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FHA Loan Modification Program

FHA-HAMP: FHA Home Affordable Modification Program

FHA-HAMP (Home Affordable Modification Program) is the primary loan modification program for FHA-insured mortgages. It combines interest rate reduction, term extension, and FHA's unique partial claim

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Program Overview

FHA-HAMP (Home Affordable Modification Program) is the primary loan modification program for FHA-insured mortgages. It combines interest rate reduction, term extension, and FHA's unique partial claim option to achieve an affordable monthly payment. The partial claim is FHA-HAMP's most powerful feature: FHA can advance up to 30% of your unpaid principal balance to cure arrears, and that amount becomes a zero-interest, no-monthly-payment junior lien — essentially an interest-free loan from HUD that you don't have to pay until you sell or refinance. FHA-HAMP is generally more generous than the GSE Flex Modification because of the partial claim option. If your servicer hasn't told you about FHA-HAMP or the partial claim, they may be violating FHA servicing requirements.

Administering Agency

FHA / HUD

Eligibility

  • •Must have an FHA-insured mortgage (check your closing documents or call 1-800-CALL-FHA)
  • •Must be delinquent or at imminent risk of default
  • •Property must be owner-occupied primary residence
  • •Must have sufficient income to support the modified payment (surplus income > 0 after modification)
  • •Loan must not have been modified through FHA-HAMP more than 2 times previously
  • •Must not have used the maximum partial claim amount ($0 cap but FHA determines a maximum based on loan characteristics)

Benefits

  • •Capitalization of arrears: past-due payments, late fees, and legal costs are added to the loan balance
  • •Interest rate reduction: rate can be reduced to market rate (no explicit floor — FHA is more flexible than GSEs)
  • •Term extension: loan can be extended to 360 months from the modification date
  • •Partial claim: FHA advances up to 30% of unpaid principal balance as a zero-interest, no-payment junior lien — this is the most powerful feature
  • •Target 31% front-end DTI ratio (housing payment ÷ gross monthly income)
  • •Standalone partial claim also available for borrowers who can afford current payments but not arrears

How to Apply

1

Confirm your loan is FHA-insured: check closing documents for FHA Case Number, review mortgage statements for MIP payments, or call 1-800-CALL-FHA.

2

Contact your servicer's loss mitigation department — state that you want to apply for FHA-HAMP and request a complete loss mitigation application package.

3

Complete the application with: Uniform Borrower Assistance Form, hardship letter, last 2 years tax returns, last 2 months pay stubs, last 2 months bank statements.

4

Submit a COMPLETE application. FHA requires servicers to evaluate borrowers for ALL available FHA loss mitigation options — not just FHA-HAMP.

5

If the servicer denies your application, demand: the specific reasons for denial, the FHA waterfall evaluation showing all options were considered, and a written appeal form.

6

If you're not satisfied with the servicer's response, escalate to the FHA Resource Center at 1-800-CALL-FHA and file a CFPB complaint.

Key Deadlines

  • ⏰Complete application submitted 37+ days before foreclosure sale triggers RESPA dual tracking protections
  • ⏰Servicer must acknowledge receipt within 5 business days
  • ⏰FHA requires servicers to complete modification evaluation before proceeding with foreclosure
  • ⏰Appeal deadline: 14 days from denial notice
  • ⏰FHA-HAMP is a permanent program — no expiration date

Frequently Asked Questions

What makes the FHA partial claim different from principal reduction?▼
The partial claim is NOT principal reduction — the full amount remains owed. However, it functions like principal reduction for affordability purposes because: (1) no interest accrues, (2) no monthly payment is required, and (3) it's only due when you sell, refinance, or the first mortgage is paid off. For a $200,000 loan, a $40,000 partial claim means you only make payments on $160,000 while the partial claim sits silently. This can reduce your monthly payment by 20-25% without the lender taking a principal reduction loss.
Can I combine FHA-HAMP with HAF assistance?▼
Yes, and this is a powerful combination. HAF can pay arrears to bring the loan current, and then FHA-HAMP can modify the loan terms for long-term affordability. Or, FHA-HAMP with a partial claim can handle the arrears while HAF provides forward payment assistance. The programs are complementary — talk to a HUD-certified housing counselor about the best sequence for your situation.

Related Programs

Flex Modification: Fannie Mae / Freddie Mac Flex Modification →HAF: Homeowner Assistance Fund →USDA Special Loan Servicing: USDA Rural Development Special Loan Servicing →

Need Help Applying for This Program?

Knowing about a program is only half the battle. Professional Law Assist helps you complete the application correctly, provides the right documentation, meets deadlines, and escalates when servicers don't comply. Get a free case review and let us help you access the assistance you deserve.

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Related Services & Resources

Loan Modification Assistance →Foreclosure Defense →FHA Foreclosure Prevention →
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