Today (Friday March 26th) the Administration announced enhancements to the Home Affordable Modification Program (HAMP) to provide additional resources for struggling homeowners.  These changes will provide temporary mortgage assistance to some unemployed homeowners, encourage servicers to write-down mortgage debt as part of a HAMP modification, allow more borrowers to qualify for modification through HAMP, and help borrowers move to more affordable housing when modification is not possible. The changes will be implemented in the coming months.

Not much teeth here… “encourage servicers”

Unemployed borrowers meeting eligibility criteria will have an opportunity to have their mortgage payments temporarily reduced to an affordable level for a minimum of 3 months, and up to six months for some borrowers, while they look for a new job.  If homeowners don’t find a job before the temporary assistance period is over or if they find a job with a reduced income, they will be evaluated for a permanent HAMP modification or may be eligible for HAMP’s alternatives to foreclosure program.

To expand the use of principal write-downs, servicers will be required to consider an alternative modification approach that emphasizes principal relief. This alternative modification approach will include incentive payments for each dollar of principal write-down by servicers and investors.  The principal reduction and the incentives will be earned by the borrower and lender based on a pay-for-success structure.

Again no teeth… “servicers will be required to consider” How about changing the wording to required period.

Other program enhancements are designed to help more borrowers complete a HAMP modification.  Borrower outreach and communications rules will be clarified and strengthened to protect responsible borrowers from unnecessary and costly foreclosure actions and to expand modification opportunities for borrowers in bankruptcy.  Servicers will receive increased incentives, allowing them to expand borrower outreach and counseling efforts.  With the introduction of FHA-HAMP, the HAMP pay-for-success incentives will be expanded to include borrowers with FHA loans.

For borrowers who continue to struggle and are unable to complete a modification, these program enhancements will help homeowners move to more affordable housing. Relocation assistance payments to borrowers who use the foreclosure alternatives program will be doubled and incentives will be increased for servicers and lenders to raise participation.

Improvements to the Home Affordable Modification Program – More Help for Homeowners

1.  Temporary assistance for unemployed homeowners while they search for re-employment

  • Mortgage payments reduced to affordable level for a minimum of three months, and up to 6months for some borrowers, while eligible homeowner looks for new job

2.  Requirement to consider alternative principal write-down approach and increased principal write-down

  • All servicers required to consider alternative modification approach that emphasizes principal write-down with incentives based on the dollar value of the principal reduced
  • The principal reduction and the incentives will be earned by the borrower and investor based on a pay-for-success structure

3.  Improvements to reach more borrowers with HAMP modifications

  • Improvements to borrower solicitation requirements including clear performance timeframes for both servicers and borrowers and a prohibition against initiation of a new foreclosure referral when a borrower is cooperating with the servicer to obtain a modification
  • Borrowers in active bankruptcy must be considered for HAMP upon request
  • Increased incentives for servicers to provide permanent HAMP modifications
  • Expansion of HAMP to include homeowners with FHA loans

4.  Helping homeowners move to more affordable housing

Relocation assistance payments to homeowners receiving foreclosure alternatives doubled

  • Increased incentives to servicers and lenders, including increased incentives for extinguishment of subordinate liens, to encourage more short sales and other alternatives to foreclosure

Continue reading the details below…

As for their “examples” below, in order to show any type of “reduction” in payments, they start with a very high interest rate on the original loan to make the mod look more attractive…


Hamp Improvements – Making Home Affordable Program Enhancements to Offer More Help for Homeowners

HAMP Examples – Helping Homeowners With Financial Hardships – Two Cases