The US Treasury Department enacted a review period for all active Home Affordable Modification Program (HAMP) trials until Jan. 31, 2010. The directive comes two weeks after the first HAMP report of 31,382 permanent modifications in nine months. Under HAMP, the Treasury allocates capped incentives to servicers for the modification of loans on the verge of foreclosure. Borrowers cleared for eligibility enter a three-month trial period, and if all payments are made and all documents received, they receive a permanent modification. The Treasury will begin reviewing all trials set to expire on Jan. 31, 2010. Active HAMP trial modifications include those that have been submitted to the Treasury system of record and have not been canceled by the servicer. During the review period, servicers will continue to convert eligible borrowers in active trials into permanent status “as quickly as possible,” according to the Treasury’s supplemental directive (available to download here). Servicers cannot cancel any active HAMP trial modification during this period with the exception of a property not meeting HAMP requirements. Servicers must also determine if the borrowers in active HAMP trials set to expire on Jan. 31, 2010 are either current or behind on their payments. The Treasury also requires the servicers to send written notification of a borrower in danger of losing HAMP eligibility because of a failure to make all trial payments, missing documentation or both. The notice will provide the borrower 30 days to either catch up on payments or submit documents through Jan. 31, 2010, whichever is later. If the borrower finds evidence of a servicer error within that timeframe, the servicer must consider the new information for HAMP eligibility. Write to Jon Prior.
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