The Obama administration has launched an effort to boost the level of conversions from trial modifications to permanent modifications under the Home Affordable Modification Program.
Under the initiative, announced jointly today by the U.S. Department of the Treasury and the U.S. Department of Housing and Urban Development, top mortgage servicers will be required to submit daily details about how and when they will decide on whether to approve modifications in process. They will also need explain how they will communicate their decisions.
Servicers who fail to meet performance obligations under the Servicer Participation Agreement face sanctions and monetary penalties.
In addition, the government will reach out to the approximately 375,000 borrowers who have started trial modifications and are scheduled to go permanent by the end of the year.
Phyllis Caldwell, the new chief of the Treasury’s Homeownership Preservation Office, explained in the statement that the focus has moved from trial modifications to conversions. Caldwell will lead the conversion drive.
“With tens of thousands of trial modifications being made each week, the administration is now working to ensure that eligible borrowers have the information and the assistance needed to move from the trial to the permanent modification phase,” today’s news release stated. “As the first round of modifications convert from the trial to permanent phase, the administration has identified several strategies for addressing the challenges that borrowers confront in receiving permanent modifications.”
The administration has reportedly extended the trial period for modifications started on or before Sept. 1. That move was made to give borrowers more time to submit required information.
The modification application process has been streamlined, and the administration said it regularly meets with servicers to review performance. It has also developed operational metrics and quantified performance by servicer.
Servicers are advised to direct modification prospects to www.MakingHomeAffordable.gov for resources to help simplify and streamline the document submission process.
HUD said its 81 field offices will reach out to local housing organizations with HAMP outreach tools. The federal housing agency is also enlisting the support of the National Governors Association, National League of Cities and National Association of Counties as well as the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.