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Showing posts with label Home Affordable Modification Program. Show all posts
Showing posts with label Home Affordable Modification Program. Show all posts

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.

Monday, July 13, 2015

HAMP Streamlined Modifications

The U.S. Treasury Department has issued Supplemental Directive 15-06 “Making Home Affordable Program – Streamlined Modification Process”.

This new program is akin to the Streamlined Modifications already offered on GSE Loans. GSE or “Government-sponsored enterprise”, are privately held corporations for a public purpose such as Fannie Mae and Freddie Mac. These GSEs have had in place streamline modifications that Loan Servicers are mandated to offer to eligible borrowers. One draw-back in any type of modification with a GSE Loan is the fact that principal reduction is not offered.

This new directive is for Non-GSE Loans and the Loan Servicers and Lenders such as Chase, Citibank, Carrington Mortgage, Nationstar Mortgage and so many others. The streamline modification provides a modification opportunity to delinquent borrowers of Non-GSE Loans without the need to submit any docs or for any income verification. In fact, once a Loan Servicer has designated its pool of eligible borrowers a Streamline HAMP Trial Period Plan Offer will be issued to the Borrower. The only thing for the Borrower to do is make the first payment to enter into the trial period. This will greatly improve the approval process for those Borrowers that are directly designated and free up resources for those borrowers that may not be eligible by lessening the modification approval time frame. The bonus is that in Non-GSE modifications, principal reduction can, and may be included in the modification.

Eligible Borrowers will only learn of this from their Loan Servicers directly by mail. Be sure to keep an eye on all mail received from your Loan Servicer to see if you are in luck. Regrettably, if a Borrower does not fit within the specific eligibility pool they will be out of luck for streamline modifications.

Wednesday, October 22, 2014

Mortgage Modifications Update - New Base Net Present Value Model v5.0

This revised tool is used by "servicers participating in HAMP as a tool for deciding whether to modify a troubled mortgage that is eligible for subsidies under the program".

A main thrust of this new version of the NPV tool is for non-owner-occupied properties.

Additionally, investor incentives for successful modifications are enhanced by way of this new Model v5.0.

If you want to actually know how modification decisions are made, knowing this document is a must.