What is the Home Affordable Modification Program?

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  • Written By: Luke Arthur
  • Edited By: C. Wilborn
  • Last Modified Date: 29 September 2019
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The Home Affordable Modification Program is a US government program that is designed to provide relief for individuals who can no longer afford their mortgage payments. The basic idea behind this program is that homeowners who are having trouble with their mortgages can deal with their lenders in order to modify their loans. The lender can use a variety of techniques to help the homeowner, including lowering the interest rate on the loan, extending the repayment period, or deferring a portion of the principal of the loan.

The Financial Stability Act of 2009 was the legislation that paved the way for the Home Affordable Modification Program. This program was created as a direct result of the housing crisis that took place in the United States in 2008. Many homeowners in the US were faced with foreclosure, and the effects of so many foreclosures could have been devastating to the economy. The Home Affordable Modification Program was created in order to provide these homeowners with an alternative to foreclosure and to allow them to stay in their homes.


Not every homeowner is eligible for the Home Affordable Modification Program. The homeowner will have to meet certain qualifications in order to be considered as a candidate for a modification. One of the most important qualifications is that the homeowner's mortgage payment has to be greater than 31% of the total amount of money that he or she brings in every month before taxes are deducted. The homeowner also has to have a financial hardship that can be proved to the lender with some type of documentation.

The Home Affordable Modification Program can be used on single family homes or homes that include up to four units, as long as the owner lives in one of the units. Each unit size has a maximum loan amount that must be met in order to qualify for the program. For example, on a single family home, the loan balance has to be less than $729,750 US Dollars (USD). The primary loan on the house has to have begun before 2009 in order to qualify for the program as well.

Once it is determined that the homeowner qualifies for the program, the lender may be willing to work with him or her in a few different ways. The first step that the lender may take is to lower the interest rate on the loan. Then the lender may extend the term of the mortgage loan to as long as 40 years. The lender could also decide to allow the homeowner to forgive a portion of the principal or defer the repayment of it until after the loan is retired.



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