The Home Affordable Modification Program came as a part of the effort to address the home loan crisis in the United States. The program is designed to help people who are having trouble making their mortgage payments be able to modify their home loan in a way that the payments can become affordable. This week, it was announced that the program is going to be extended.

Broadening the scope

The Administration announced that the Home Affordable Modification Program will be expanded by $14 billion. Currently, the program is designed in such a way that people can apply for a temporary modification to their home loan. They then make three months of reduced payments on their home loan. After they have made those payments, the modification to their home loan is made permanent.

The program is being expanded to offer unemployed people a temporary break on their home loans. It would lower the mortgage payment for unemployed folks for a temporary period, from between three and six months. In addition, the overall modification programs would be available to people with low credit scores, including those with a credit score as low as 500.

A program with potential

Some experts suggest that the changes being made to the Home Affordable Modification Program could keep as many as 1 million to 1.5 million people from being unable to make their mortgage payments and losing their homes. The program is especially aimed at those who owe more on their home than what it is now worth.

A rocky beginning

The program has had its critics since it started early last year, largely because so many of the people who entered the trial modification program did not complete the necessary payment or paperwork requirements that were needed in order to make the modifications permanent. The Administration made changes earlier this year that closed the paperwork loophole, requiring applicants to submit all of the necessary paperwork at the time they apply for the modification.

Photo via Christian Haugen