The Federal Government allowed the nation’s primary mortgage modification program, HAMP, to expire on December 31, 2016. The Home Affordable Modification Program, or HAMP, was introduced in 2009 to respond to the sub-prime mortgage crisis and it provided targeted aid to homeowners who met certain criteria. The primary eligibility requirements were that the loan needed to be originated before January 1, 2009, borrowers needed to document their income, suffer a financial hardship and the debt-to-income ratio needed to fall in the 30-35% range.
HAMP was uniformly used by most of the big banks and servicers and my office worked with more than a dozen of these banks and servicers to secure modifications for hundreds of our clients. While frustrating at times because of institutional bureaucracy, modifications were accomplished in a variety of ways, including through interest rate reduction, fixing the interest rate, reducing mortgage principal and/or forebearance and/or extending the term of the loan. HAMP was beneficial in that it provided clear and concise guidelines and included incentives for both the banks and the homeowners.
Neither Congress or Regulators have yet to put forth a replacement for HAMP. This is worrisome because it means that each bank or servicer is free to use and set their own guidelines. While there will be some period of uncertainty during this transition, our office will be working with homeowners and dealing with each bank or servicer’s specific and particular requirements.