Message to HAMP Servicers: Remember your requirementsby Tim Manni
If you ask a borrower “who is to blame for your HAMP denial?” They’ll likely say the servicer. If you ask the servicer, chances are they’ll say it’s the borrower’s fault. Wherever the proper blame lies, a few things are for certain: the foreclosure epidemic is steady if not rising, and failed modifications are still outnumbering permanent mods.
But as the Treasury Department reiterated this month, it’s the participating servicers who are the ones with the obligation to the borrower. If a borrower doesn’t provide the proper paperwork, then their denial is their own fault; however, “participating servicers are required to certify they tried a variety of solutions including a HAMP modification, a proprietary one, a short sale or some other option to help borrowers avoid foreclosure,” according to National Mortgage News:
On October 6, Treasury reiterated this requirement in guidance to all HAMP servicers. The guidance also stated that servicers are “prohibited from conducting a foreclosure sale until the HAMP-required written certifications have been issued to foreclosure counsel or the trustees,” according to Phyllis Caldwell, chief of Treasury’s Homeownership Preservation Office.
More recently, Treasury ordered a review of the “10 largest servicers’ internal policies and procedures for completing the pre-foreclosure certifications,” Caldwell told the Congressional Oversight Panel, which oversees the Troubled Asset Recovery Program.
The Treasury is trying to get tougher
The Government Accountability Office (GAO) ripped the Treasury Department in a June 24 report, claiming that the Treasury had yet to fine a single mortgage loan servicer for HAMP noncompliance, despite the thousands of complaints from homeowners and housing counselors, lawsuits seeking class action status, and individual states themselves, several of which are proposing laws to enforce HAMP compliance.
To this point, the Treasury’s enforcement of the rules has been limited to prodding servicers to do better and requiring them to review borrowers’ applications. It’s unclear yet if this new “review” of the nation’s 10 largest servicers will result in anything more.
You can reapply for HAMP
As long as you weren’t denied a HAMP loan modification because you failed to make your trial mortgage payments on time, you can reapply. You are entitled to get the reason that the mortgage servicer declined your request; if you can show that the servicer’s numbers or information is incorrect, or that your circumstances have changed, you get to reapply for HAMP. Some non-Fannie Mae or Freddie Mac lenders, however, only allow one crack at HAMP, and unfortunately, they get to make up their own rules.
If you decide to take another run at HAMP, look for the required forms on your lender’s website, or download a HAMP application package from www.hmpadmin.com. Be sure to tell your lender that you are reapplying for HAMP, and continue to pay your modified trial payment during the process. Call weekly to make sure that your mortgage servicer has received the new application package. Carefully document every call, and call after every fax to verify that the paperwork has been received and that it is what was requested. Then the fun begins all over again.
Have you been denied a HAMP modification? If so, let us know!
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(Gina Pogol contributed to this blog post)