History

• Launched in 2009, the Home Affordable Modification Program provides financial incentives to mortgage lenders and banks that work with struggling homeowners to reduce these individual's monthly mortgage payments. According to the U.S. Treasury Department, 170,000 homeowners had received mortgage modifications as of the end of February 2010. The Treasury Department reported that 91,800 additional loan modifications were only awaiting final approval by homeowners.
  
  

Eligibility Requirements

• Homeowners must meet certain eligibility requirements to participate in the Home Affordable Modification Program. They must apply for a loan modification for a mortgage that is attached to their primary residence, and this loan must be $729,750 or less. Homeowners must be struggling to pay their mortgage payments, and must have been approved for their current mortgage on or before Jan. 1, 2009. The payment on homeowners' first mortgage loans must be more than 31 percent of their gross monthly income.
  
  

Not Automatic Acceptance

• Even if homeowners meet all of these requirements, though, there is no guarantee that they will be approved for a Home Affordable Modification Program. Their mortgage lender or bank will study their financial situation to determine if they warrant a loan modification. Homeowners whose lenders determine that they actually do have enough income to comfortably pay their mortgage loan will not be eligible for a modification through the federal program.
  
  

Applying

• Homeowners must apply for a Home Affordable Modification Program modification through their current bank or mortgage lender. Though the federal government is running the program, it does not modify any loans. That is the job of private financial institutions. Homeowners, if they think they are eligible for a modification, should call their lenders or banks to start the process. Homeowners will usually have to provide some form of proof--such as copies of paycheck stubs, credit card bills, bank savings and checking account statements or unemployment checks--that they have suffered a financial hardship and makes it impossible for them to continue making their mortgage payments.
  
  

Lender Options

• Mortgage lenders or banks have several options when it comes to reducing the mortgage payments of homeowners. They can reduce the interest rates attached to a loan, reduce the principal balance or restructure the terms. All of these options will result in a reduced monthly mortgage payment.