As part of The Administration’s new plans last week, they’ve clarified what you can expect to happen if you are unable to make your HAMP trial plan payments and want to try a short sale.
The Home Affordable Foreclosure Alternative (HAFA) program, which includes short sales and deed-in-lieu of foreclosure, is available if you are generally eligible for HAMP but do not qualify for or complete a HAMP trial period plan.
Servicers are now eligible for additional incentive payments and you can even get up to $3,000 in borrower relocation assistance payments.
They hope this will encourage greater use of HAFA short-sales and deeds-in-lieu.
But I Keep Getting Foreclosure Notices…What’s Up With That?
Foreclosure and loss mitigation are two separate processes handled by two different departments in most lenders and servicers. And often, they don’t talk with each other very well.
But new guideline put out last week should help this a little.
It clarifies lender contact requirements and defines “reasonable effort” on the part of the servicer to outreach to borrowers.
It encourages early intervention by requiring pro-active solicitation of all borrowers who meet HAMP eligibility profile and have missed two or more payments.
It establishes minimum solicitation requirements that include both phone and mail attempts.
Referral to foreclosure is prohibited until a borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed.
Requires servicers to stop foreclosure actions after a borrower enters into a trial plan based on verified income.
Requires written certification that a borrower is not HAMP eligible before an attorney or trustee can conduct a foreclosure sale.
Establishes a 30-day borrower response period from the date of a non-approval notice during which foreclosure sale is prohibited.
Requires servicers to consider borrowers in bankruptcy for HAMP and removes barriers to HAMP evaluation. It allows use of bankruptcy documents to verify income and a waiver of the trial period in some cases were a borrower is already performing under a bankruptcy plan.
The Program is Still Optional
They added and changed a lot of stuff in HAMP last week (as we reported a couple weeks ago), but one thing they haven’t changed is the program is still optional for lenders. If your lender doesn’t participate, there’s not much you can do about it, but most of the country’s largest lenders, servicers, and investors have signed on.
Where Can I Get More Information?
- The new Making Home Affordable Consumer FAQ
- The HAMP Improvement Fact Sheet
- The HAMP Improvement Example Sheet (very instructive and helpful!)
- The FHA’s National Servicing Center
- Sign up for Truth in Foreclosure updates below