Principal Forbearance if needed is required under HAMP

[hope67]

Banks are not following the guidelines as to principal forbearance, according to HAMP guidelines, servicer should forbear principal no more than 30% of the principal if it is needed to reach the 31% payment target, IT IS NOT OPTIONAL (it's the last step in the waterfall calculation)

From HAMP guidelines dated October 28 2009:


Are there limits to how much forbearance is required in the standard modification waterfall?

Servicers are not required to forbear more than the greater of (i) 30 percent of the unpaid principal balance of the mortgage loan or (ii) an amount resulting in a modified interest bearing balance that would create a current mark-to-market loan-to-value ratio of less than 100 percent. If the borrower’s monthly mortgage payment cannot be reduced to the target monthly mortgage payment ratio of 31 percent unless the servicer forbears more than the amounts described above, the servicer may consider the borrower ineligible for a HAMP modification. However, servicers are permitted, at their discretion, to forbear principal in excess of the amounts described above in order to achieve the target monthly mortgage payment ratio of 31 percent.

Is a borrower with a mortgage loan that has a current remaining term (prior to modification) that is greater than 480 months eligible for a HAMP modification?

Yes. The fact that the loan’s current remaining term is greater than 480 months does not disqualify the borrower from HAMP eligibility. If the borrower is otherwise eligible under HAMP and reduction of the borrower’s current interest rate to two percent would not be sufficient to reach the target monthly mortgage payment ratio of 31 percent, the servicer should skip the term extension step of the standard modification waterfall and proceed to the principal forbearance step of the waterfall to attempt to achieve the target monthly mortgage payment ratio of 31 percent. The servicer should enter the remaining term in the NPV input field labeled "Amortization Term after Modification" so that the number in this field and the "Remaining Term" NPV input field are identical.

https://www.hmpadmin.com/portal/docs...r/hampfaqs.pdf

[Evan Bedard]

It seems that no lenders are compltely following the HAMP requirements and guidelines. I am definitely not a fan of this program and feel it is a waste of time. Why do homeowners need to be stuck in a never ending trial period that is just going to ruin your credit further...

[Liz Medrano]

It is all a scam....if you read my previous posts you will see my fight. The banks are buying time so that they can spread out the foreclosures and thanks to the "never ending trials", they are bringing in more money while doing it.

[hope67]

Originally Posted by Evan Bedard

It seems that no lenders are compltely following the HAMP requirements and guidelines. I am definitely not a fan of this program and feel it is a waste of time. Why do homeowners need to be stuck in a never ending trial period that is just going to ruin your credit further...

Evan, HAMP program itself is a good program, the problem is the banks are not following the guidelines, it is supposed to be 3 months trial, during that time the bank should evaluate/review the modification application and reach a decision after the 2nd payment. Then after the 3rd payment they should send the permanent modification agreement if it is approved!

The banks are abusing the trial period to keep asking for more financial docs and to keep collecting payments for more than 3 months.

[MyHAMP]

I'd love to know if your HAMP can be denied if you don't make a 4th, 5th or 6th trial payment if your trial period agreement says you are only required to make 3.

I think recalling a phrase from the guidelines that the lenders can extend their timeline for the final decision but the borrower could skip a payment if the servicer elects that option.

[hope67]

Originally Posted by MyHAMP

I'd love to know if your HAMP can be denied if you don't make a 4th, 5th or 6th trial payment if your trial period agreement says you are only required to make 3.

I think recalling a phrase from the guidelines that the lenders can extend their timeline for the final decision but the borrower could skip a payment if the servicer elects that option.

Yep, I vaguely remember reading somwhere that the borrower is not required to keep making trial payments if the servicer needs more time to execute the agreement. In other words, if it is not the borrower's fault. That's why the servicer always blames it on the borrower. Example: didn't submit all required docs..etc..etc..

With that said, I'm not really positive if I recall correctly.

[nativelasvegan]

Forbearance should be required. I agree with Liz. She is living proof the bank does not do what it "should" do. The law/directive/regulations are written so poorly with no penalties for failing to follow the guidelines, it basically gives the banks the authority to do whatever they want. What is the penalty if the fail to modify loans? Who is going to make them give the money back? Who is going to impose hefty fines? No one.

[hope67]

Originally Posted by nativelasvegan

Forbearance should be required. I agree with Liz. She is living proof the bank does not do what it "should" do. The law/directive/regulations are written so poorly with no penalties for failing to follow the guidelines, it basically gives the banks the authority to do whatever they want. What is the penalty if the fail to modify loans? Who is going to make them give the money back? Who is going to impose hefty fines? No one.

I totally agree, they should hold the servicers accountable and penalize them for violations of the guidelines.

[BadBobMo]

It's so poorly written it is not even law period, the only recourse is if enough people complain the Gov. can boot them out of the program, but do you really think that is going to happen when the Gov. won's a good percentage of the banks.
Where on our own people!

[MyHAMP]

Originally Posted by hope67

Yep, I vaguely remember reading somwhere that the borrower is not required to keep making trial payments if the servicer needs more time to execute the agreement. In other words, if it is not the borrower's fault. That's why the servicer always blames it on the borrower. Example: didn't submit all required docs..etc..etc..

With that said, I'm not really positive if I recall correctly.

Found it, bottom of page 2. However, they can only "delay" the modification effective date if the borrower missed the due date for his final trial payment:

https://www.hmpadmin.com/portal/docs...cer/sd0903.pdf

[hope67]

Originally Posted by MyHAMP

Found it, bottom of page 2. However, they can only "delay" the modification effective date if the borrower missed the due date for his final trial payment:

https://www.hmpadmin.com/portal/docs...cer/sd0903.pdf

Thank you so much MyHAMP! We were right! However, the servicers are not following those guidelines, just today, I was told that I should keep making payments until I receive the final agreement. They said that sometimes it takes 60 or even 90 days after the 3rd payment to finalize the agreement, meanwhile we are supposed to keep making the trial payments

The lady I was talking to told me that she could see Dec 1 as the end of my trial, in other words, they just extended it another month, but I will definitely call again to verify this info.

[nativelasvegan]

I read somewhere on this post from someone who was successful in getting a mod that she wrote detailed "legal" type letters to mha compliance, fannie mae, and the legal departments of her servicer. The letter was brief, and very specific about the points of non-compliance with the Supplemental Directives, etc. Whose to say if this was instrumental in her accomplishing the mod.
I have writte the same type letters. Time will tell for me if it is successful.

[MyHAMP]

Originally Posted by hope67

Thank you so much MyHAMP! We were right! However, the servicers are not following those guidelines, just today, I was told that I should keep making payments until I receive the final agreement. They said that sometimes it takes 60 or even 90 days after the 3rd payment to finalize the agreement, meanwhile we are supposed to keep making the trial payments

The lady I was talking to told me that she could see Dec 1 as the end of my trial, in other words, they just extended it another month, but I will definitely call again to verify this info.

That's the point where you can tell whether you have a well organized servicer or not. From a HAMP guideline's standpoint, you either have 3 trial payments if your loan was in default or 4 if you were current. Labeling additional payments as "trial" or even worse, a "trial extension" simply doesn't comply with the guidelines.

I recall a post of a member who was just approved for her final HAMP-mod after 6 payments - BUT the effective-date of the modification was 09/01. So you see, they can't extend the trial itself. Any additional payments (after your 3rd or 4th) will ultimatively be considered as retroactive payments under your final modification.

Of course, that was not how it was planned..