GUIDING PRINCIPLES FOR THE FUTURE OF LOSS MITIGATION: HOW THE LESSONS LEARNED FROM THE FINANCIAL CRISIS CAN INFLUENCE THE PATH FORWARD

mitigation

GUIDING PRINCIPLES FOR THE FUTURE OF LOSS MITIGATION: HOW THE LESSONS LEARNED FROM THE FINANCIAL CRISIS CAN INFLUENCE THE PATH FORWARD

EXECUTIVE SUMMARY

This white paper has been prepared by the U.S. Department of the Treasury (Treasury) in conjunction with the U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA)—together the Agencies—to continue the collaborative efforts of the past seven years to stabilize the housing market and help struggling homeowners recover from the financial crisis. With the termination of crisis-era programs at the end of this year, the Agencies are working with stakeholders to maintain strong loss mitigation programs going forward. This white paper examines the evolution of loss mitigation programs administered by the Agencies, and discusses the lessons learned from such programs. The paper also lays out five guiding principles that should be a foundation for future loss mitigation programs: accessibility, affordability, sustainability, transparency, and accountability.

The financial crisis of 2008 revealed that the mortgage servicing industry was ill-equipped to adequately respond to the needs of struggling homeowners. Indeed, there was no standard approach among mortgage servicers and investors about how to respond to homeowners who wanted to continue making payments, but were in need of mortgage assistance. Most solutions offered by servicers simply added unpaid interest and fees to the mortgage balance, which often resulted in higher—and thereby less sustainable—payments for homeowners, regardless of a hardship.

In early 2009, a government-sponsored program—Making Home Affordable (MHA)—was established to provide foreclosure alternatives to homeowners impacted by the financial crisis. The Home Affordable Modification Program (HAMP), the first and largest program under MHA, provided a standard for mortgage modifications that crossed mortgage servicer and investor types, with the goal of reducing struggling homeowners’ monthly mortgage payments to an affordable and sustainable amount.

“We’re not just helping homeowners at risk of falling over the edge; we’re preventing their neighbors from being pulled over that edge, too – as defaults and foreclosures contribute to sinking home values, failing local businesses, and lost jobs.” ~ President Obama

As the needs of homeowners changed over time, the Agencies responded by expanding the options available under MHA and HAMP, and by introducing additional loss mitigation programs and standard practices for homeowner outreach and engagement. FHFA’s Servicing Alignment Initiative (SAI) and HUD’s expansion of options for mortgagees with mortgages insured by the Federal Housing Administration (FHA), provided additional assistance to struggling homeowners and furthered the promotion of common standards across mortgage servicers and investors.

In total, through government programs and private sector efforts, 10.5 million modification and mortgage assistance arrangements were completed between April 2009 and the end of May 2016. i The Agencies have also helped homeowners by creating a transparent process, setting standards for how modifications should be done, and prompting changes in industry procedures to mirror the standards established through MHA, SAI, and other programs administered by the Agencies.

As a result of the Agencies’ programs, regulatory actions, and private sector initiatives, steps taken by the mortgage servicing industry to improve practices over the past seven years have been encouraging. The industry is generally better prepared now to provide assistance to struggling homeowners than it was before the crisis. This is due, in part, to the adoption of certain homeowner engagement standards including continuity of contact, solicitation timeframes, and certain notice and appeal processes required by the Consumer Financial Protection Bureau (CFPB).

There is, however, more work to be done. Certain programs—e.g., MHA programs—introduced in response to the financial crisis were temporary and will end this year. With some exceptions, servicers will no longer be required to evaluate homeowners for a standard mortgage modification like HAMP. Instead, servicers and investors will need to utilize proprietary loss mitigation programs (either existing or new), and determine the appropriateness of such programs in a more economically stable, post-crisis environment. It is in this context that the Agencies intend to continue their collaborative efforts to help design a framework for the future of loss mitigation. Such a framework should incorporate—and modify as necessary—the best practices and guiding principles that have led to positive outcomes for all stakeholders, including homeowners, investors, and servicers.

Full paper here…

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4closureFraud.org

Comments
5 Responses to “GUIDING PRINCIPLES FOR THE FUTURE OF LOSS MITIGATION: HOW THE LESSONS LEARNED FROM THE FINANCIAL CRISIS CAN INFLUENCE THE PATH FORWARD”
  1. johenrion says:

    Sounds good on paper but I’m convinced my real problems started when I applied for HAMP. It was a red flag to the servicer waiving “I’m struggling” which to them said, she’s vulnerable, let’s get her! Since that time I’ve had to monitor my mortgage on a monthly basis to make sure they’re not pulling yet another underhanded tactic. The CFPB thinks they need better computer systems, I say they need a heart! They’ll figure out how to get around a new computer system just like they’ve gotten around all the other laws on the books. Face it, there is NO ONE to call when the bank robs you!

    The fact they have no regard for the homes they foreclose is another burr! They don’t want those homes, they don’t care about those homes, all they want is the foreclosure and the insurance money. They don’t care what happens after that.

    Not only does it affect those that lost their homes, but everyone around them is impacted by shuttered homes, deteriorating before your eyes, dragging down the values of those who are still managing to hold on and stay in their homes. What do they have to look forward to? More of the same! Congratulations Banksters and Wall Street not to mention the generations to come who will continue to suffer
    from the loss of home, jobs, schools, friends, creating an even greater society of homeless, both adult and children. If the way we were treated by these two groups weren’t enough, let’s talk about the judicial system, the one that’s NOT for us but for the rich and powerful. Let’s talk about the judges that look the other way knowing full well what they’re doing. A society of the have’s and the have nots and guess who’s winning!

  2. mike Drouin says:

    How do you comment on a story like this ? The whole narrative is FALSE !!! The servicing Industry was ” ill equipped ” to handle the volume of STOLEN HOMES delivered into the hands of the Banks , acquired from an illegal scheme , perpetrated through investment Banks and Investors . The task of the servicers was to deal with the FRAUD that was needed to hide the fact that the every Mortgage is the lie / Fraud !!! Any offer to any Homeowner after the designed collapse of the Illegal scheme by any servicer of an ALLEGED MORTGAGE , had no authority to do so !!!

  3. lvent says:

    These crooks stole my identity to steal my social # 341-66-6698 to try to unlawfully steal everything from me by securities fraud.

  4. lvent says:

    MY HOUSE PROPERTY ADDRESS IN THE AFOREMENTIONED IS: 14867 LANDINGS LANE, OAK FOREST, ILLINOIS.

  5. lvent says:

    Here’s the case #’s from the 2 FC’s I was forced to defend myself, PRO SE for the past 5 years with no college education & the case I won myself in the DALEY CENTER 50 WEST WASHINGTON DOWNTOWN CHICAGO, ILLINOIS 60606:

    My business property: WEST END TRUST 2012-1, AS SUCCESSOR IN INTEREST TO BAYVIEW FUND AQUISITIONS, LLC., AS SUCCESSOR IN INTEREST TO BAYVIEW LOAN SERVICING, LLC., AS SUCCESSOR IN INTEREST TO BAYVIEW FUND AQUISITIONS, LLC., AS SUCCESSOR IN INTEREST TO FIRST MIDWEST BANK PLAINTIFF’S -v- LINDA & JOSEPH VENTURELLA DEFENDANT’S –
    NO. 10 CH 20188 PROPERTY ADDRESS 14201 S CICERO AVE. CRESTWOOD, ILLINOIS

    My house: PHH MORTGAGE CORPORATION PLAINTIFF’S -v- JOSEPH & LINDA VENTURELLA DEFENDANT’S – NO. 11 CH 8076

    The case I won myself PRO SE: CALVARY PORTFOLIO SERVICES, LLC PLAINTIFF -v- LINDA VENTURELLA DEFENDANT – NO. 13 M1 139323

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