HAMP - Home Affordable Modification Program

Thanks to HAMP (Home Affordable Modification Program), millions of American homeowners will be able to stay in their homes.

Part of a $75 billion stimulus package ($50 billion of which came from TARP funds), lenders are lowering payments to allow Americans to hold onto their houses, many of which have no equity or negative equity in them.

HAMP reduces a monthly payment to a maximum of 31% of a homeowner’s income for a period of up to 5 year, by:
-lowering the interest rate to 2%
-extending the repayment term to up to 40 years
-setting aside some of the principal owed

After the five-year period ends, the interest rate can only go up to a capped current market rate, set the day of the loan modification. Capped rates in November 2009 were set at approximately 5%.

To qualify for HAMP, borrowers need to contact their lender or mortgage servicer, fill out paperwork, and successfully complete a three-month trial period while the paperwork is being reviewed.

The deadline to participate in HAMP is December 31, 2012.