What Is Making Home Affordable?
Making Home Affordable (MHA) was the U.S. Treasury's umbrella initiative launched in 2009 to stabilize the housing market during the Great Recession. MHA encompassed multiple programs — including HAMP for loan modifications, HARP for underwater refinancing, and smaller programs for second liens, short sales, and unemployment forbearance — collectively assisting over 5 million homeowners using $27 billion in TARP funds.
Key Facts
- MHA was announced on February 18, 2009 and authorized up to $75 billion from the Troubled Asset Relief Program (TARP), though actual disbursements totaled approximately $27 billion across all programs — the remainder was never committed
- The MHA umbrella included over a dozen programs: HAMP (1.8M modifications), HARP (3.5M refinances), 2MP (second lien modifications), HAFA (short sale assistance), UP (unemployment forbearance), PRA (principal reduction alternative), and others
- The program faced significant criticism for slow implementation — Treasury's own inspector general (SIGTARP) issued 39 audit and evaluation reports documenting servicer non-compliance, dual tracking violations, and failure to meet modification targets
- MHA's most lasting impact was not the programs themselves but the regulatory framework they created: the CFPB's Regulation X mortgage servicing rules and the Consumer Financial Protection Bureau itself were partially born from MHA-era failures in servicer accountability
- The ADI's backtest of the 2008-2012 period shows the Great Recession scoring at Crisis levels (ADI 80+) — MHA programs were designed to address exactly the type of household financial distress the American Distress Index now tracks
What Programs Were Part of Making Home Affordable?
MHA was a suite of interconnected programs, each targeting a different aspect of the housing crisis:
- HAMP (Home Affordable Modification Program): Modified first-lien mortgages to reduce monthly payments to 31% of gross income. 1.8 million permanent modifications.
- HARP (Home Affordable Refinance Program): Allowed underwater homeowners with GSE loans to refinance at lower rates. 3.5 million refinances.
- 2MP (Second Lien Modification Program): Modified second liens (HELOCs, home equity loans) in conjunction with first-lien HAMP modifications.
- HAFA (Home Affordable Foreclosure Alternatives): Provided incentives for short sales and deeds-in-lieu as alternatives to foreclosure.
- UP (Unemployment Program): Provided temporary forbearance for unemployed homeowners — 12 months of reduced or suspended payments.
- PRA (Principal Reduction Alternative): Offered principal forgiveness for deeply underwater borrowers. Participation was voluntary, and many servicers and investors declined.
- FHA-HAMP: Extended HAMP-like modifications to FHA-insured loans, administered through HUD. Continued beyond 2016.
Why Did MHA Fall Short of Expectations?
Treasury initially projected helping 7-9 million homeowners. Actual results reached roughly 5 million across all programs — significant, but well below targets. Key failures:
- Servicer capacity: Major servicers (Bank of America, JPMorgan Chase, Wells Fargo, Ocwen) were operationally incapable of processing the volume of modification applications. Borrowers reported lost documents, contradictory instructions, and months-long delays.
- Moral hazard concerns: Some policymakers argued that helping delinquent borrowers would encourage "strategic default" — borrowers who could pay but chose not to. This led to program eligibility requirements that excluded many struggling households.
- Investor alignment: Private-label MBS investors often opposed modifications because they reduced bond returns. The program had limited ability to override investor objections on non-GSE loans.
- Timing: By the time HARP 2.0 launched (2012) and servicer compliance improved, many eligible borrowers had already lost their homes.
What Is MHA's Legacy?
MHA's most important legacy is institutional, not programmatic:
- The CFPB Regulation X mortgage servicing rules (2014) codified many MHA-era requirements into permanent law: loss mitigation evaluation before foreclosure, single point of contact, prohibition on dual tracking
- The National Mortgage Settlement (2012) — a $25 billion agreement with the five largest servicers — grew directly from MHA-era enforcement actions
- The waterfall modification structure (rate reduction → term extension → principal forbearance) pioneered by HAMP became the template for all subsequent GSE modification programs
- The Homeowner Assistance Fund (2021) incorporated lessons from MHA — most notably, direct payments to servicers rather than complex modification negotiations
Frequently Asked Questions
Is Making Home Affordable still active?
No. MHA's component programs expired between 2016 (HAMP) and 2018 (HARP). Successor programs exist: Flex Modification (GSE loans), FHA loss mitigation, VA loan modification, and the Homeowner Assistance Fund (2021 pandemic relief). Contact your servicer or a HUD-approved housing counselor for current options.
How much did Making Home Affordable cost taxpayers?
Treasury committed approximately $27 billion of the $75 billion authorized from TARP. The Congressional Budget Office estimated the net cost to taxpayers was lower because some TARP funds were recovered through program fees, servicer payments, and reduced foreclosure costs to Fannie Mae and Freddie Mac.
Did Making Home Affordable work?
MHA helped approximately 5 million homeowners but fell well short of its 7-9 million target. Economists debate whether it was the programs themselves or the broader economic recovery that stabilized housing. However, MHA's regulatory legacy — the CFPB, Regulation X, the National Mortgage Settlement — permanently improved mortgage servicing accountability.
What can I do now if I'm struggling with my mortgage?
Contact a HUD-approved housing counselor (free, 1-800-569-4287) to explore current options: forbearance, loan modification, partial claim (FHA), repayment plan, short sale, or the Homeowner Assistance Fund if your state still has funds available.
How does MHA relate to the 2008 financial crisis and the ADI?
MHA was the policy response to exactly the type of household distress the ADI tracks. The ADI's backtest shows Crisis-level scores (80+) during 2008-2009 — the period MHA was designed to address. The program's successes and failures inform how we interpret current distress patterns.