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.
