The U.S. Department of the Treasury and the Department of Housing and Urban Development (HUD) announced this past Thursday an updated guideline for servicers participating in the Administration’s mortgage modification program commonly known as H.A.M.P. The rule change is intended to speed conversions of trial modifications to permanent ones by requiring documentation up front. “The updated process requires that key documents, including proof of income, be obtained from the borrower before a borrower evaluation can begin. This more robust requirement of upfront documentation will make it easier and quicker to convert trial modifications to permanent modifications and enable servicers to use their resources more effectively.” http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-021. The full text of Supplemental Directive 10-01, Home Affordable Modification Program – Program Update and Resolution of Active Trial Modifications, dated January 28, 2010 can be found at https://www.hmpadmin.com/portal/docs/hamp_servicer/sd1001.pdf.
Before the new requirements, a trial period plan could be based on verbal financial information obtained from the borrower, subject to later verification during the trial period. Now for all trial period plans with effective dates on or after June 1, 2010, a servicer may evaluate a borrower for HAMP only after the servicer receives the following documents: (1) Request for Modification and Affidavit (RMA) Form; (2) IRS Form 4506-T or 4506T-EZ; and (3) Evidence of Income.
We previously pointed out that the lack of permanent loan modification conversions might be more the result of homeowner’s resisting a program that leaves them in yet another exotic mortgage. Not just a paperwork-processing problem as the Administration suggests. Regardless, homeowners will be better off with the “more robust requirement” because the homeowner will be less likely to make several mortgage payments under a trial modification only to be denied permanency due to disqualification caused by the documentation. In other words, it will be less likely that the homeowner will throw good money after bad on a mortgage that does not qualify for modification. Ostensibly, under the new requirements the homeowner’s qualifications can be better assessed before any modified mortgage payments are made in good faith by the homeowner during the trial period.
Whether the new documentation requirements really make it easier and quicker to convert trial modifications remains to be seen. An argument can be made that the new requirements don’t simplify the documentary complexities associated with H.A.M.P. but merely push the problem forward in the loan modification timeline so that the ultimate number of permanent loan modifications achieved will not change. But if nothing else, in many cases the homeowner and the servicer should know sooner if the sought after loan modification is destined for failure and that makes good sense.
Nice rule change, but the banks, do NOT tell you are not eligible for HAMP even though they know it months in advance. Banks hang you out to dry. There is no teeth in the HAMP program. The banks make more money if they force families into foreclosure.
The Banks dump homes in foreclosure on the market, usually more than is owed and make money.
Unless Congress forces the banks to help people keep their homes, families losing their homes will keep climbing and that affects everyone trying to sell a home that is not in foreclosure. Vacant and uncompeted homes will be bull dozed if no one buys them.
The banks are lying through their teeth!! My daughter is going through a nasty divorce, her father died (who was financially helping her through it, she went through stress leave at work (RN at a hospital), diagnosed with cancer and had taken longer to heal from that because of a infection that set in and her employer terminated her (because she was on leave longer than she was supposed to be, 4 months). She got behind on her mortgage, which still has equity, and the bank said they would help her. She got her letter congratulating her that they would give her a 3 month trial and then modify her. She got back to work, got her finances straightened out and paid all of her trial payments on time. During the last month she got a notice of sale. They told her not to worry that they were going to extend it because she was in a modification. Up until the day before the sale, they kept lying to her saying that they would extend it. We didn’t believe them, we rushed to a lawyer to file a bankrupcy. That stopped the sale. If it weren’t for that, she and her children would be homeless, after all she was going through. Don’t believe the banks!!! They lie. She is now going through another organization that will hopefully work with the lying bank to get her modified.
The only thing that the bank needs to do next is hire more worker to be able to speed this process up.