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.
