What Is the HAMP Refinance Program?

The Home Affordable Modification Program, or HAMP, is a type of refinancing available to homeowners who are in default on their mortgages or at risk of it, according to Fannie Mae. It is a government program that modifies mortgage payments in a way that makes them more affordable for homeowners in financial difficulty.

Refinancing through HAMP modifies a mortgage payment so it is no more than 31 percent of a homeowner's gross monthly income, explains Fannie Mae. It accomplishes this by changing the type of mortgage loan, extending the term of the mortgage, reducing the interest rate or adding the past due amounts to the re-amortized new term. To qualify, the original closing date of the mortgage loan must be prior to Jan. 1, 2009 and obtained through Freddie Mac, Fannie Mae or a participating lender. Additionally, the homeowner must be experiencing a long-term financial hardship and be ineligible for typical refinancing options.

HAMP helps prevent foreclosure and lets homeowners remain in their homes, states Fannie Mae. It immediately resolves a loan's delinquency status and changes the original mortgage terms permanently, allowing homeowners to start over with more manageable payments. By preventing foreclosure, homeowners are also able to avoid further damage to their credit.