:
Participation in HAMP was voluntary for lenders, but the government provided financial incentives to encourage them to modify terms for delinquent borrowers. Most assistance came in the form of first-lien modifications. According to 2014 statistics from HUD, many homeowners reduced their first mortgage payments by almost 40% through HAMP, with a median savings of $541 per month.
Before a loan could be permanently modified, borrowers participated in a three-month trial period to ensure they could make the new payments. If the trial was successful, borrowers were then eligible for a permanent loan modification.
Loan modification details could vary and some included interest rates that increased or terms that ended with balloon payments. Some borrowers were approved to receive up to $10,000 in principal reduction in exchange for timely payments.
While modifications could make payments affordable, not everyone qualified for HAMP benefits. Program eligibility was limited to those who:
Submitting a HAMP program application didn’t guarantee approval either. Program data from January 2017 indicates 2.9 million assistance requests were approved out of 9.6 million applications.
Many of those who were approved didn’t qualify for a permanent loan modification. For instance, loans for unemployed individuals may not have qualified if borrowers struggled to make timely payments during the trial period.
Now that the HAMP program deadline has passed, it’s no longer an option if you’re struggling to make mortgage payments. Fortunately, there are some alternatives available:
There are also loan modification programs available for VA and USDA loans. Even if you don’t qualify for a government program, you should contact your lender to discuss your options. Companies may prefer to adjust the terms of your loan rather than go through the time and expense of a foreclosure.
From first-time homebuyers to established homeowners, the economic uncertainty of the past few years has caused many people to struggle with their mortgage payments. While HAMP may be gone, other options exist. If you need help, you can reach a HUD-approved housing counselor through the HUD Exchange website.
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