In February 2009, the government unveiled the Making Home Affordable Program, which is made up of two main programs: one for loan modifications and one for refinance loans. While there are a number of companies whom offer loan modification programs, the loan modification portion is called the Home Affordable Modification Program (HAMP). It is designed to reduce mortgage payments struggling homeowners pay per month to sustainable levels. The refinance plan is called the Home Affordable Refinance Program (HARP).

According to the details of the HAMP plan:

• The lender would first be responsible for bringing down interest rates so that the borrowers monthly mortgage payment is no more than 38 percent of his or her income.

• Next, the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent.

• Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with Treasury sharing in the costs.

• Borrowers will be put on a trial modification at the new interest rate and payment for three months. If they make all their payments on time, the modification will be implemented at the new rate and be fixed for five years.

Under the HAMP, loan modifications will be standardized, with uniform loan modification guidelines used by Fannie and Freddie Mac, and then they will be implemented throughout the entire mortgage industry.

HAMP has expanded it’s reach to a broader swatch of hardships to include more people in the program. Many are confused to how HAMP works and this is the key to getting more people on board so the program can do what it’s designed to do – stop foreclosures.

Many banks have been slow to move on many of the Making Home Affordable loan mortgage modification programs for lots of reasons that may or may not be valid.

One such program included in HAMP is the ‘exit gracefully opportunity’. It’s called the Home Affordable Foreclosure Alternatives (HAFA) Program and this seems to be picking up steam as more and more people learn about this Making Home Affordable HAMP loan mortgage modification alternative strategy from getting out from under your mortgage.

It appears that there are mortgage modification plans for second mortgages too. As far as how effective it will be remains to be seen.

There are specific guidelines you must fall under to qualify of course for the HAMP loan mortgage modifications, but they are reasonable and have been adjusted over the last few years to include more and more people with varies situations of hardship.

One very effective mortgage modification is the HAMP Principal Reduction Alternative (PRA). This was a long time in coming because house values have declined so quick and so much. This program should help reduce foreclosures because people can get their principal reduced along with their payment.

There is also Hardest Hit Housing Markets (HHF) HAMP program to help those states hit the hardest by value decline. Not all states are included in this program, just the hardest hit ones are.

To read more go to HAMP loan mortgage modification and you can get more in detail on how HAMP works.