Are you currently applying for a HAMP
loan modification? Then good news! If you are granted a HAMP trial period or
permanent loan modification on or after March 1, 2014, you may have access to
free financial counseling from your servicer!
Currently, Section
6.7 of Chapter II of the MHA Handbook, only borrowers with a total
debt-to-income ratio of 55 percent are required to obtain HUD-approved financial
counseling when they are approved for a Home Affordable Modification
Program (HAMP)
modification. These borrowers are at high risk of defaulting because they use
over half of income just to satisfy their debts and have little income left
over every month. It makes sense that these high-risk borrowers are required to
speak with a counselor, but under this Section of the MHA Handbook, they are
the only ones required to receive such counseling.
Now, under the Supplemental
Directive 13-08, servicers must offer financial counseling to borrowers who
have been granted a HAMP
trial period plan or permanent modification regardless of the total
debt-to-income ratio. More borrowers than ever before will now have access to
free financial counseling from their servicers, provided that their servicers participate
in HAMP,
and either have enough money for HAMP ($75 million or more) or voluntarily choose
to follow Supplemental Directive 13-08. This Supplemental Directive is
effective March 1, 2014 and does not apply to loans that are owned, insured, or
guaranteed by Fannie Mae,
Freddie Mac, Veterans Administration, the
Department of Agriculture’s Rural Housing Service (RHS), or the Federal
Housing Administration (FHA). Even so, this Supplemental Directive will
apply to many mortgage loans and affect millions of people who have been
approved of a HAMP trial period or HAMP permanent modification.
The purpose of the financial counseling is to ensure that
the borrowers are able to successfully complete their trial period plans and
afford their permanent modified payments. Even borrowers who have already
received a HAMP
permanent modification before March 1, 2014 can receive financial counseling if
they are at a high risk of default or believe they will be at risk in the
future. It is an exciting opportunity for borrowers to receive free financial
counseling from their servicers and for servicers to receive consistent monthly
payments from every borrower who has received a HAMP
modification.
Thank you to Lieb at Law's Assistant Case Manager, Jessica Vogele, for sharing this valuable information.
