Government Hamp Program What Is The Hamp Program

Government HAMP Program – What Is The HAMP Program?

By: - Mortgage - November 21, 2011
government hamp program what is the hamp program

After the mortgage crisis of 2008 and 2009, the US government stepped in and offered programs to those eligible homeowners who were having difficulty making their mortgage payments. Part of the Emergency Economic Stabilization Act of 2008 and the Financial Stability Act of 2009, the government HAMP program is one such assistance you may be able to secure. If you are wondering “What is the HAMP program?”, it is short for Home Affordable Modification Program and is a valid option if you need help and qualify for it.

You know what HAMP stands for, but you still don’t know the answer to “What is the HAMP program?” The HAMP program is made for people who own homes, have a mortgage and are having financial problems. For those accepted, it will help them get a lower mortgage rate and avoid foreclosure. There are specific requirements of the government HAMP program and if you meet them, you can get your mortgage payments down to 31% of your pre-tax income.

Now that you know the answer to “What is the HAMP program?”, you may be wondering about the eligibility requirements. There are several basic requirements and there may be additional ones depending on your lender. The first requirement is that you had to have your loan originated by January 9th, 2009. You must own your home and it must be your primary residence. Additionally you must have an unpaid balance of less than $729,750. Your payments must be greater than 31% of your monthly gross income and you must be falling behind on your payments or have already fallen behind, but this cannot be because of unemployment. If you meet these basic requirements, you should contact your lender for further evaluation.

You must fully document your finances when applying for the government HAMP program and you must provide proof of income.  Additionally you will need to sign an affidavit stating you have financial hardship. You must not be more than 5% underwater when you apply for this assistance and modifications of these loans will only be accepted until December 31, 2012. HAMP is a free program and you should never pay a fee to be eligible. Your lender may have some processing fees, but there should be no other fees involved. In recent months, scammers have come in and began charging for paperwork and processing. Do not pay anything for participation in the HAMP program.

As mentioned above, the goal of the program is to get your mortgage payments down to about 31% of your pretax monthly income. In order to do this, your lender will do one of three things. The first step is usually to lower your interest payments. Per the regulations of the HAMP program, they can lower payments as low as 2% interest. If that doesn’t work, the second option is to extend the term of the loan up to 40 years. If the monthly payment is still not at 31% of your gross monthly income, forbearance is drawn on a portion of the principal.

Once the terms have been set, you will be put on a three month trial period to make sure you can handle the payments. After that three month trial has passed, if you have been able to make your payments, the new terms of payment will become permanent.

If you believe that you may be eligible for the HAMP program and want more information, the best thing you can do is to contact your lender. The sooner you make that call, the sooner you can begin getting relief. Even if you are not eligible for the HAMP program, you may be eligible for another program type.