U.S. homeowners eligible for loan modifications under the federal Home Affordable Modification Program will have until the end of 2015 to apply for assistance, the Treasury Department said today.
“Extending the program for two years will benefit many additional families while maintaining clear standards and accountability for an important part of the mortgage industry,” Treasury Secretary Jacob J. Lew said in a statement.
HAMP, which was scheduled to expire at the end of this year, allows certain borrowers with loans originated before Jan. 1, 2009, to change the terms of their mortgages so their monthly payments are lowered. Treasury pays lenders an incentive fee for participating.
By the end of March, 1.1 million homeowners had obtained permanent loan modifications through HAMP, far fewer than the 3 million to 4 million projected by President Barack Obama’s administration when the program began in 2009. Only about $4.7 billion of the $29 billion originally allocated for the program has been spent.
In April, the auditor overseeing the disbursement of funds for HAMP said homeowners participating in the program were re-defaulting on their loans at an “alarming rate.” Between 30 percent and 40 percent of homeowners who obtained modifications in 2010 have re-defaulted, the special inspector general for the Troubled Asset Relief Program said.