Treasury announces big changes for HAMP borrowers

by MPA05 Dec 2014
Government officials have announced extra incentives for borrowers under the Home Affordable Modification Program (HAMP).

Currently, homeowners who remain current following their modification are eligible to earn up to $5,000 over the first five years of their modified loan, which is applied in repayment of their outstanding principal balance. Under the revised guidelines announced Thursday, all homeowners in HAMP will now be eligible to earn $5,000 in the sixth year of their modification, reduceing their outstanding principal balance by as much as $10,000. Homeowners will also be offered an opportunity to re-amortize the reduced mortgage balance, which will have the effect of lowering their monthly payment.

“While the housing sector has strengthened in recent years, there are still many homeowners struggling to make their mortgage payments,” said Secretary of the Treasury Jacob Lew. “The changes we are announcing today offer meaningful incentives for borrowers to stay current in their modifications, increase their opportunity to build equity in their homes, and provide vital safety nets for those facing greater financial strains.”

Government officials estimate that approximately one million homeowners with HAMP loans are eligible for the additional $5,000 incentive. The changes appear aimed at motivating borrowers to stay current while also providing a cushion for borrowers due to see higher rates. The Treasury Department and Department of Housing and Urban Development (HUD ) established HAMP in 2009 in an effort to provide relief to homeowners facing financial hardship.

The administration also announced incentives for borrowers in the HAMP Tier 2 alternative program., which provides a low fixed interest rate for borrowers who did not qualify for a standard HAMP modification. Those borrowers can now pay a 50-basis point lower interest rate and are eligible for the $5,000 pay-for-performance incentive if they are in good standing at the end of their sixth year.

Additionally, the administration announced it has increased the amount of relocation assistance provided to homeowners to $10,000 to better reflect increased rents and the cost of moving in many parts of the country.


  • by cheryl m | 12/5/2014 11:08:45 AM

    5K is not going to slow the rate of default.

  • by | 1/2/2015 2:27:44 PM

    This does nothing for the home owners that have purchased their homes after 2009. This is just an added benefit to those that are under the modification currently.


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