TopMortgage Compliance Update (1)
  July 2, 2010
                                       Home Affordable Unemployment Program

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Overview
Under the Home Affordable Modification Program (HAMP), servicers apply a uniform loan modification process to provide eligible borrowers with sustainable monthly housing payments. On May 10, 2010, a Supplemental Directive was issued that gave servicers flexibility to provide assistance to borrowers whose hardship is related to unemployment.

When a borrower is unemployed, a HAMP trial period plan or permanent HAMP modification may not be appropriate, and in some cases, the borrower may not have the ability to make the required payments.

So, the Supplemental Directive requires servicers to consider eligible borrowers for the Home Affordable Unemployment Program (HAUP), which grants borrowers a forbearance plan during which regular monthly mortgage payments are reduced or suspended.

Borrowers will be evaluated for HAMP at the earlier of re-employment or 30 days prior to the expiration of the UP forbearance plan.

The Supplemental Directive pertains to first lien mortgage loans that are not owned or guaranteed by Fannie Mae or Freddie Mac (Non-GSE Mortgages) or insured or guaranteed by a federal agency, such as the Federal Housing Administration (FHA).

Effective for all participating servicers on July 1, 2010.
Highlights

Eligibility

Servicers are required to offer an HAUP forbearance plan to a borrower who meets the following HAMP minimum eligibility criteria:

  • The mortgage loan is secured by a one- to four-unit property, one unit of which is the borrower's principal residence.
  • The mortgage loan is a first lien mortgage loan originated on or before January 1, 2009.
  • The current unpaid principal balance of the mortgage loan is equal to or less than $729,750.1
  • The mortgage loan is delinquent or default is reasonably foreseeable.
  • The mortgage loan has not been previously modified under HAMP and the borrower has not previously received an UP forbearance period.
Additional HAUP forbearance plan eligibility requirements include that the borrower:
  • Makes a request before the first mortgage lien is seriously delinquent (before three monthly payments are due and unpaid). A request for UP may be made by phone, mail or email. Servicers must document the date of the UP request in the servicing file and, within 10 business days, confirm the receipt of the request with the borrower via mail or return email.
  • Is unemployed at the date of the request for UP and is able to document that he or she will receive unemployment benefits in the month of the Forbearance Period Effective Date (defined below) even if his or her unemployment benefit eligibility is scheduled to expire before the end of the UP forbearance period.
Terms
  • Term must be three months or upon reemployment (whichever is less). Servicers may extend this period according to their investor/regulatory guidelines.
  • Monthly mortgage payment must be reduced to less than or equal to 31% of the borrower's gross monthly household income and may be suspended in full.
Transition to HAMP
  • Borrowers in an HAUP forbearance plan will be evaluated for HAMP at either reemployment or 30 days prior to the UP forbearance period expiring (whichever happens first).
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Home Affordable Unemployment Program


Home Affordable Modification Program Supplemental Directive - May 11, 2010

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