Magazine article Mortgage Banking

HAMP Rules Revised to Get Income Documentation Upfront

Magazine article Mortgage Banking

HAMP Rules Revised to Get Income Documentation Upfront

Article excerpt

On Jan. 28, the Obama administration issued revised guidelines to help boost the number of trial loan modifications that can be converted to permanent modifications under the Home Affordable Modification Program (HAMP). The new rules require that key documents, including proof of income, be obtained at the front end of the modification process. The announced goal of the change is to enable quicker conversion from a trial HAMP mod stage to a permanent modification and to enable servicers to more effectively use their resources.

The Treasury Department and the Department of Housing and Urban Development (HUD) issued a joint press release announcing the new guidance, which is contained in Supplemental Directive 10-01. The guidance states that before borrowers can be evaluated as to their eligibility for a trial HAMP modification, they must provide a simple standard package of documents. The release notes, "This process will be required for all new HAMP modifications that became effective after June 1, although mortgage servicers may implement it sooner."

The new approach requires servicers to verify income/eligibility before any borrower can be offered a trial period plan. The second component of the guidance attempts to offer help to servicers seeking to make eligibility determinations for borrowers currently in trial plans, including borrowers subject to the temporary review period required under Supplemental Directive 09-10. …

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