In an effort to move homeowners quickly through the lengthy process of modifying their home loans, new guidelines will soon be taking effect. Borrowers who want to apply for the modification program are now going to have to have all of the required paper work upfront.
This guideline amendment is being put into place by the Treasury’s Homeownership Preservation Office. Phyllis Caldwell is in charge of this department and is spearheading this initiative. The new guidelines go into effect on June 1, 2010, but Phyllis is encouraging loan servicers to adopt the implementations earlier. The amendments state that wage earners will need; two pay stubs, an electronic form that allows a loan servicers to pull up a tax return online, and a request for modification that includes a hardship affidavit.
Some servicers like G.M.A.C. have already adopted the new policies and are reporting that they have seen an increase not only in applicants, but they have improved the percentile of turning new modifications into permanent status. An assistant secretary at the Treasury Department was quoted as saying “a lot of the problem of converting trial modifications to into permanent modification has been time delays”. The hope is that the implementation of these new procedures will ease the backlog of stalled modifications due to missing or poorly completed paperwork.
It was the goal of the Obama Administration to allocate $75 billion to help struggling homeowners stay in their homes by modifying their loans. These loans would be restructured to have lower interest rates, longer terms, and prior delinquency fees clear. The administration had hopped that the creation of this program would prevent an estimated 4 million homeowners that were on their way to foreclosure, or currently in the foreclosure process stay in their homes. At last count only 90,000 delinquent borrowers have entered the trial modification process, and an estimated 66,000 have made it through to permanent modification.
The average saving that these applicants can expect if they complete the process all the way through to permanent modification is $500 per month. Typically homeowners that enter into the trial modification program, and make their payments on time for three months get offered acceptance into permanent modification status.
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Thats good to hear. I keep hearing about modifications programs but have not seen them being used frequently. My impression was that the public was confused by the exact guidelines of who would qualify. Hopefully the new rules will work better.
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This is ridiculous. Lenders have required all these docs all along. AND they ask for them over and over and over again. I help people through the loan mod quagmire and I’m telling you, this is just another piece of toothess legislation.
Loans are the best lifesavers. I once took a loan due to a fire damage that had brought me a great loss of property. For sure, I had no possible way to recollect myself. In fact I had totally lost hope on life. The loan that I took managed to replace a few impairments and I suddenly began getting back on my feet.
Wow, a potential saving of about $500 per month, that will surely help alot of people out there strugling right now. Overall I think things like this that are designed to help the everyday man/woman stay away from foreclosure can only be a good thing.
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I guess my question would be this: why do homeowners need to move quickly through the process? IMHO, buying a home should be a long process that takes time to get everything in order and ensure that both parties are coming through with the best possible options.
@ Matt – here’s the thing, there’s already a huge backlog of trial modifications that met HAMP guidelines that were kicked out after making the 3 trial payments on time; HAFA is designed to help out the homeowners that are falling through the cracks and quickly; as far as time-table, things definitely need to be sped up; B of A, Wells Fargo and the other major players are still averaging 90 days from initial contact to successful modification (if they even grant one).
@ Paul: Thanks for the good read; there’s not a lot of insight into HAFA and the more good Samaritans like you get the word out, the better.. I thought it was coming out on the 5th of next month though..?
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