The Obama administration announced changes to the much-criticized Home Affordable Modifications Program on Friday, a day after it was blasted by lawmakers at a Congressional hearing.
The revisions are aimed at increasing the number of borrowers who receive mortgage modifications through the $75 billion program, which critics say is not delivering on its promise to provide relief to 2 to 4 million borrowers. The changes are especially aimed at aiding unemployed and underwater borrowers.
"These program adjustments will better assist responsible homeowners who have been affected by the economic crisis through no fault of their own," the Treasury Department said in a statement.
According to Treasury, the changes also will increase incentives to servicers who participate in HAMP and improve opportunities for those who must transition to affordable housing as a result of failing to qualify for HAMP.
The department now is requiring all servicers to solicit HAMP participation from borrowers who have missed at least two mortgage payments and meet the program's eligibility requirements.
Since Treasury launched HAMP last February, just 170,207 permanent modifications have been completed, according to Treasury's latest figures.
The new policies are likely to increase participation in a program that critics say is not helping enough people. The department said it will gradually roll out the changes, which should all be in place by the fall.
Under the changes, the program will provide incentives to servicers who write down the principal of home loans that are worth more than 115 percent of the property's value. Borrowers would restructure underwater mortgages into Federal Housing Administration loans if the borrower is current and the lender can reduce the amount owed by at least 10 percent. After restructuring, the mortgage must be less than 115 percent of the home value.
Treasury also is increasing incentives it provides for loans extinguished through HAMP's Second Lien Program.
Unemployed borrowers will be able to have mortgage payments reduced for three to six months as they seek reemployment. Those who don't find jobs, or find jobs that pay less than their original salaries, could be evaluated for permanent modifications.
Relocation assistance payments to borrowers who use alternatives to foreclosure when vacating their homes will double. Another change is that borrowers in active bankruptcy must be considered for HAMP upon request.
The changes also include consumer protections, including a prohibition on foreclosure until a borrower has been found to be ineligible for HAMP. Servicers must stop foreclosure actions if a borrower enters a HAMP trial period based on verified income.
0 Comments
Leave a comment