Mortgage Assistance Payments

The IRS has issued a revenue ruling that states Pay-for-Performance Success Payments that benefit a homeowner under the U.S. government’s Home Affordable Modification Program (HAMP) are excludable from the homeowner’s income under the general welfare exclusion.

This program helps homeowners who have defaulted, or are at risk of default, on their mortgages. A homeowner that makes timely payments on a modified loan is eligible to have incentive payments made to lenders/investors that reduce the principal balance on the loan.

The full text of Rev. Rul. 2009-19 is available on NATP’s website.