Mortgage Modifications

NCUA encourages credit unions to work constructively with residential mortgage borrowers who may be unable to meet their contractual payment obligations. One common workout arrangement is a mortgage loan modification. A loan modification permanently restructures the terms of an existing mortgage loan. It is important to understand a loan modification is not a new loan, but a renegotiation of an existing loan. It does not satisfy or replace the existing note.

Loan modification options may include (but are not limited to) any one, or a combination, of the following:

  • Reduction in the interest rate;
  • Extension of the maturity date;
  • Principal forbearance or forgiveness;
  • Conversion of the interest rate from adjustable to fixed;
  • Allowing interest-only payments for a period of time;
  • Balloon options;
  • Waiver of late fees; and
  • Reduction or capitalization of past due amounts, accrued interest, taxes, insurance, or fees.

Home Affordable Modification Program

The Home Affordable Modification Program (HAMP) is a federal loan modification program designed to reduce delinquent and at-risk borrowers' monthly mortgage payments. The Program is part of the Making Home Affordable Program, which was created by the Financial Stability Act of 2009.

For additional information regarding HAMP, visit: makinghomeaffordable.gov.