Foreclosure prevention programs over the past seven years have shaped the way the mortgage servicing industry and homeowners interact and make accommodations. The U.S. Department of the Treasury, the U.S. Department of Housing and Urban Development (HUD), and the Federal Housing Finance Agency (FHFA) released a white paper designed to guide future loss mitigation and reflect on the lessons learned from the implementation of these housing recovery programs, according to an announcement from the departments.
In the report it has been noted that 10.5 million modification and mortgage assistance arrangements were completed between April 2009 and the end of May 2016 due to the government programs and private sector efforts and additionally, Making Home Affordable (MHA) and other crisis-era homeowner assistance programs according to the report, resulted in improved homeowner engagement in the loss mitigation process as well as new guidelines for the types of loss mitigation options offered to homeowners and standardized procedures for how such products are provided. It found these programs also aided in the recovery of the housing market and likewise, demonstrated a mortgage modification can be a viable option for homeowners avoiding foreclosure.
At the end of this year, the MHA programs will close, and with some exceptions, mortgage servicers will no longer be required to evaluate homeowners for a standard mortgage modification, such as the Home Affordable Modification Program (HAMP). This report says that its written purpose is an important part of an ongoing effort to assist the mortgage servicing industry and other stakeholders in order to develop a framework for future loss mitigation.
“The foreclosure prevention programs established by Treasury, HUD and FHFA in response to the financial crisis have transformed the way in which the mortgage servicing industry has interacted with and assisted struggling homeowners,” says Mark McArdle, Deputy Assistant Secretary for Financial Stability at the U.S. Department of the Treasury. “While MHA and other crisis-era homeowner assistance programs are ending, their impact will endure. Servicers and investors will need to leverage new or existing loss mitigation programs, but they should build on the best practices and guiding principles that have led to positive outcomes for all parties.”
In doing this, the white paper highlights five principles believed by agencies to be essential to the success of the government’s programs as well as provide a foundation for any future loss mitigation programs. The principles include accessibility, affordability, sustainability, transparency, and accountability.
From the time after the housing crisis starting in 2009, government agencies, servicers, investors and consumer advocates have come together to steady the housing market and assist homeowners in avoiding foreclosure. As these crisis-era programs formal come to a close, the report states that the mortgage servicing industry could now start to shoulder more responsibility for assisting homeowners through proprietary modifications and other programs. Treasury, HUD and FHFA moving towards the future have stated they will continue to engage with a variety of stakeholders, specifically focusing on mortgage servicers in an effort to assess how foreclosure alternative options will incorporate and continue to develop the five represented principles in the white paper.
Click HERE to read the full white paper report.