The Obama administration, seeking to help more homeowners lower their interest rates and shed mortgage debt, will relax the rules on a federal loan- modification program and triple its incentives to banks.
The revised Home Affordable Modification Program, or HAMP, also would pay Fannie Mae and Freddie Mac to forgive debt on homes that have lost value. The government-owned companies, citing cost, don’t reduce principal, a policy that has limited HAMP’s reach because they own or guarantee nearly half of U.S. home loans.
Housing and Urban Development Secretary Shaun Donovan, Assistant Treasury Secretary Tim Massad, and White House National Economic Council Director Gene Sperling announced the program changes yesterday in a phone call with reporters.
“This will expand the reach of HAMP,” Massad said.