The $75 billion Home Affordable Modification Program (HAMP) started in March 2009 to help homeowners prevent foreclosures by providing financial incentives to mortgage companies and investors for modifying home loans.

Since then, approximately 66,000 homeowner mortgages have been permanently modified under the program, while 46,000 modifications are underway. The program is still a long way from its initial goal of modifications for four million homeowners. While over 850,000 homeowners have entered into trial loan modifications, only 15% of these have been converted into permanent ones.

The Home Affordable Modification Program is currently plagued with a number of problems, ranging from a shortage of personnel to handle the modifications to failure on the part of borrowers to submit the required paperwork. Another problem with modifying home loans is that it has a negative impact on the homeowner’s credit score, which can make it difficult for them to obtain a loan or credit card. Though loan modifications can help homeowners prevent foreclosure, before entering a loan modification, borrowers must discuss the impact of the modification on their credit score with their mortgage lender.