LIEB BLOG: Loan Modification

Showing posts with label Loan Modification. Show all posts

Wednesday, November 10, 2021

Foreclosure Alert - Lenders Required to Provide Single Point of Contact to Borrowers

Starting January 2, 2022, borrowers negotiating a loan modification have a right to a single point of contact at their lender.

On November 3, 2021, Governor Hochul signed BillS671 into law, which amends Section 6-o to the banking law, and starting on January 3, 2022, upon written request by the borrower, lenders will be required to provide borrowers with a single point of contact who must provide accurate account and other information related to the foreclosure process and loss mitigation efforts.

This is huge because many mortgage modifications are functionally blocked by a lack of access to lenders rather than based upon qualification criteria. As the foreclosure moratorium is coming to an end on January 15, 2022 and a wave of foreclosures are about to hit New York State, this is a needed law for borrowers, and their attorneys, to settle cases.

Leslie Mendoza, Esq. quoted in Newsday Article about Foreclosure Moratorium

Andrew M. Lieb, Esq., MPH #listentolieb , #theliebcast

Take a read of Maura McDermott's latest article in Newsday, "NY's COVID-19 foreclosure ban is set to expire, but homeowners can still get help," where she quotes our very own Leslie Mendoza, Esq.

Leslie explains that while the "[t]he state’s temporary foreclosure ban 'merely delays any kind of discussion between the borrower and the lender in terms of resolving the delinquencies,' the CFPB rule should help many homeowners get a modified loan, as long as they qualify for one."

To learn more about whether you qualify, read the article and always speak to a great lawyer.

Podcast | Foreclosures & Mortgage Modifications - Perspective From The Lender

Lauren Lieb #listentolieb , #realestateinvestingwithandrewlieb

You can't just decide to stop paying your mortgage without consulting with your Lender.

In Episode 42, Andrew and Lauren breakdown the cost/benefit analysis of whether you deserve a mortgage modification. We discuss foreclosure lawsuits, mortgage terms and what motivates a modification from your lenders perspective.

In Episode 43, From the initial phone call to the bank, we go through how to get a mortgage forbearance agreement and understand the terms before you find yourself with a much bigger problem. Bob Lund leads the residential lending department at Bethpage Federal Credit Union and shares insights from his perspective.

Click Here for Episode 42

Click Here for Episode 43

New Law: Mortgage Forgiveness Debt Relief Act Extended to 1/1/2021

Andrew M. Lieb, Esq., MPH deed-in-lieu , Eye on Real Estate

On December 20, 2019, Public Law No: 116-94 extended 26 USC 108(a)(1)(E) to 1/1/2021.

According to the IRS, this law "allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief."

Short sales, modifications with debt forgiveness, and deeds in lieu of foreclosure are now viable options for many more distressed homeowners for the remainder of 2020.

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

Anonymous Fannie Mae , HAFA

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.

New Fannie Mae/Freddie Mac Refinance Program for 2017

Anonymous Fannie Mae , FHFA

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:

There are no missed mortgage payments within the last six months;
There is not more than one missed mortgage payment within the last twelve months;
The house is a primary residence, 1-unit second home, or a 1- to 4- unit investment property;
It is a Fannie Mae or Freddie Mac-owned loan;
The loan was made on or before May 31, 2009; and
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:

There are no missed mortgage payments within the last six months;
There is not more than one missed mortgage payment within the last twelve months;
The borrower must have a source of income;
It is a Fannie Mae or Freddie Mac-owned loan; and
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.

Changes to New York Foreclosure Law Impose Stringent Penalties for Failing to Negotiate in “Good Faith”

Anonymous CPLR 3408 , deed-in-lieu

Recently Governor Andrew Cuomo signed into law a comprehensive piece of legislation, which makes sweeping changes to New York’s requirement that Lenders and Borrowers negotiate in “good faith” during Mandatory Foreclosure Settlement Conferences.

Under New York foreclosure law, in a residential foreclosure action, commenced on or after February 13, 2010, involving a 1-4 family owner occupied property, it is required that a Mandatory Foreclosure Settlement Conference be held within sixty (60) days of service of the foreclosure summons and complaint. The purpose of the Mandatory Foreclosure Settlement Conference is to provide a venue for Borrowers and Lenders to settle the foreclosure action without further court action, via a loan modification, deed-in-lieu, short sale or other loss mitigation option. At this settlement conference, it is required that both parties negotiate in “good faith.”

However, the implementation of New York’s Mandatory Foreclosure Settlement Conference and its “good faith” negotiations requirement, has had its fair share of complications. To mitigate these complications, this recently enacted legislation, which takes effect on December 20, 2016, places stringent guidelines on the documentation and information that both parties must come to the conference with and requires that both parties, or representatives thereof, appear at the conference with full authority to settle the case.

Additionally, the legislation imposes more stringent penalties upon both parties should they fail to negotiate in “good faith.” Where it is found that a Lender has failed to negotiate in “good faith,” one or more of the following penalties may be imposed:

A toll of the accumulation and collection of interest, costs and fees during any undue delay caused;

A civil penalty of up to twenty-five thousand dollars ($25,000.00);

Actual damages, fees (including attorney’s fees) and expenses incurred by the homeowner as a result of the Lender’s failure to negotiate in good faith; or

Any other relief that the Court deems just and proper.

On the other hand, where it is found that a Borrower has failed to negotiate in “good faith,” the Court is required to remove the case from the conference calendar, meaning that the Lender will then be permitted to move forward towards obtaining a Judgment of Foreclosure and Sale.

Since the Federal Making Homes Affordable (“MHA”) program is due to expire on December 31, 2016, these additional consumer protections, provided by the State of New York, will ensure the availability of continued protections for the State’s distressed homeowners by requiring that Lenders come to the Mandatory Foreclosure Settlement Conferences ready, willing, and able to settle foreclosure actions, or face the consequences.

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

Anonymous Foreclosure , Foreclosure Defense

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.

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

Anonymous Foreclosure , HAMP

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.

Making Home Affordable Program to End in 2016

Anonymous Foreclosure , HAFA

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.

HAMP Streamlined Modifications

Anonymous Carrington Mortgage , Chase Bank

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.

The Making Home Affordable Program (MHA) has been formally extended 1 year

Anonymous deed-in-lieu , Foreclosure

The Making Home Affordable Program (MHA), has been formally extended 1 year, through December 31, 2016, by Supplemental Directive 15-04. The program has been widely successful in providing affordable alternatives to foreclosure for millions of homeowners nationwide, and the extension through 2016 will provide relief to the millions more who will be in danger of falling behind on their mortgages in the next year.

This extension applies only to mortgages that are not owned or guaranteed by Fannie Mae or Freddie Mac and for applications that are submitted to the Lender on or before December 31, 2016. 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, the transaction must close on or before September 30, 2017 if the borrower would like to receive incentive compensation, such as relocation assistance, payments for successfully completing a short sale or deed-in-lieu, or payments for making timely loan modification payments. Since the amount of relocation assistance that Lenders must offer has increased from $3,000 to $10,000 for all HAFA (short sales & deeds-in-lieu) transactions closing on or after February 1, 2015, borrowers must be mindful of the deadlines so that they may be eligible to receive this increased amount to assist them in moving costs.

This Directive also amends the MHA guidebook to allow servicers to establish a cap on the amount that they will pay to release the second mortgage liens, as long as the cap is not less than $12,000. It establishes a floor amount that borrowers may receive from their primary mortgage lenders to assist them in closing on their short sales or deeds-in-lieu.

These amendments ensure that borrowers will continue to have access to adequate relief through the MHA program.

New NYS Foreclosure Prevention Program is Closing its First Loans

Anonymous Attorney General , Eric Schneiderman

Yesterday, the New York Attorney General, Eric Schneiderman, announced in a press release that the first loans have closed in the New York State Mortgage Assistance Program (NYSMAP) to help homeowners across the state pay off their mortgage arrears and/or liens in order to avoid foreclosure.

This program was launched on Long Island in September and was opened to the rest of the state in mid-October to provide funds to homeowners so that they may apply and be approved for loan modifications. Since one of the most common reasons for loan modification denial is the inability to pay off mortgage arrears, unpaid property taxes, and liens on properties in foreclosure, these NYSMAP loans are specifically designed to help homeowners pay off these types of debt up to $40,000. The program has already received 41 loan applications and approved 9 loans from Long Island alone. Mr. Schneiderman is predicting that hundreds of loans across the state will be approved over the next year, helping homeowners obtain loan modifications and keep their homes into the future.

Click here at nysmap.org or call 855-466-3456 to see if you are eligible for a loan through NYSMAP.

Good Faith Decisions on Short Sales - Updates Coming 12/1/2014

Anonymous 202.12 , deed-in-lieu

Effective December 1, 2014, the Courts of the State of New York will oversee negotiations between lenders and borrowers to achieve a short sale or deed-in-lieu within foreclosure settlement conferences. The Courts are empowered to sanction parties who negotiate in bad faith.

Previously, borrowers were only allowed to attend the conferences to discuss workout options, such as loan modifications and payment plans, which would allow borrowers to keep their homes. If borrowers were denied loan modifications, their cases would be released from the settlement conference part, and they would be forced to do short sales or deeds-in-lieu on their own without court intervention or oversight. Oftentimes, these exit strategies took a very long time because many borrowers with second mortgages had difficulties settling their second mortgages or were unable to keep up with the lender’s numerous and complicated document requests. Many borrowers simply gave up and allowed their properties to go to foreclosure rather than spend thousands of dollars on legal fees for help with a short sale that was never going to be approved.

Now, with court oversight, it is anticipated that lenders will now be making quicker decisions on short sale and deed-in-lieu applications within the State of New York, and there should be fewer foreclosures overall. The court referees will set deadlines for the submission and review of short sale and deed-in-lieu applications and will ensure that the borrower is complying with the lender’s document requests and that the lender is properly reviewing the applications.

Despite this new rule, it is likely that short sales will continue to decline because the Mortgage Forgiveness Debt Relief Act of 2007 expired at the end of 2013. Under this Act, borrowers were not required to pay income tax on cancelled mortgage debt as a result of loan modifications, short sales, or deeds-in-lieu. Now that it has expired, borrowers who choose to do short sales may be hit with large tax bills after they sell their properties for less than what is owed on the mortgage. Therefore, even though the short sale and deed-in-lieu application process will be quicker with court oversight, borrowers may still choose to not move forward with these exit strategies because they cannot afford the taxes.

New York Foreclosure Settlement Conferences are Tools to Help Homeowners Stay in Their Homes

Anonymous CPLR 3408 , Foreclosure

New York is one of many states across the country that has implemented court-mandated settlement conferences for residential foreclosure actions.

It is important to understand how these conferences work so that homeowners can take full advantage of this opportunity to delay and avoid foreclosure. The initial conference must be scheduled within 60 days after the proof of service of the complaint has been filed with the county clerk and allows the borrower to meet with his or her Lender and a court referee or judge to discuss potential workout options, such as loan modifications or payment plans. If the borrower decides to apply for a loan modification, the Lender provides the borrower with a document request for the loan modification application, and the court referee sets deadlines for the submission and review of the application. Typically, there are numerous conferences throughout the application process in order to ensure that the borrower is complying with the Lender’s document requests and that the Lender is properly reviewing the application. If a borrower believes he was improperly denied a loan modification, his attorney may request a bad faith hearing with the judge to determine whether the Lender should be sanctioned for bad faith negotiations. These settlement conferences not only help homeowners delay the foreclosure process but also can stop the foreclosure process all together.

Not every person who has a property in foreclosure in New York State is entitled to these mandatory pre-trial foreclosure settlement conferences. The law in New York (CPLR 3408), extends the conferences only to owner-occupied residential properties, so if a homeowner has a vacant property or a rental property in foreclosure, he or she is not entitled to a CPLR 3408 conference as of right.

Further, CPLR 3408 does not apply in federal court, but settlement conferences are still available at the federal level. Rule 16 of the Federal Rules of Civil Procedure allows federal courts to hold pre-trial conferences for the purpose of settlement negotiations and encourages judges to take an active part in the settlement negotiations. The procedures differ at the federal level but the purpose is still the same. These conferences are often the difference between a homeowner staying in his or her home and losing it.

Ocwen Mortgages May Get a Reprieve from Foreclosure

Andrew M. Lieb, Esq., MPH Foreclosure , Loan Modification

On October 21, 2014 the New York State Department of Financial Services sent correspondence to Ocwen's General Counsel raising issue "with Ocwen's systems and processes".

The issue presented by NYS DFS deals squarely with Ocwen engaging in bad faith negotiations to modify mortgages.

Borrowers in New York should be arming their applications for violations of CPLR 3408's good faith negotiation requirement as they review this correspondence and asking the Courts to sanction Ocwen should they have experienced the issues highlighted in the correspondence.

Of note are the record keeping inaccuracies attributed to Ocwen by NYS DFS, which impact RPAPL 1303 and 1304 as well as issues with standing and, in particularly, the attorney verification requirements embodied CPLR 3012-b. How can a Court trust their applications to foreclose in light of this correspondence?

The correspondence claims that "these issues remain unresolved today". This is very concerning.

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

Andrew M. Lieb, Esq., MPH HAMP , Home Affordable Modification Program

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.

New Amendment Allows For Borrowers to Re-Modify Loans That Have Already Received a HAMP Modification If They Experience a New Hardship

Anonymous Foreclosure Defense , HAMP

Great news for those struggling with their mortgage after previously receiving a modification! Now, you can re-modify your mortgage due to recent amendments to the Making Homes Affordable (MHA) Handbook. On September 30^th, Treasury released Supplemental Directive 14-03, which provides new guidelines, updates and clarifications that servicers must follow.

To better understand these new amendments, previously, a servicer could not re-modify a loan that received a HAMP permanent modification until either the loan lost good standing or more than 5 years had passed since the permanent modification effective date.

Now, the new rule permits a loan that was previously permanently modified under HAMP to be re-modified regardless of loss of good standing so long as, either, the borrower has experienced a change in circumstance, or at least 12 months have passed since the HAMP Modification Effective Date. This amendment will allow for borrowers to re-modify loans that have already received a HAMP permanent modification if they experience a new hardship or if one year has passed.

New Pressure for Lenders to Negotiate in Good Faith

Anonymous HAMP , Loan Modification

If you are a struggling homeowner and have sought relief via a loan modification, there may be new pressure on lenders to negotiate a modification. Last week, New York’s Appellate Division, Second Department, ruled in US Bank N.A. v Sarmiento that Wells Fargo, a well-known lender, could not collect interest or fees on a loan that had accrued while a borrower, Sarmiento, pursued a loan modification. Sarmiento attended 18 settlement conferences and remained persistent in obtaining a loan modification yet the decision indicates that Wells “delayed and prevented any possible resolution of the action.” Wells is cited for various delays and miscommunications which when considered wholly, led to the determination by the court that Wells failed to negotiate in good faith. This court decision yielded a long-awaited definition of “good faith” with regards to negotiations in foreclosure conferences. The court concluded that Wells’ conduct indicates a “disregard for the settlement negotiation process” which increased the balance on Sarmiento’s loan.

This decision gives hope to borrowers frustrated with the often drawn-out process of obtaining a loan modification. If a lender loses documents, repeatedly requests the same information, fails to review the application in a timely manner, denies an application without adequate grounds or deliberately or recklessly delays the process in any way, a borrower now has the option to demonstrate the lender’s failure to negotiate in good faith. This could translate to thousands of dollars lost in interest and legal fees for lenders.

Hopefully, this will put pressure on lenders to remain timely and organized in their evaluation of a borrower’s loan modification application for if they don’t comply with good faith guidelines, they could be at risk to lose a great deal of money. But remember, “good faith” is a double edged sword, as borrowers must also negotiate in good faith by putting forth a purposeful and honest effort at a settlement conference to reach a resolution.

The Home Affordable Modification Program has been Extended

Anonymous HAMP , Home Affordable Modification Program

If you are a struggling homeowner and have defaulted or are at risk of default on your mortgage loan, an application for the Home Affordable Modification Program (HAMP) may be your best chance of obtaining an affordable loan modification.

Previously set to expire in December 2015, the Home Affordable Modification Program has recently been extended by the Obama Administration through December 2016. This federal loan modification program has been successful in providing reductions in monthly mortgage payments for millions of homeowners nationwide. Unlike Lender-based modifications, this program has two tiers, one of which requires a debt-to-income of 31% in its modification terms and another which requires a 10% reduction in monthly mortgage payments. If a homeowner is not eligible for Tier 1, then he or she will be reviewed for Tier 2, thus giving homeowners two chances to obtain lower, affordable monthly mortgage payments in their application for HAMP.

Oftentimes, Lenders that have their own loan modifications will only add the arrears to the principal balance without changing any other terms of the loan, thus creating monthly mortgage payments that are, in fact, higher than the original payments. Struggling homeowners often cannot accept a modification with higher payments because their hardships are long term or even permanent.

HAMP, however, requires affordable mortgage payments as part of its program and now will continue through the remaining term of the Obama Administration.

Wednesday, November 10, 2021

Tuesday, August 24, 2021

Wednesday, May 13, 2020

Friday, January 10, 2020

Wednesday, March 08, 2017

Thursday, September 08, 2016

Tuesday, July 26, 2016

Monday, June 20, 2016

Tuesday, May 31, 2016

Tuesday, May 10, 2016

Monday, July 13, 2015

Tuesday, May 26, 2015

Monday, January 12, 2015

Tuesday, November 25, 2014

Thursday, November 13, 2014

Wednesday, October 22, 2014

Wednesday, October 08, 2014

Thursday, August 07, 2014

Thursday, July 03, 2014

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