From DSNews.com
President Obama and his administration are floating an idea to prohibit lenders from foreclosing on a home unless the borrower has been considered for the government’s Home Affordable Modification Program (HAMP).
The proposal would require servicers to initiate contact with all borrowers who are 60 or more days behind on their mortgage payments and offer them access to the federal modification program.
Only after the homeowner has been screened under the HAMP guidelines and it is determined that the loan cannot be saved, could foreclosure proceedings commence. The proposal would also halt any foreclosures already in process once a borrower has been accepted into the trial phase of the program.
So What’s This Mean?
Well first of all, it’s just a proposal, so it doesn’t mean anything yet.
It’s just one of the things the President and his advisers are considering to try to address the “failed” Home Affordable Modification Program. The proposal was reviewed by lenders during a teleconference last week.
In addition to preventing new foreclosures, the plan would also require lenders to stop foreclosure proceedings once you enter into the HAMP trial period. They’re not currently required to do that! Right now, the processes can run concurrently so it’s possible (although fairly unlikely) that you could have your house sold at auction while you’re in the trial period…crazy, huh?
To be “somewhat” fair, though, there are plenty of lenders that already consider you for HAMP before they begin the foreclosure process…so it won’t be a change for them.
According to Bloomberg.com,
The Treasury proposal would require all borrowers who are 60 or more days delinquent on their mortgage to be sought out for participation in HAMP. Mortgage companies would need to try to contact the borrower at least four times by phone and twice by certified mail over 30 or more days before going to foreclosure.
Would It Help or Just Delay the Inevitable?
Of course, there are many opinions on whether a foreclosure ban would actually help or not. And there are plenty of Republicans saying this is just a publicity stunt to try to revive the failed HAMP.
There are basically two ways you can look at this from my point of view:
- If you assume that the lenders aren’t doing anywhere near what they could be doing to try to modify mortgages, then this could help. The proposal would make them incapable of selling the home at a foreclosure sale until it has been appropriately considered under HAMP.
- If you think the lenders (in most cases) are evaluating cases and the reason more loans haven’t been modified is because it makes not financial sense to modify them, then this won’t help. It will just delay the inevitable.
Now…the truth is probably in the middle somewhere. Just like with everything else concerning foreclosure. When you ask whether it would help you and your family or not, you wind up with a big, fat “It Depends.”
Tags: foreclosure timeline, Home Affordable Modification, loan modification
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