Home Affordable Modification Program - HAMP

AAA

DEFINITION of 'Home Affordable Modification Program - HAMP'

A loan modification program introduced in 2009 to promote stability in the housing market. The Home Affordable Modification Program (HAMP) was aimed at helping homeowners who were devoting more than 31% their of gross income toward mortgage payments. Eligible homeowners can receive adjustments to the mortgage principal, interest rate or payments in order to get the percentage of income going to payments below 31%.

INVESTOPEDIA EXPLAINS 'Home Affordable Modification Program - HAMP'

The government refers to the ratio of payments to gross income as the front-end debt-to-income (DTI) ratio. Working in conjunction with mortgage lenders, the HAMP program provided incetives for banks to reduce the DTI ratio to less than or equal to 38%; the Treasury will then step in to help reduce the DTI ratio to 31% or less. Mortgage servicers received an up-front payment of $1,000 for each eligible modification they performed plus up to $1,000 per year for up to three years while borrower is in the program.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Fannie Mae - Federal National Mortgage ...

    A government-sponsored enterprise (GSE) that was created in 1938 ...
  3. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
  4. Principal

    1. The amount borrowed or the amount still owed on a loan, separate ...
  5. Subprime Mortgage

    A type of mortgage that is normally made out to borrowers with ...
  6. Forbearance

    A temporary postponement of mortgage payments.
Related Articles
  1. To Rent Or Buy? The Financial Issues
    Home & Auto

    To Rent Or Buy? The Financial Issues

  2. Mortgage Points: What's The Point?
    Credit & Loans

    Mortgage Points: What's The Point?

  3. Mortgages: How Much Can You Afford?
    Budgeting

    Mortgages: How Much Can You Afford?

  4. Things To Know About The Home Modification ...
    Options & Futures

    Things To Know About The Home Modification ...

Hot Definitions
  1. Return On Sales - ROS

    A ratio widely used to evaluate a company's operational efficiency. ROS is also known as a firm's "operating profit margin". ...
  2. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  3. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  4. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  5. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  6. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
Trading Center