HAMP Program Alternatives You Should Know About
The Home Affordable Modification Program (HAMP), created in 2009 by the federal government, helped struggling homeowners stay afloat by modifying their original mortgage loan terms. The HAMP program ended in 2016, but other loss mitigation and mortgage modification options have cropped up. These alternative programs help ease the burden on struggling homeowners, usually by reducing unaffordable monthly payments.
The HAMP program expired in 2016*, but homeowners in financial distress have several alternatives. The loss mitigation programs listed below are compatible with conventional and government-backed mortgages, and can help borrowers who are struggling to meet their monthly payments. Most are loan modification programs, which means they permanently alter your mortgage loan terms.
*One exception: homeowners who inherited a mortgage through certain eligible types of transfers — like death or divorce — can still use the FHA HAMP program. To qualify, such a borrower must be in imminent default.
The Home Affordable Modification Program (HAMP) was created in 2009 after the Great Recession. It offered financial relief to homeowners who were at risk of losing their homes because they couldn’t afford their monthly mortgage payments.The program modified the terms of qualified applicants’ mortgages to help them bring their loans current and stay in their homes. Eligible borrowers were required to enroll in a three-month trial program. After they paid the modified amount for this set period, they could enter into a permanent agreement.
Families typically reduced their monthly payments by more than $530 a month until the program expired in 2016.
HAMP vs. HARP program: What’s the difference?
What is the HARP program?
The federal government created the Home Affordable Refinance Program (HARP) in 2009 to help borrowers who found themselves owing more than their homes were worth due to the Great Recession of 2008. Unlike HAMP, which was about modifying a borrower’s current mortgage, HARP was designed to help “underwater” homeowners refinance into more affordable mortgages with lower payments and interest rates.
HARP expired in 2018, while HAMP expired in 2016.
HAMP program alternatives to consider
Mortgage relief programs
| Who it’s for | Program name | What assistance does it offer? | Who’s eligible? |
|---|---|---|---|
| FHA loan borrowers | COVID-19 loss mitigation | Reduces monthly mortgage payments by:
| Borrowers who are at least 61 days late on mortgage payments |
| HUD standard loss mitigation | Reduces monthly mortgage payments by temporarily pausing or reducing payments | Borrowers who are either already in default, or at risk of default | |
| Conventional loan borrowers | Fannie Mae/Freddie Mac Flex Modification | Provides a 20% reduction in mortgage payments by:
| Borrowers whose loan is owned by Fannie Mae or Freddie Mac and is at least 12 months old |
| VA loan borrowers | VA loan modification | Allows borrowers to finance the missed mortgage payments into their total loan balance, then set up a new mortgage payment schedule | Borrowers in default |
FHA loss mitigation options
1. COVID-19 Advance Loan Modification (ALM)
This program modifies mortgages by extending the loan term, adding late payments to the principal balance and reducing the mortgage interest rate. The goal is to reduce your monthly principal-and-interest payments by at least 25%.
→ How to qualify: Borrowers must be at least 61 days delinquent on their mortgage.
→ Expiration: This program is set to expire on April 30, 2025.
→ Where to apply: This isn’t a program you can apply for cold. Your loan servicer will send you the documents if you qualify — all you’ll need to do is sign them.
Who is my loan servicer?
If you’re unsure who your loan servicer is, look at the top left corner of your mortgage statements — it should be listed there. If you still aren’t sure, you can find your servicer by using the MERS® system online, or by phone at 888-679-6377.
2. COVID-19 Recovery Home Retention Options
These programs allow borrowers to reduce their monthly mortgage payments by altering the original loan in different ways.
- COVID-19 Recovery Standalone Partial Claim: If you’re able to resume making your normal mortgage payments, this program is for you. It lets you delay repaying the amount you owe in missed mortgage payments, placing it at the end of your loan repayment. However, if you sell or refinance, you’ll have to pay that amount back immediately.
- COVID-19 Recovery Modification: If you’re not able to resume your normal mortgage payments, this option allows you to permanently reduce your monthly payment amount. The amount you owe in missed mortgage payments will be folded back into the principal loan balance, and your term will be extended to 30 or 40 years.
- Payment supplement: If none of the options above will work for you, you can turn to this one, which will bring your mortgage current and help temporarily reduce your payments by as much as 25%. It offers up to 30% of your outstanding loan balance in assistance funds, which first go toward covering the amount you owe in missed mortgage payments, and then toward reducing your monthly payments. You’re required to pay back the assistance funds, but not until you sell, refinance or pay off the loan.
→ How to qualify: Borrowers must be behind on their mortgage payments and not have already utilized their payment supplement funds in a previous loss mitigation plan.
→ Where to apply: In some cases, your loan servicer may prepare and send you documents to sign if you’re eligible for this program. However, if you think you qualify and haven’t heard anything, you should reach out to your servicer to discuss your options.
3. HUD standard loss mitigation options
FHA loans follow rules set by the U.S. Department of Housing and Urban Development (HUD). HUD’s standard loss mitigation options include:
- Formal or informal forbearance. A forbearance plan allows you to temporarily reduce or press “pause” on your mortgage payments in order to find your financial footing. You’ll be guided to longer-term options, like loan modification, if you aren’t yet stable once the forbearance period comes to an end.
- Special forbearance (SFB). This is a variation of the standard forbearance plan that’s designed for borrowers dealing with job loss. Your lender will offer you a forbearance plan that ends on a specific date and/or when you find new employment. They’ll then reassess your situation, with the potential to extend the forbearance (up to 12 months total).
→ How to qualify:
- Be at least 61 days, but not more than 12 months, behind on mortgage payments
- Not be in foreclosure
- Live in the home as your primary residence
- Either have no income coming in, or be able to show that at least one co-borrower is unemployed and the mortgage payment is more than 40% of the other’s income
→ Where to apply: If you’re ready to initiate the process, call your loan servicer and explain your situation. If you’re just looking for more information on the program, you can call the FHA Resource Center at 800-CALL FHA (800-225-5342), go to the online HUD Frequently Asked Questions or email the FHA Resource Center at [email protected].
Fannie Mae and Freddie Mac Flex Modification
If you hold a conventional mortgage owned by Fannie Mae and Freddie Mac — and the mortgage finances your primary residence — you may qualify for their Flex Modification program. This program can help borrowers who are delinquent on their mortgage by at least 60 days, but even homeowners who are current on their loan may qualify if default is “imminent.” (Check out the green box below for more details on imminent default.)
If you use a Flex Modification program, you’ll receive reduced monthly principal-and-interest payments. The program targets a 20% reduction in your mortgage payment amount, achieved through extending your loan term to 40 years and/or reducing your interest rate.
→ Program requirements include:
- Default: The mortgage must be 60 days or more past due or in imminent default.
- Seasoning: The mortgage must be at least 12 months old.
- Hardship: The borrower must have a qualifying hardship, which includes unemployment, loss or reduction in income, an increase in housing costs, illness, disability, divorce and natural disaster.
- Income: The borrower must have a stable verified income to support a monthly payment.
- Previous modifications: The mortgage loan must not have been modified three or more times.
→ Where to apply: Your loan servicer may decide to offer you a Flex Modification, in which case they’ll reach out to you with details. Alternatively, you can initiate the process by filling out an application known as a borrower response package (BRP). Contact your loan servicer to acquire the necessary forms.
If you’re headed toward foreclosure but the sale hasn’t happened yet, you still have time to apply for a loan modification. As long as you submit your application at least 37 days before the scheduled foreclosure sale, the sale will be delayed while your application is under review.
What is imminent default?
Imminent default means that you’re not yet 60 days behind on your mortgage payments, but there’s good reason to believe you will be soon. The exact criteria used to determine this are a little complex, but involve an evaluation of:
- How much you’re spending on housing in relation to your income
- Whether you’ve missed any mortgage payments in the last six months
- Your credit score
- Any recent rate adjustments to your loan
- Your family situation, including deaths, illness and divorce
- How much cash you have on hand
You must also live in the home as your primary residence to qualify for a Flex Modification under the imminent default rule.
VA loan modification
If you have a VA loan that you’re struggling to pay, the VA loan modification program could help you keep your home. This program adds any past-due amounts to your outstanding principal balance, and then recalculates a new payment schedule for your home loan. You may qualify to reduce your monthly payment by extending your home loan up to 360 months (30 years).
→ Program requirements include:
- Your VA loan must be in default
- The property may not be abandoned
→ Where to apply: If you’re ready to get the ball rolling on a loan modification, reach out to your loan servicer. If you need help understanding your options first, contact the VA at 877-827-3702.
What are my other mortgage relief options?
If you’re looking to lower your mortgage payments, but don’t qualify for any of the programs above because you’re not in default (or imminent default), refinancing may be your best bet.
- Standard refinance. Refinancing can help you swap out your old loan for a new one with a lower interest rate or longer loan term. It can also help you switch from a fixed-rate loan into an adjustable-rate mortgage (ARM), or vice-versa.
- High-LTV refinance. Many refinance programs limit you to a 97% loan-to-value (LTV) ratio, but it’s possible to get a high-LTV refinance if you have a conventional, FHA, VA or USDA loan:
High-LTV refinance programs
| Loan type | Refinance program | LTV maximum |
|---|---|---|
| Conventional loans | Fannie Mae RefiNow | 97% |
| Freddie Mac Refi Possible | 97% | |
| Fannie Mae HomeReady refinance | 97% | |
| Freddie Mac Home Possible refinance | 97% | |
| FHA loans | FHA streamline refinance | No maximum |
| VA loans | VA IRRRL | No maximum |
| USDA loans | USDA streamline refinance | No maximum |
These higher LTV limits can be crucial for homeowners with little, no or negative equity.
