Major Changes in HAMP Loan Modifications

On July 13, 2010, in Mortgage, by Matthew Forbes

Pursuant to the Treasury Department’s Supplemental Directive 10-01, issued January 28, 2010, mortgage servicers are required to fully verify borrower eligibility prior to offering a trial period plan under the Home Affordable Modification Program (“HAMP”), began on June 1, 2010. If actually followed, this will significantly change the time and protocol for determining permanent HAMP eligibility.

Currently, servicers take anywhere from 30 days to 300 million years to make an initial determination as to whether a homeowner qualifies for a trial plan modification under HAMP. During this initial phase, the servicer repeatedly will lose information, not review information, and ignore information until it becomes stale, and then needs to be resent (i.e., Chase and Bank of America). They will then repeat the process – over and over again. For the fortunate few that actually get a trial plan, they are still only half way home. Even if they make all of their payments, as scheduled, there is still no guarantee that the servicer will not come back later and issue a denial, usually for unspecified reasons (see IndyMac Bank).

However, under Directive 10-01, the servicers will now have 10 days following receipt of the homeowners initial package to acknowledge, in writing, the homeowners request for HAMP participation. Within 30 days from receipt of the initial package, the servicer must review the documentation provided for completeness. If the documentation is incomplete, the servicer must send an Incomplete Information Notice. If the borrower’s documentation is complete, the servicer must either:

  • Send the borrower a Trial Period Plan Notice; or
  • Make a determination that the borrower is not eligible for HAMP and communicate this determination to the borrower.

In theory, this sounds like an incredible step in the right direction. However, as anyone that deals with these servicers can attest, the vast majority of them have (and likely will) ignored these directives and work at their own pace. For example, CitiMortgage continues to inform homeowners that they do not even review the documents for 30 to 60 days upon receipt, never mind make a determination within 30 days.

Accordingly, I would advise approaching these new guidelines with cautious optimism. For those homeowners seeking a free initial consultation to discuss whether you are potentially eligible for a modification under HAMP, please contact me at the number/address below:

Matthew Forbes
30 ManMar Drive, Suite 11
Plainville, MA 02762
(508) 809-6141 (office)
(508) 377-9483 (fax)
Contact Matthew Forbes here.

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