Are you sick of the unnecessarily long HAMP application process? Do you have countless loss mitigation initial packages sitting on your desk at home? Well, good news! Supplemental Directive 13-09 to the Making Homes Affordable Handbook, issued on October 18th, 2013, makes the loss mitigation process more efficient.
Under Section 2.2.2 of Chapter II of the Making Homes Affordable Handbook, “Right Party Contact” is established when the Lender successfully communicates with the borrower regarding loss mitigation options. After these options are discussed and the borrower decides to apply for the Home Affordable Modification Program (HAMP), the servicer must submit to the borrower an initial loss mitigation package that would allow the borrower to apply for HAMP. This package, at a minimum, must include the Request for Mortgage Assistance form, which asks the borrower to outline his income, expenses, assets, real estate, and reason for delinquency. The package, however, can also include documents such as 4506-T, which grants the servicer access to the borrower’s tax returns, and the Dodd-Frank Certification form, which requires that a person is ineligible for any MHA program if that person has been convicted of felony, larceny, theft, fraud, forgery, money laundering, or tax evasion in the last ten years.
Before Supplemental Directive 13-09 was issued, if the borrower did not at least complete and submit the Request for Mortgage Assistance, the servicer had to re-submit the entire initial package to the borrower.
However, under Supplemental Directive 13-09, if the borrower submits any documents of an initial package, such as the 4506-T, RMA, or Dodd-Frank Certification, the servicer must now confirm receipt of the documents and submit an “Incomplete Information Notice.” No longer does the servicer need to re-submit the entire initial package if the borrower only completes a 4506-T. An Incomplete Information Notice is sufficient. The only time the servicer must re-submit the initial package is when the borrower does not submit any documents whatsoever.
In Section 4.5 of Chapter II of the MHA Handbook, before Supplemental Directive 13-09 was issued, servicers confirmed receipt of initial package within 10 business days and had to make a decision regarding the borrower’s request for HAMP within 30 days. The servicer was not required to respond immediately to requests and this was one of the biggest problems when applying for HAMP or other loss mitigation options. The process dragged on and the borrower sometimes had to wait an entire month before hearing from his or her servicer regarding the loan modification application.
However, under Supplemental Directive 13-09, the servicers must now confirm receipt of the initial package within 5, not 10, business days and must also inform the borrowers at this time whether or not additional documents are needed to complete the loan modification application. This amendment to the MHA Handbook will speed up with loan modification application process. Servicers must confirm receipt of documents and inform of additional document requests within 5 business days.
Also, under the Supplemental Directive 13-09, if the application remains incomplete for a long period of time and the servicer has diligently attempted to obtain the requested documents from the borrowers, then the borrower can be deemed as ineligible for HAMP. If this happens, the servicer must submit to the borrower a “Non-Approval Notice” that informs the borrower why he or she is ineligible for HAMP at this time. This does not mean, however, that the borrower will be forever ineligible for HAMP. If there is a change in circumstances, for example, a new application for HAMP may be submitted to the servicer.
Once a complete loan modification application is submitted to the servicer, the review process begins and takes up to thirty (30) days.
Thank you to Lieb at Law's Assistant Case Manager, Jessica Vogele, for sharing this valuable information.