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                                             HUD Issues HAMP Guidance
                                        to Expedite Permanent Modifications
                                                           and our
                                    SOLUTION to Excessive Defaults and Claims

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Overview

On January 28, 2010, the U.S. Department of the Treasury and the Department of Housing and Urban Development (HUD) released updated guidance for servicers participating in the Home Affordable Mortgage Program (HAMP).

This guidance, given in Supplemental Directive 10-01, refines the documentation requirements in order to expedite conversions of current trial modifications to permanent ones.

On December 23, 2009, the Obama Administration required most trial modifications to be placed in a temporary review period to ensure that all borrowers are being fairly evaluated for the program. During this temporary review period, servicers were not permitted to cancel an active HAMP trial modification for any reason other than failure to meet the HAMP property eligibility requirements. This allowed servicers to convert a significant number of trial modifications to permanent ones.

According to HUD, the total number of conversions more than doubled in December. The subject guidance is meant to help improve this conversion process for the future.

Highlights

Guidance in Two Major Issues

1. New Requirements that Documentation be Provided Before Trial Modification Begins

The guidance refines the documentation process and makes it easier for eligible borrowers in trial modifications to get permanent modifications quickly.

          Under this guidance:

  • A simple, standard package of documents will be required prior to the servicer's evaluation of the borrower for a trial modification. This process will be required for all new HAMP modifications that become effective on or after June 1, 2010, although mortgage servicers may implement it sooner.

2. Converting Borrowers in the Temporary Review Period to Permanent Modifications

In December, Treasury implemented a review period through January 31, 2010 to provide servicers additional time to collect and submit missing documentation for borrowers in trial modifications, to require that borrowers be notified of any missing documents, and to give borrowers an opportunity to dispute and correct any erroneous information in their applications.


  • The guidance clarifies for servicers the proper procedures for conversion of those borrowers who are current on their monthly payments to permanent modifications
Solution to Excessive Defaults and Claims
REDUCE HIGH COMPARE RATIOS
- FHA and Conventional -


Our Compare Ratio Task Force is designed to reduce high
 Compare Ratios caused by excessive defaults and claims.


Task Force Description
  • Staffed with subject matter experts and skilled auditors
  • Specially designed checklists and automated file screening systems
  • State-of-the-art quality control, compliance, forensics, and modern research facility
  • Scalable up to virtually any size default and claims experience
  • Upload/download large file formats for prompt reviews
  • Located in a secured and safe audit location
The Remedy
  • Comprehensive review of existing defaults and claims for loss mitigation  and loan modification eligibility
  • HUD-FHA and regulatory compliance guidance for the mortgagee
  • FHA and conventional Early Payment Defaults resolution strategies and loss mitigation methodologies
  • Notification to mortgagee of borrower's loss mitigation eligibility
  • Notification of loss mitigation eligibility to the borrower
  • Referrals to expert, nationwide legal counsel to handle loss mitigation and loan modification strategies
  • Monitoring of loss mitigation applications in process
  • Follow-up with servicers to assure proper and timely resolution and notification to HUD-FHA
  • On-going review and loss mitigation of new defaults and claims

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Home Affordable Modification Program - Program Update and Resolution of Active Trial Modifications, Supplemental Directive 10-01, 1/28/10




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