HAMP, the government’s making homes affordable modification program, which provides financial incentives to loan servicers to modify the loans of troubled borrowers has fallen short of its goals because many borrowers did not meet eligibility requirements and loan servicers were not required to participate, according to the U.S. Treasury Department.
Many attempts to modify loans also were sidetracked by second loans which were a popular means of avoiding mortgage insurance during the boom. So far this year, loan servicers have done twice as many loan modifications outside of the HAMP program as in it, with 81 percent of modifications completed in October done outside of HAMP. The government lost its authority to restructure HAMP which expired on October 3 but there are still steps it is looking at including enabling borrowers to apply for loan modifications online and intervening when borrowers are falling behind on HAMP-modified mortgages.
The good news is that half of homeowners who applied for HAMP modifications but did not qualify have received a loan modification outside of the program. Servicers must evaluate homeowners who do not qualify for HAMP or who have fallen out of HAMP to see if they qualify for alternative loss mitigation programs or private modification programs. Therefore, if you are thinking about trying to modify your mortgage you should and you should try the HAMP program. Be patient and be prepared to provide the requested documents more than once. However, if you are rejected by HAMP do not give up and keep trying through other programs your lender may offer as it is a much better climate for modifications than it was even a year ago.