The Home Affordable Modification Program (HAMP) was established by the U.S. Departments of the Treasury and Housing and Urban Development (HUD) to help homeowners avoid foreclosure by modifying their loans to achieve more affordable monthly payments.
Key Features
- Objective: Reduce monthly mortgage payments to as low as 31% of a homeowner’s verified monthly gross pretax income.
- Eligibility: Non-unemployed homeowners experiencing financial hardships.
- Application Process: Borrowers need to apply through their mortgage servicer and comply with various documentation requirements.
- Support: Borrowers could seek assistance from HAMP representatives for guidance and information.
Examples
- Example 1: John, employed as a mechanic, earns $4,000 per month. His current mortgage payment is $2,000. Under HAMP, he may be able to reduce his mortgage payment to 31% of his monthly income, which equates to $1,240.
- Example 2: Maria, earning $3,500 monthly, has a mortgage payment of $1,700. HAMP can help her adjust her payment to approximately $1,085, making it more affordable.
Frequently Asked Questions (FAQs)
- Q: Who qualifies for HAMP?
- A: Homeowners who are employed and experiencing financial hardship, provided they meet specific income and hardship criteria.
- Q: How can I apply for HAMP?
- A: Contact your mortgage servicer to start the application process or visit the Making Home Affordable website for more information.
- Q: What documentation is required for the HAMP application?
- A: Generally, proof of income, financial hardship explanation, and other financial documentation are needed.
- Q: Is HAMP still available?
- A: HAMP was a temporary program that expired on December 31, 2016, but similar options may be available through mortgage servicers.
- Q: What if I do not qualify for HAMP?
- A: There are alternative programs like Home Affordable Refinance Program (HARP), through which you might seek mortgage relief.
Related Terms and Definitions
- Homeowners Affordability and Stability Plan (HASP): A broader U.S. government initiative under which HAMP was developed, aimed at stabilizing the housing market.
- Making Home Affordable (MHA): An overarching government program that included HAMP and related mortgage relief initiatives to assist struggling homeowners.
- Foreclosure: The legal process in which a mortgage lender attempts to recover the balance of a loan from a borrower who has stopped making payments.
Online Resources
- Making Home Affordable - Comprehensive information about government programs aimed at preventing foreclosure.
- HUD - Housing and Urban Development.gov - Resources for homeowners seeking relief options.
- Consumer Financial Protection Bureau - Guidance on mortgage modification and homeowners rights.
References
- US Department of the Treasury. “Making Home Affordable.” Retrieved from www.makinghomeaffordable.gov.
- HUD. “Mortgage Relief and Foreclosure Alternatives.” Retrieved from www.hud.gov.
Suggested Books for Further Studies
- “The Home Mortgage Book: Insider Information Your Banker & Broker Don’t Want You to Know” by Dale Robyn Siegel
- “Foreclosure Investing For Dummies” by Ralph R. Roberts
- “Real Estate Investing: Market Analysis, Valuation Techniques, and Risk Management” by David M. Geltner and Norman G. Miller
Real Estate Basics: Home Affordable Modification Program (HAMP) Fundamentals Quiz
### What is the main goal of the Home Affordable Modification Program (HAMP)?
- [ ] To increase property taxes.
- [x] To reduce monthly mortgage payments to 31% of the borrower's gross monthly income.
- [ ] To provide new mortgage loans.
- [ ] To eliminate all mortgage debts.
> **Explanation:** The main goal of HAMP is to reduce monthly mortgage payments to as little as 31% of a homeowner's verified monthly gross pretax income.
### Who is eligible for HAMP?
- [ ] Unemployed homeowners.
- [x] Employed homeowners with financial hardships.
- [ ] Homeowners who have paid off their mortgage.
- [ ] Only first-time homebuyers.
> **Explanation:** HAMP is designed for employed homeowners who are experiencing financial hardships and need assistance in making their mortgage payments more affordable.
### What percentage of the homeowner's income does HAMP aim to limit the monthly mortgage payment to?
- [ ] 25%
- [ ] 50%
- [ ] 75%
- [x] 31%
> **Explanation:** The program aims to adjust monthly mortgage payments to be no more than 31% of the homeowner's gross monthly income.
### If a homeowner earning $5,000 per month qualifies for HAMP, what could their adjusted mortgage payment be according to the program's criteria?
- [x] $1,550
- [ ] $2,000
- [ ] $500
- [ ] $1,000
> **Explanation:** Under HAMP, the mortgage payment could be adjusted to 31% of $5,000, which would be approximately $1,550.
### What primary documentation is required when applying for HAMP?
- [ ] Homeowner's manual.
- [ ] Property appraisal report.
- [ ] Previous owner's credit report.
- [x] Proof of income and financial hardship explanation.
> **Explanation:** Applicants must provide proof of income and a detailed explanation of their financial hardships.
### What government body oversees HAMP along with the Department of Treasury?
- [ ] Federal Bureau of Investigation (FBI)
- [ ] Environmental Protection Agency (EPA)
- [x] Department of Housing and Urban Development (HUD)
- [ ] Department of Education
> **Explanation:** The program is overseen by both the Department of Treasury and the Department of Housing and Urban Development (HUD).
### Where can homeowners get more information and assistance for HAMP?
- [ ] Local grocery stores.
- [ ] Sports clubs.
- [x] The Making Home Affordable website.
- [ ] Automobile dealerships.
> **Explanation:** Comprehensive information and assistance for HAMP can be found on the Making Home Affordable website.
### When did the HAMP program officially expire?
- [ ] 2010
- [ ] 2012
- [ ] 2020
- [x] 2016
> **Explanation:** The HAMP program was a temporary measure and officially expired on December 31, 2016.
### What happens if a homeowner does not qualify for HAMP?
- [ ] They are automatically enrolled in a new mortgage program.
- [ ] They must sell their home immediately.
- [ ] There are no other options available.
- [x] They may consider other alternatives such as HARP or other mortgage relief options.
> **Explanation:** Homeowners who do not qualify for HAMP can seek other relief options like the Home Affordable Refinance Program (HARP) or explore other assistance programs.
### How were homeowners supposed to apply for a HAMP modification?
- [ ] By mailing a postcard to the Department of Treasury.
- [ ] By attending in-person workshops only.
- [x] By contacting their mortgage servicer and providing necessary documentation.
- [ ] By enrolling online via social media accounts.
> **Explanation:** Homeowners needed to start the application with their mortgage servicer and provide the required documentation for consideration.
