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September 25th, 2010

Fannie Mae: HAMP harder to qualify, foreclosures speed up

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Beginning on November 1, 2010, Fannie Mae will no longer consider unemployment benefits as income for borrowers applying for HAMP. Fannie hopes that the new restriction will serve to curb the large number of HAMP redefaults. This will also mean that fewer borrowers will qualify for the federal modification effort.

Banks have same restrictions

According to CNNMoney.com:

Fannie Mae’s new stance also prevents banks from using unemployment benefits in their own proprietary modification programs if the loan is backed by the mortgage finance company.

The unemployed account for most of the new delinquencies in the mortgage market, experts say. Many depended on using their jobless benefits to qualify them for modifications.

However, the growing focus on the sustainability of these modifications have raised questions about counting temporary benefits as an income source.

Still options for the unemployed

Instead of considering unemployment benefits as income under HAMP, Fannie Mae will instead evaluate unemployed borrowers for a forbearance period of up to six months. The forbearance plan will either reduce borrowers’ monthly payments or eliminate them altogether for a set period of time.

Fannie has been making a lot of changes

Earlier this month, Fannie Mae told servicers that they need to speed up their handling of troubled loans. Fannie warned servicers that they will fine them if they fail to deal with the troubled mortgages in a swift and timely manner:

Mortgage servicers have come under intense scrutiny as they have struggled with record delinquencies and foreclosures. Their efforts to ease payments on loans to avert default have fallen short in many cases, playing some role in disappointing results of a federal program to refinance or modify mortgages.

“A compensatory fee not only compensates Fannie Mae for damages but also emphasizes the importance placed on a particular aspect of a servicer’s performance,” Fannie Mae said in an announcement to servicers.

“In some cases, a compensatory fee will relate to the action a servicer took, or failed to take, in handling a specific mortgage loan,” it said.

What does this mean for borrowers? If you’re behind on your mortgage and don’t qualify for a modification or a refinance, that foreclosure notice might be coming sooner then you think.

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2 Responses to “Fannie Mae: HAMP harder to qualify, foreclosures speed up”

  1. News about Mortgage Loan Forbearance issue #1 Says: September 25th, 2010 at 11:41 am

    [...] Joe Manausa, MBA on September 25, 2010 Fannie Mae: HAMP harder to qualify, foreclosures speed up – HSH Financial Publishers (blog) – blog.hsh.com 09/25/2010 Fannie Mae: HAMP harder to qualify, foreclosures speed upHSH [...]

  2. Finding Foreclosures Online » Blog Archive » House Dems want answers from Fannie over Florida ‘foreclosure mills’ – The Hill (blog) Says: September 25th, 2010 at 10:41 pm

    [...] Mills?Huffington PostArea judges handling hundreds of foreclosures a dayTbo.comMarketWatch -HSH Financial Publishers (blog) -NASDAQall 16 news [...]

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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