WHAT IS HAMP?
The Emergency Economic Stabilization Act EESA (EESA) was signed into law by President Obama on October 3, 2008. EESA included several programs implemented by the United States Treasury. Some of the government programs include the “Home Affordable Modification Program” or “HAMP.” The HAMP program was implemented to keep homeowners in their homes. The HAMP program includes loan modifications or workout agreements to modify homeowner’s mortgages. Homeowners may modify interest rates, term extensions and principal forbearance or forgiveness.
According to the Homeowner Affordability and Stability Plan, the Home Affordable Modification Program, and the United States Treasury Supplemental Directive 09-01 (also known as the “Making Home Affordable Program”), the Treasury Department requires all Financial Stability Plan recipients to participate in foreclosure mitigation plans consistent with the U.S. Treasury’s loan modification guidelines. The goal of HAMP is to modify the borrower’s loan such that the borrower’s monthly payment is equal to 31 percent of the borrower’s gross monthly income.
In fact, most major residential mortgage servicers have committed to the Home Affordable Modification Program (HAMP) by signing formal “Participation Agreements” with the United States of America, in which the mortgage servicers agree to postpone foreclosures and modify loans for eligible borrowers. Click here for the list of Residential Mortgage Servicers.
Mortgage servicers have been instructed by US Treasury Department that they should not proceed with a foreclosure sale until the borrower has been evaluated for the program and, if eligible, extended an offer to the homeowner to participate in the program. Mortgage servicers must use reasonable efforts to contact borrowers facing foreclosure to determine their eligibility for HAMP.
For more information about HAMP and other EESA Programs click here.