Can I Qualify for a Government Mortgage Modification?

Unexpected life events have the potential to cause financial strain, even for the most diligent savers. Homeowners who are having trouble making ends meet or could just use a little extra room to breathe may benefit from a mortgage modification. In a modification program, the lender agrees to modify the terms of your mortgage to make the monthly payments more manageable by lowering the interest rate or extending the repayment term. The federal government sponsors a modification program to help homeowners avoid foreclosure.

Home Affordable Modification Program

The Home Affordable Modification Program, or HAMP, began in 2009 in an effort to help homeowners at risk of foreclosure. The program focuses mainly on mortgage loans backed by Fannie Mae or Freddie Mac. Lenders servicing these loans must agree to participate in HAMP. Other loans may or may not be eligible for a HAMP modification, it depends on the lender. The original requirements of the program were altered in 2012 to include modifications on rental-property mortgages and to re-evaluate homeowners who were previously denied.

How to Qualify

Even with the relaxed qualification requirements, not everyone will be eligible for a HAMP modification. First, the mortgage loan must be dated before January 1, 2009. The total unpaid balance cannot exceed $729,750 for a single family home. However, higher limits are in place for multi-unit properties. You will need to be able to provide evidence that you are experiencing a financial hardship, such as a medical issue. Additionally, you must show that you will be able to make the new estimated payments through your monthly income.

Investment Properties

Prior to 2012, rental properties did not qualify under HAMP. At the time of publication, rental properties were eligible for mortgage modification. There are some additional requirements to qualify with a rental property. The property must be a one- to four-unit property that is not condemned. You cannot occupy the property that's used as a rental unit. The tenant living at the property must use it as his primary residence. Properties rented on a seasonal basis or as a vacation home are not eligible. However, if you own more than five rental properties, none of them is eligible for HAMP.


If your loan or situation disqualifies you from a government mortgage modification, your lender may be willing to do a private modification. The requirements for this are completely up to the lender. In some cases, the lender requires that you miss a few monthly payments before considering a modification. This can hurt your credit score. If both of these modification options do not work, you can consider a short sale or deed-in-lieu-of-foreclosure.

the nest