LIEB BLOG

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Showing posts with label HAMP. Show all posts
Showing posts with label HAMP. Show all posts

Wednesday, March 08, 2017

Guidance for Borrowers Seeking Home Loan Modifications Under the Making Homes Affordable Act

On Monday, February 27, 2017, Fannie Mae, acting as administrator of Home Affordable Modification Program (HAMP), implemented portions of the Supplemental Directive 16-02 regarding the termination of Making Homes Affordable Program (MHA).

Now, borrowers who have applied for a modification on or before the termination of the MHA on December 31, 2016 under HAMP Tier 1, HAMP Tier 2, Streamline HAMP, Second Lien Modification Program (2MP), Treasury Federal Housing Administration HAMP (Treasury FHA-HAMP), and Rural Development HAMP (RD-HAMP) must have modification effective dates on or before December 1, 2017. Additionally, closing dates for a transaction under Home Affordable Foreclosure Alternatives Program (HAFA) must be on or before December 1, 2017.

In conjunction with the termination of the MHA on December 31, 2016, Supplemental Directive 16-02 provides guidance to servicers regarding non-Government Sponsored Enterprise (GSE) Mortgages of borrowers who have requested assistance prior to December 31, 2016. Specifically, this Directive applies to: the HAMP, the Home Affordable Unemployment Program (UP), HAFA, 2MP, Treasury FHA-HAMP, and RD-HAMP. In addition, this Supplemental Directive provides guidance with respect to the eligibility of certain GSE HAMP Loans to receive pay-for-performance incentives through the Troubled Asset Relief Program (TARP).

So, the MHA has ended. However, no need to worry if you have applied on or before December 31, 2016 for a home loan modification through MHA because you still have time to receive the benefits of the MHA if you complete the modification process by December 1, 2017.

Alternatively, if you have not yet applied for a home loan modification, New Yorkers may continue seek mortgage modifications under Civil Practice Law and Rule §3408.



Thursday, September 08, 2016

New Fannie Mae/Freddie Mac Refinance Program for 2017

On August 25, 2016, the Federal Housing Finance Agency (FHFA) announced a new refinance program by Fannie Mae and Freddie Mac that will be implemented in October 2017 for borrowers who are underwater on their mortgages.

This new program will replace the current Home Affordable Refinance Program (HARP), which was set to expire on December 31, 2016. To avoid a gap of almost one year between the commencement of the new program and the expiration of HARP, the FHFA, which oversees both Fannie Mae and Freddie Mac, has also extended HARP through September 30, 2017.

HARP was launched in 2009 to assist homeowners who have high loan-to-value ratios to obtain refinanced loans with better rates. For clarity, HARP is different than the Home Affordable Modification Program (HAMP), which is more generally familiar to our readership. HAMP was designed to assist homeowners in obtaining mortgage modifications on their existing loans whereas HARP is for homeowners seeking to refinance their loans into an entirely new mortgage product. Moreover, HAMP is for loans that are already in default or at risk of default whereas HARP is only for homeowners who are current on their loans.

A borrower is eligible for HARP through September 30, 2017 if:
  1.  There are no missed mortgage payments within the last six months;
  2. There is not more than one missed mortgage payment within the last twelve months;
  3. The house is a primary residence, 1-unit second home, or a 1- to 4- unit investment property;
  4. It is a Fannie Mae or Freddie Mac-owned loan;
  5. The loan was made on or before May 31, 2009; and
  6. The loan-to-value is greater than 80%.
The new refinance program launching in October 2017 will be more “targeted” than HARP, but details are not yet fully available. The following are the currently known eligibility requirements:
  1. There are no missed mortgage payments within the last six months;
  2. There is not more than one missed mortgage payment within the last twelve months;
  3. The borrower must have a source of income;
  4.  It is a Fannie Mae or Freddie Mac-owned loan; and
  5. The borrower must receive a benefit, such as reduced monthly mortgage payments.
Of greatest import, unlike the expiring HARP, the new program will extend eligibility to loans made after May 2009 and borrowers will be able to refinance under the new program more than one time. Though more than 3.4 million homeowners have already refinanced under HARP, there are still hundreds of thousands of eligible homeowners who are still in need of assistance. This new program will continue to assist homeowners who are suffering from the housing crisis and open up opportunities to refinance for new categories of homeowners.

Unfortunately, no new announcements have been made to extend HAMP through 2017 even though there remains many properties currently in foreclosure and many millions more properties at risk for default. HAMP is set to expire on December 31, 2016. 

Monday, June 20, 2016

Major Federal Foreclosure Prevention Program Will Come to an End in 2016

The Making Home Affordable (MHA) Program, which was launched in 2009 to assist millions of distressed homeowners facing foreclosure, is set to expire on December 31, 2016. Under this program, homeowners with non-GSE mortgages (i.e. mortgages not owned or guaranteed by FannieMae or Freddie Mac) may apply and be reviewed for refinancing, loan modifications, short sales, deeds-in-lieu, and unemployment assistance with their lenders in accordance with stringent guidelines set forth in the Making Home Affordable Handbook. Many homeowners who were approved for loan modifications under the Home Affordable Modification Program (HAMP) were also eligible for free HUD-approved credit counseling to assist them in creating a household budget that lowers the risk of default in the future.

Previously set to expire on December 31, 2015, MHA was extended through 2016 due to its widespread success and the continuing need for relief for millions of homeowners nationwide. However, the number of applications under the MHA program have declined overall in recent years due to both the stabilizing housing market and drop in the unemployment rate. At the end of 2015, RealtyTrac reported that there were 1,083,572 properties with foreclosure filings nationwide—a significant drop from the peak of 2,871,891 properties with foreclosure filings in 2010. As of May 2016, RealtyTrac reported a total of 896,913 properties in default, at auction or repossessed by the banks.

The Obama administration has not yet announced another one-year extension to the program through 2017, and it is unclear at this time whether such an extension will be granted. The unknowns that are involved with the looming presidential election make the possibility of an extension even less clear. Though the foreclosure rate is down, there is still a great need for the MHA program for the many properties currently in foreclosure and the many millions more that are still at risk for default.

Homeowners who are still facing the possibility of foreclosure may apply for any of the foreclosure alternative programs under MHA on or before December 31, 2016 deadline.

Though it is not necessary to have a decision on the application for a loan modification, short sale, or deed-in-lieu by the end of 2016 to be eligible under the MHA program, servicers are required under the MHA program to design policies and procedures that ensure that permanent modifications are effective by December 1, 2017 and short sales and deeds-in-lieu are closed by December 1, 2017.

Struggling homeowners should apply now to take advantage of the foreclosure alternatives provided by the MHA program before the deadline of December 31, 2016. If homeowners do not apply by that date, they will be limited to applying for lender/servicer in-house programs, which are usually limited in scope and may not be as affordable or reasonable as the offers under the MHA program.

The candidates for the 2016 election should take a position on the possibility of extending the MHA program through 2017 in order to help the millions in foreclosure and in default. 

Tuesday, May 31, 2016

New Making Home Affordable Handbook Released: Program to End in 2016

The U.S. Department of Treasury recently released Supplemental Directive 16-04 (Making Home Affordable Program – Handbook for Servicers Version 5.1).  This Supplemental Directive announces the release of Version 5.1 of the Making Home Affordable (“MHA”) Handbook (the “Handbook”).  This newest version of the Handbook consolidates the “sunset” provisions provided by the U.S. Department of Treasury in Supplemental Directive 16-02 (MHA Program Termination and Borrower Application Sunset) and Supplemental Directive 16-03 (MHA Program Termination and Borrower Application Sunset II) into one location for ease of reference.

Distressed homeowners who are facing foreclosure must submit their request for mortgage assistance under the MHA program by December 31, 2016.  After that date, lenders will no longer be required to comply with the MHA guidelines set forth in the Handbook.  This will leave many distressed homeowners with few remaining options and most will face the possibility of foreclosure.

The MHA program was announced in 2009, by the Obama Administration, as a relief to distressed homeowners.  The MHA program’s objective is to provide guidelines to lenders to modify the terms of eligible mortgages so that “at-risk” homeowners would be able to reduce their monthly mortgage payments and to avoid foreclosure.  According to the most recent MHA Program Performance Report, during the last 7 years, the MHA program has only helped 2.5 million of the 7 to 9 million homeowners that were identified as “at-risk” by the Obama Administration in 2009.  This means that the remaining 4.5 to 6.5 million “at-risk” homeowners who do not submit their request for borrower assistance by December 31, 2016, will be faced with foreclosure.

Congress’ decision to abandon the MHA program seems misguided because of the time and resources it has invested in the program.  Most importantly, the termination of the program on December 31, 2016, leaves up to 6.5 million “at-risk” homeowners scrambling to submit requests for assistance of face the possibility of foreclosure. 

Tuesday, May 10, 2016

Making Home Affordable Program to End in 2016

The U.S. Department of Treasury (Treasury) recently released Supplemental Directive (SD) 16-03 (MHA Program Termination and Borrower Application Sunset II) to the Making Home Affordable (MHA) handbook, containing “sunset” provisions for its MHA program. The release of this Supplemental Directive signals that there will be no further extensions of the program.

The Making Home Affordable program was announced in 2009, by the Obama Administration, as a relief to distressed homeowners. The MHA program’s objective is to provide guidelines to lenders to modify the terms of eligible mortgages so that “at-risk” homeowners would be able to reduce their monthly mortgage payments and to avoid foreclosure. According to the most recent MHA Program Performance Report, during the last 7 years, the MHA program has only helped 2.5 million of the 7 to 9 million homeowners that were identified as “at-risk” by the Obama Administration in 2009. This means that the remaining 4.5 to 6.5 million “at-risk” homeowners who do not submit their request for borrower assistance by December 31, 2016, will be faced with foreclosure.

SD 16-03 provides the following modifications to the MHA handbook for winding down the program:
  • All borrower requests for assistance under MHA must be submitted by December 31, 2016;
  • On December 1, 2017, MHA Help and the Home Affordable Modification Program (HAMP) Solution Center will no longer accept new cases, nor escalate cases to servicers;
  • All cases that have been escalated prior to December 1, 2017 must be resolved by May 1, 2018;
  • After December 30, 2016, servicers will no longer be required to assign relationship managers to borrowers;
  • Effective May 1, 2018, servicers will no longer be required to follow Section 3 of Chapter 1 of the MHA Handbook; however, the Treasury suggests that servicers continue to follow the best practices that have been established by MHA;
  • After September 1, 2016, servicers are no longer required to satisfy the Reasonable Effort standard set forth in Section 2.2.1 of Chapter II of the MHA handbook; and
  • Servicers will not be required to suspend a scheduled foreclosure sale if a borrower submits an Initial Package after December 30, 2016.
After continuously developing and expanding the MHA program over the last 7 years, it is surprising that Congress has refused to extend its life. Since 2009, the Treasury has issued 5 versions of its MHA handbook and has issued over 80 Supplemental Directives, including SD 16-03, refining the guidance it has provided to participating servicers. Congress’ decision to abandon the MHA program seems misguided because of the time and resources it has invested in the program. Most importantly, the termination of the program on December 31, 2016, leaves up to 6.5 million “at-risk” homeowners scrambling to submit requests for assistance or face the possibility of foreclosure.