The Obama administration's adjustments to the Home Affordable Modification Program (HAMP), announced March 26, are intended to help unemployed homeowners as well as some of the estimated 11 million borrowers who are current on their mortgage payments but owe more than their properties are worth.

Under the plan, servicers will be required to provide three to six months of temporary forbearance to eligible unemployed borrowers, with payments reduced to no more than 31 percent of monthly income.

Servicers will also be encouraged to write down principal for underwater borrowers whose loans exceed their home value by more than 115 percent. Some of these homeowners will be able to refinance into FHA mortgages. Another provision provides $3,000 in "relocation assistance" to homeowners who close a Short Sales rather than having their home foreclosed; the original HAMP payment in this situation was $1,500.

The new measures will be implemented over the next few months. Costs will be shared between the private sector and the Federal Government; the Federal cost of these changes will be funded through the $50 billion allocation for housing programs under the Troubled Asset Relief Program (TARP).

Here are links to more information and resources about the new policies:
- Obama administration press release
- Consumer FAQs (download PDF)
- HAMP improvement fact sheet (download PDF)
- FHA refinance fact sheet (download PDF)
- DS News article: "White House Adds Help for Underwater, Unemployed to Housing Plan"
- USA Today article: "Aid Plan Could Lower Payments on More Underwater Mortgages"