The Treasury Department
on Monday released a free calculator online that will provide borrowers an estimate on whether or not they qualify for the Home Affordable Modification Program.
The Dodd-Frank Act required the Treasury to give borrowers an online tool for them to enter their own financial data for the net present value test. When evaluating a loan for HAMP, servicers conduct an NPV test to determine the value of the loan if it is modified under program guidelines or if it is left "as is." Servicers are required to provide the modification if the NPV test comes out higher for the workout.
Since the program launched in March 2009, more than 670,000 borrowers received a permanent loan modification and roughly 1.8 million trials have been extended. But the program has fallen short of what the Treasury has since called a premature estimate of reaching between 3 million and 4 million borrowers. Complaints from borrowers trapped in the process sparked legislation from the House of Representatives to end the program nearly two years early, though the Senate isn't likely to approve the bill.
Changes have been made. In June 2010, the Treasury required servicers to gather all financial information before putting a borrower into a trial. In February 2011, the Treasury implemented an escalation program
to give borrowers the chance to contest negative NPV tests.
And in May, the Treasury established a new rule
requiring servicers to provide a single relationship manager to guide a borrower through the evaluation process and even provide assistance during foreclosure.
Rep. Elijah Cummings (D-Md.), ranking member of the Oversight and Government Reform Committee, called it a "small but critical step."
"Lost paperwork, conflicting guidance and ‘dual-tracking’ problems have been well-documented, and according to the Special Inspector General for TARP, the performance of mortgage servicing companies has been ‘abysmal,’" Cummings said. "This is one modest step in the right direction, but much more needs to be done."
The new calculator is intended to be a reference point for homeowners, housing counselors and others working in the process. However, the Treasury said it is not intended to be a concrete resolution.
The calculator evaluates the loan based on the terms the borrower provides such as interest rate, term and forbearance amounts. This information may be inputted differently by the servicer based on documentation already provided by the borrower and other "industry-related data," according to the calculator's guidelines provided to HousingWire.
Also, the calculator does not have access to investor guidelines for loans owned outside of the government-sponsored enterprises.
It does not return principal forgiveness amount, either, because this option remains at the discretion of the investor and servicer and is not a requirement.
"Only a homeowner’s mortgage servicer can provide guidance about the specific procedures used to process requests for a mortgage modification in accordance with HAMP program requirements," a Treasury spokesperson said. "Still, this tool is another way to educate and empower struggling homeowners to learn more about options that may be available for them."
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