The government continues to struggle to put together a loan modification program that will work for both the homeowner and the lender. According to a recent announcement by HUD and the U.S. Department of the Treasury, new provisions to the mortgage modification program (HAMP-Home Affordable Modification Program) that will speed the process will go into effect on June 1, 2010 and include:
Documentation – homeowners must supply three types: a Request for Modification and Affidavit form, IRS Form 4506T-EZ and proof of income.
Acknowledgement – lenders must acknowledge in writing within 10 days that they have received the documentation and provide a timeline and explanation of the evaluation process.
Evaluation – lenders must evaluate application within 30 days and request any additional information needed from the homeowner within that timeframe. Also within that same 30 days, lenders must provide homeowners who meet modification eligibility requirements with a trial modification plan notice. If the homeowner does not qualify, they must also be notified within 30 days and be given consideration for other options, including forbearance, refinancing, non-HAMP modifications, short sales or deeds in lieu of foreclosure.
Homeowners who obtain a trial modification must make payments on time for the modification to become permanent.
And when they say “permanent”, it’s the government definition: the lender can choose to continue or end the modification at any time, even years later.