On March 26, the Obama administration announced initiatives to enhance HAMP and FHA programs to provide relief for unemployed and underwater borrowers. The changes to HAMP will: (i) temporarily reduce mortgage payments for unemployed borrowers while they look for new jobs, (ii) encourage servicers to write down principal, (iii) allow more borrowers to qualify for HAMP modifications, and (iv) help borrowers move to more affordable housing where modifications are not possible. Utilizing up to $14 billion in TARP funding, the FHA initiatives will provide incentives for servicers to refinance underwater mortgage loans into FHA-insured loans and for owners to write down second lien loans for these borrowers. Release.
HAMP
Updated HAMP Documentation
On January 28, Treasury issued Supplemental Directive 10-01, which provides updated guidance for servicers participating in HAMP and revises documentation requirements in an effort to expedite the conversions of trial modifications to permanent modifications. Under the new procedures, a set of standard documents (including proof of income) must be obtained from the borrower upfront before the borrower can be evaluated for and receive a trial modification. This process will be required for all new HAMP modifications with effective dates on or after June 1, although servicers may elect to implement it sooner. Treasury Release. Supplemental Directive 10-01.
Treasury and HUD HAMP Update
On January 19, Treasury and HUD released an update on the progress of the Administration’s campaign to help borrowers convert from the trial phase of a mortgage modification to a permanent modification under HAMP. The Administration has implemented a temporary review period, through January 31, to ensure that borrowers are fairly evaluated for the program. Treasury Release. Treasury Report.