Skip to content

Push for Permanent Loan Modifications Gets Underway

loan modifications

Loan servicers participating in the Making Home Affordable program (HAMP) will face possible monetary penalties and sanctions if they fail to meet performance obligations, according to a joint release from the Treasury and HUD.

The warning is part of a nationwide campaign to help more borrowers convert from trial to permanent loan modifications, a crucial step to ensuring homeowners actually receive meaningful assistance.

Since HAMP began earlier this year, roughly 650,000 borrowers have received trial modifications, with 375,000 scheduled to become permanent by year-end.

However, in order for a loan modification to become permanent, borrowers must provide documentation and prove that the new loan is sustainable.

To facilitate this complicated conversion process, the Obama Administration has extended the trial period for modifications started on or before September 1 so borrowers have more time to submit required information.

Additionally, the application process will be streamlined to minimize the paperwork burden, and loan servicers will be held accountable for their actions.

“We are encouraged by the pace at which trial modifications are now being made to provide immediate savings to struggling homeowners,” said the new Chief of Treasury’s Homeownership Preservation Office (HPO), Phyllis Caldwell.

“We now must refocus our efforts on the conversion phase to ensure that borrowers and servicers know what their responsibilities are in converting trial modifications to permanent ones.”

Loan servicers will be required to report the status of each loan modification in order to provide more information regarding possible obstacles facing borrowers moving to the permanent phase.

“Top servicers will be required to submit a schedule demonstrating their plans to reach a decision on each loan for which they have documentation and to communicate either a modification agreement or denial letter to those borrowers.”

Treasury/Fannie Mae “account liaisons” will also be assigned to these servicers, following up daily as necessary to track progress against the servicer’s plan.

The December MHA Servicer Performance Report will include the number of permanent modifications as well as the number of active trial period modifications that may convert by year-end if all necessary conditions are met.

Leave a Reply

Your email address will not be published. Required fields are marked *