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After Many, Many Complaints, The Treasury Implements Even More Changes And New Guidelines to HAMP. With only 170,000 people now in long term modifications, HAMP is coming uner fire.
Why Isn’t HAMP Working?
Most people don’t realize the foreclosure process does not stop in the loan modification trial period; the foreclosure clock keeps ticking. Most borrowers going into the program are already in the foreclosure process; the Notice Of Default has been filed and the Notice of Trustee Sale is on its way. Because of the fact that the foreclosure process does not stop in the HAMP trial modification process, if a homeowner skips a beat, has another setback, or even a payment gets lost in the mail, the servicer has been moving forward on the foreclosure and the foreclosure trustee sale date is sometimes just days away from a failed loan mod.
So the new HAMP ruleswill give 30 days for the homeowner to respond, and appeal to a non-approval notice before moving abead with the foreclosure. It also gives assurance that every homeowner that misses two payments will be contacted and offered HAMP before any foreclosure filing can take place.
Here’s part of agreat article from the Baltimore Sun
The HUD press release is … well, not exactly clear-cut about what those changes are. So here’s the translation offered by the Consumer Federation of America:
· Requiring participating servicers under HAMP to offer at least 3 months’ forbearance of mortgage debt for unemployed borrowers, and encouraging such assistance for up to 6 months.
· Requiring participating servicers to use principal reduction as a primary means of reducing borrowers’ payments where loans are more than 115 percent of the current home value.
· Offering borrowers that are current on their mortgages but with debts greater than their home’s current value the opportunity to refinance into a lower cost, long-term fixed rate mortgage insured through the FHA if the current lender will agree to reduce principal owed by at least 10 percent and the total combined debt including any second liens would be no greater than 115 percent after the refinancing.
· Requiring HAMP servicers to work with borrowers in bankruptcy on mortgage modifications, and waive the trial period for such modifications if consumers have been successfully performing under bankruptcy settlements.
· Increasing the incentives to get second lien holders to reduce their claims to facilitate modifications.
· Clarifying that HAMP servicers must suspend all foreclosure actions and notices for borrowers that have sought modifications or are in trial modification periods, and requiring a written certification that a borrower is not HAMP eligible before an attorney or trustee can conduct a foreclosure sale.
Here’s another article I found on the HAMP changes from DSNews.com