What is FHA-HAMP and How Can it Help You Avoid Foreclosure?

HAMP, or Home Affordable Modification Program, is a program run by the FHA, or the Federal Housing Administration, which helps insure mortgages to lenders and lower monthly mortgage payments to borrowers. This program can help lenders granting mortgages to people with lower credit scores lessen the likelihood of the borrower defaulting on a loan. Mortgage lenders with FHA insurance can thereby charge lower monthly payments to make mortgage payment more affordable for the borrower.

To learn how the FHA-HAMP program can help you avoid foreclosure, keep reading!

History of the FHA

The FHA was first created in 1934 in the aftermath of the Great Depression. Owning a home was nearly impossible at this time, and most families were renting because mortgages had a narrow limit of only fifty percent of the property’s market value and a short window of repayment time.

The FHA continued to help people, especially veterans after the World Wars, to find affordable housing. Over the years, the FHA has helped seniors, people with disabilities, and communities negatively affected by recessions to be able to find affordable housing and to avoid foreclosures on their homes.

How does the FHA work?

The FHA receives its income in the form of insurance payments from lenders. Lenders that are approved by the FHA may opt to purchase FHA insurance so that they can create more mortgages. Currently, the FHA offers single and multi-family housing mortgages, residential care facilities mortgages, and hospital mortgages in the United States.

What is the HAMP program?

The HAMP program essentially helps borrowers with FHA-insured mortgages to lower their monthly loan payments in an effort to avoid foreclosure. The way that the program works is that it “allows the use of a partial claim up to 30 percent of the unpaid principal balance as of the date of default combined with a loan modification” (https://www.hud.gov/hudprograms/fhahamp)

How does the HAMP program work?

The HAMP program can be offered to borrowers who are struggling to make their mortgage payments, have defaulted on mortgage payments, or are trying to avoid foreclosure. Homeowners who have proof of financial hardship as well as the ability to make modified payments may be considered.

Once it is determined that a borrower may be eligible for the HAMP program, there will be a three month trial period in which the borrower must make timely payments of their modified mortgage payments. Should the borrower not meet these requirements, they will not be qualified for the HAMP program.

Is the HAMP program right for you?

If you are struggling to make your monthly mortgage payments and your credit score is not good, the HAMP program may be a good option for you to lower your monthly payments. It is important that you understand what your options are, and a good first step is to speak with you lender. To learn more about timelines and processes to consider when possibly facing foreclosure, visit: https://njforeclosurerescue.com/nj-foreclosure-timelines-and-processes-to-consider/.

Research:

https://home.treasury.gov/data/troubled-assets-relief-program/housing/mha/hamp