LIEB BLOG: HAFA

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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.

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.

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.

Making Home Affordable - New Handbook Available - Version 4.4

Andrew M. Lieb, Esq., MPH HAFA , Mortgage Industry

To access the new Handbook for MHA, inclusive of HAMP and HAFA, click here.

This Handbook is the rules for banks / servicers to modify mortgages, so pay careful attention to detail and make sure that they comply.

Mortgage Foreclosure Alert: New Making Home Affordable Program Handbook Released - Version 4.3

Andrew M. Lieb, Esq., MPH Foreclosure Defense , HAFA

To access the new Handbook for MHA, inclusive of HAMP and HAFA, click here.
This Handbook is the rules for banks / servicers to modify mortgages, so pay careful attention to detail and make sure that they comply.

Making Home Affordable Program extended to 12/31/2015

Andrew M. Lieb, Esq., MPH HAFA , HAMP

Pursuant to Supplemental Directive 13-04 of this month, the Making Home Affordable Program, including HAFA (short sales) and HAMP (mortgage mods), is extended through the end of 2015.

Additionally, Supplemental Directive 13-04 simplifies the income documentation requirements under HAMP, by modifications to the rules concerning Form 4506-T; Benefit Income; Verification of Monthly Gross Expenses; Wage or Salary Income; Self Employment Income; Rental Income; and Alimony, Separation Maintenance and Child Support.

To illustrate, now the requirement that a servicer must verify monthly gross expenses is removed and a servicer may just rely on a borrowers stated expenses. With respect to the other categories, the Supplemental Directive enables the servicer to "verify such income in accordance with the [...] documentation the servicer relies on when modifying loans held in its own portfolio..."

The extension is certainly welcomed as the foreclosure crisis is far from over. Also, these new rules are smart as they simplify an unnecessarily complex process, which has resulted in both lenders and borrowers being frozen in time when seeking to follow the rules. Instead, its expected that more decisions will be made whether to modify a loan based upon these changes.

Mortgage Foreclosure Alert: New Making Home Affordable Program Handbook Released - Version 4.2

Andrew M. Lieb, Esq., MPH Foreclosure Defense , HAFA

To access the new Handbook for MHA, inclusive of HAMP and HAFA, click here. While reviewing the Handbook you should be aware of the case of Flagstar Bank v. Walker wherein the Court held that the statutory good faith standard for a CPLR 3408 Foreclosure Settlement Conference is compliance with the Handbook. To review the case, click here.

This Handbook is the rules for banks / servicers to modify mortgages, so pay careful attention to detail and make sure that they comply.

Wednesday, March 08, 2017

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

Tuesday, May 10, 2016

Making Home Affordable Program to End in 2016

Tuesday, May 26, 2015

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

Tuesday, March 04, 2014

Making Home Affordable - New Handbook Available - Version 4.4

Tuesday, September 17, 2013

Mortgage Foreclosure Alert: New Making Home Affordable Program Handbook Released - Version 4.3

Monday, June 17, 2013

Making Home Affordable Program extended to 12/31/2015

Wednesday, May 01, 2013

Mortgage Foreclosure Alert: New Making Home Affordable Program Handbook Released - Version 4.2

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