Treasury Adds New Consumer Protections to HAMP

Is the Home Affordable Modification Program (HAMP) really preserving homeownership? That's the question posed by lawmakers sitting on the House Committee on Oversight and Government Reform Thursday.

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The administration's foreclosure prevention plan has come under heavy fire lately, with critics taking aim at everything from the program's ""turtle-like conversion rates"":http://dsnews.comarticles/servicers-complete-170000-permanent-hamp-mods-2010-03-12 to ""officials' 'revised' modification goals"":http://dsnews.comarticles/inspector-general-concludes-hamp-goals-are-inflated-2010-03-24 to servicing ""staffs' lack of capacity and expertise"":http://dsnews.comarticles/hamp-report-card-shows-only-31000-permanent-mods-2009-12-10 to handle large modification volumes.

In response to all the flying bullets, Assistant Treasury Secretary Herbert Allison announced at the House committee hearing Thursday that the administration has decided to incorporate ""new consumer protection policies"":https://www.hmpadmin.com/portal/docs/hamp_servicer/sd1002.pdf into its modification program.

[COLUMN_BREAK] Beginning June 1, HAMP servicers must evaluate _all_ homeowners who have missed at least two mortgage payments for the program. No foreclosure can begin unless the borrower does not respond to the servicer's outreach efforts, is determined to be ineligible for HAMP, or fails to make their trial modification payments.

Servicers will be required to provide borrowers with clear written communications explaining the foreclosure and modification procedures and stating that a foreclosure sale will not take place during the trial period.

If a borrower is found ineligible for HAMP, a foreclosure sale cannot be scheduled sooner than 30 days after the date of a non-approval notice so that the borrower has a chance to respond and appeal. Servicers must also certify to their foreclosure attorneys that a borrower is not eligible for HAMP before a sale may be conducted, and are now required to consider borrowers in active bankruptcy for HAMP if a request for modification is made.

Allison told lawmakers that the changes will ""help address some of the confusion and anxiety that some borrowers reported surrounding their rights during the evaluation process.""

The official implementation of the new policies comes less than a month after ""DSNews.com reported"":http://dsnews.comarticles/obama-considers-foreclosure-ban-2010-02-26 that the administration was considering such changes, after receiving numerous complaints from borrowers and their foreclosure counselors that the program just wasn’t working for them.