Treasury establishes single point of contact for HAMP
Mortgage servicers must provide a single relationship manager to borrowers being evaluated for a Home Affordable Modification Program trial by Sept. 1, according to guidance released by the Treasury Department Wednesday.
The guideline is required of the 20 largest servicers participating in HAMP, and it is one of the largest adjustments to the program since its inception in March 2009. Since then, more than 670,000 borrowers received a permanent loan modification, and more than 1.8 million trials have been extended.
"Over the past two years, two of the biggest complaints we received from borrowers were servicers are losing documents and they can't connect with anybody who can actually track them down. Every time they call they can't get a hold of someone with access to their case," Laurie Maggiano, director of policy at the Treasury's homeownership preservation office, said in an interview with HousingWire Wednesday.
The relationship manager must be an employee of the bank and cannot be a contractor. This manager will be assigned when the servicer makes successful contact with the delinquent borrower. The borrower must meet the initial criteria of the program, such as owner-occupancy and a 31% debt-to-income ratio.
During the period of evaluation for loss mitigation option, the relationship manger will contact the borrower with status updates, coordinate the receipt of financial documents and provide options until the delinquency is resolved.
This means the relationship manager will stay with the borrower through HAMP, other forbearance programs, the Home Affordable Foreclosure Alternatives Program, even the bank's own private modification programs.
The manger will also be the single-point of contact with the borrower throughout the foreclosure process, which can sometimes take up to a year. However, the responsibilities become reactive. If the borrower has a question or their financial status changes for a possible re-evaluation, the borrower must call the relationship manager.
Servicers are required to give borrowers already in a trial modification a single point of contact by Nov. 1. The Treasury set a later date for these borrowers so as not to slow the process if they are already nearing a resolution.
The Treasury did not put a cap on the caseloads one manager can handle at one time. Servicers are allowed to assign other employees to do the underwriting or perform other duties.
"This has been percolating for sometime in our consciousness not only at Treasury but within the industry. We gave the servicers enough time, and we told them, 'If you can't figure it out, we have to be prescriptive,'" Maggiano said.
Also, Maggiano said the Treasury worked with other regulators investigating these servicers for foreclosure malpractices uncovered last year. Recent consent orders signed in April require the servicers to submit plans to implement a single-point of contact for borrowers going forward.
"Other regulators told us that this guidance can serve as a model for their plans," Maggiano said. "If a servicer submits these requirements as a plan, they may be approved."
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