The US Department of Housing and Urban Development (HUD) on Thursday revealed changes to its loan modification program focusing on Federal Housing Administration (FHA)-insured mortgages. A new workout program, FHA-Home Affordable Modification Program (FHA-HAMP), should be operational by August 15, HUD secretary Shaun Donovan said. “Tens of thousands of FHA borrowers will now be able to modify their mortgages in the same manner as so many others who are taking advantage of the Administration’s Making Home Affordable program,” Donovan said in a statement Thursday. The program permanently reduces the borrower’s monthly payment through a partial claim, which defers the repayment of mortgage principal through an interest-free subordinate mortgage that is not due until the first mortgage is paid off. FHA-HAMP allows lenders to advance funds on the borrower’s behalf, to pay down the loan by up to 30% of the unpaid principal balance and deferring these amounts in a partial claim. The program calls for a three-month trial period during which borrowers will be expected to make payments of the amount of the future modification. Only once the borrower remains current on all payments under the trial period, the mortgage can be considered for modification. As part of the HAMP program, FHA said it will pay incentives up to $1,250 to loan servicers that modify FHA-insured loans under the program. Write to Diana Golobay.