Can HAMP Assistance Affect My Credit?

HAMP, or the Home Affordable Modification Program, is the portion of the Obama administration’s Making Home Affordable Program that allows homeowners to modify their mortgage loans in order to lower their monthly payments.  By meeting certain criteria, homeowners can participate in HAMP, and lenders are given certain incentives for referring and qualifying homeowners for HAMP. 

Reporting to Credit Agencies

Each month, your mortgage lender will report the status of your mortgage loan to the credit agencies.  If you are current in your mortgage loan payments, the lender must report you as current; on the other hand, if you are delinquent in your mortgage loan payments, the lender can report the amount of your delinquency.  Whether you are current or delinquent in your mortgage loan payments, however, if you are participating in HAMP, the lender can also report this fact to the credit agencies. 

Temporary Modification Payments

Under HAMP, homeowners enter into a trial modification period during which they make lower mortgage payments pursuant to an agreement with their lender.  This trial modification period may in fact last for several months while the lender determines whether a homeowner is eligible for a permanent modification.  However, the reality is that the homeowner is only making partial payments toward his or her original mortgage loan during the trial modification program, and the lender is permitted to report that while the homeowner is participating in HAMP, he or she is still making only partial payments toward the original mortgage loan balance, which is sure to adversely affect the homeowner’s credit. 

Consult a Lawyer for Assistance

If you have questions about whether you should apply for and/or enter into a HAMP-sponsored mortgage loan modification with your lender, consider consulting a lawyer for help.  A lawyer who is well-versed in real estate and creditor-debtor law will be able to explore all of your options with you and help you choose the path that is best suited to meet your needs.