Home Affordable Modification Program

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The Home Affordable Modification Program (HAMP) is a $75 billion program that is part of a larger Making Home Affordable Program. TARP money accounts for $50 billion, which largely consists of incentive payments to mortgage servicers when they modify terms of mortgages to lower monthly payments (not the principal), though some money does go borrowers. Also included in the $50 billion is $10 billion under the Home Price Decline Program (HPDP) in incentive payments to investors in mortgage-backed securities to further encourage modifications and $4.6 billion for the Home Affordable Foreclosure Alternatives (HAFA) program, which is supposed to provide alternatives to foreclosure. As of the end of 2009, Treasury had made deals with mortgage servicers and investors for $35.5 billion, covering 66,465 mortgage modifications, of which $15.4 billion has been paid out. About $12.1 went to servicers and $3.2 million went to investors. Since it’s inception, the program has initiated about 903,000 mortgage modifications – of which the 66,465 have been converted to permanent modifications – and about 787,000 remain active. An additional $25B, funded by the Housing and Economic Recovery Act of 2008 goes to modify mortgages owned or guaranteed by GSEs. Of the $50 billion.[1]

In February and March 2010, the Obama administration announced that $2.1 billion of the TARP money will be sent to five states with the most depressed home values and five states containing counties with high unemployment under the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (the “HFA Hardest Hit Fund”). States are able to design their own programs, with suggested uses of:

  • Unemployment Programs – Programs may provide for assistance to unemployed borrowers to help them avoid preventable foreclosures.
  • Mortgage Modifications – Programs may provide for modification of mortgage loans held by HFAs or other financial institutions or provide incentives for servicers/investors to modify loans.
  • Mortgage Modifications with Principal Forbearance – Programs may provide for paying down all or a portion of an overleveraged loan and taking back a note from the borrower for that amount in order to facilitate additional modifications.
  • Short Sales / Deeds-In-Lieu of Foreclosure – Programs may provide for assistance with short sales and deeds-in-lieu of foreclosure in order to prevent avoidable foreclosures.
  • Principal Reduction Programs for Borrowers with Severe Negative Equity – Programs may provide incentives for financial institutions to write-down a portion of unpaid principal balance for homeowners with severe negative equity.
  • Second Lien Reductions – Programs may provide incentives to reduce or modify second liens.

No funds have yet been disbursed under the HFA HFH.[2]


“According to Treasury, HAMP is a $75 billion program that will lower monthly mortgage payments for homeowners by providing loan modification incentive payments to the servicers and loan holders (lenders or investors — referred to as investors in this section), and by protecting against further loss of collateral value. Of the $75 billion reserved for HAMP, $50 billion will be from TARP and will be used to modify private-label mortgages. Of the $50 billion for private-label mortgage modifications, $10 billion will be used to provide recently announced incentives through the Home Price Decline Protection (“HPDP”) pro- gram, which is intended to protect investors from potential price declines on modified mortgage properties. Treasury estimates that $4.6 billion of the $50 billion will be used for the Short Sale / Deeds-In-Lieu of Foreclosure (“SS/DIL”) program… The additional $25 billion in HAMP funding is provided under the Housing and Economic Recovery Act of 2008 (“HERA”) and will be used to modify mortgages that are owned or guaranteed by Government-sponsored enterprises (“GSEs”), particularly Fannie Mae and Freddie Mac.”

Wall Street Bailout Accounting
(back to main table)
Balance Sheet
Disbursed*: $1.96B[4]
Current outstanding: $1.96B[5]
Public Funds
Maximum at-risk: $45.6B[6]
Current at-risk: $45.6B[7]

* See the methodology and glossary for definitions of "disbursed," etc.

Funding agency and aid type

The funding agency is the Treasury Department.

Though Treasury initially reported a $1.27 billion disbursal figure for HAMP in its December 2009 report, they did not explain the figure and it dropped down to $30 million in January 2010, so that initial figure is most likely a planning or intended number, not what was actually disbursed.[8]

Who benefits

Primarily banks, who receive incentive payments for modifying mortgages. Also homeowners, who receive smaller incentive payments.


Articles and resources

Related SourceWatch articles


  1. SIGTARP Jan. 2010 report, p. 96-97.
  2. U.S. Treasury, "ADMINISTRATION ANNOUNCES SECOND ROUND OF ASSISTANCE FOR HARDEST-HIT HOUSING MARKETS," Mar. 29, 2010, available at http://www.financialstability.gov/latest/pr_03292010.html
  3. SIGTARP Oct. 2009 report, p.94.
  4. U.S. Treasury, Section 105(a) Monthly Congressional Reports, June 2011, available at http://www.financialstability.gov/latest/reportsanddocs.html
  5. U.S. Treasury, Section 105(a) Monthly Congressional Reports, June 2011, available at http://www.financialstability.gov/latest/reportsanddocs.html
  6. Note: Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) had stated total risk for HAMP was $75B ($50B in TARP funding, $25B in HERA funding). See “Quarterly Report to Congress January 30, 2010”, pps. 96-97.
  7. See Max at-risk.
  8. U.S. Treasury, Section 105(a) Monthly Congressional Reports, Dec. 2009, available at http://www.financialstability.gov/latest/reportsanddocs.html

External resources

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