New Directives and Denial Codes from Treasury

[litehouse01]

I was Looking around the Treasury website and found this it is a "NEW" Supplemental Direcitve 09-06 just Google Supplemental Directive 09-06 and then page all the way down to the bottom where it says "NEW" its about 15 pages long with alot of new updates on HAMP and the list of denial codes which are:
1. Ineligable Mortgage
2.Ineligable Borrow Current DTI less than 31%
3.Property not owner occupied
4.Other Ineligable Property(ie property condemmend, property 4 units)
5.Investor guarantor Not Participating
6.B/K Court Declined
7.Negative NPV
8.Offer not accepted by Borrower/ Request Withdrawn
9.Default not Imminent
10.Pervious Official HAMP Modification
11.Loan Paid off or reinstated
12.Excessive Forbearence
13.Request Incomplete
14.Trial Plan Default

Hope this helps..............

[MyHAMP]

Hmm, "excessive Forbearance"...since when is there a limit on that? I though that is already taken into account in the NPV-analysis?!

[litehouse01]

This New supplemental directive is 15 pages long you really should take a read thru its got an awlful lot of stuff in there.... not just the denial codes............Goggle it

Supplemental Directive 09-06 then page all the way down to where it says NEW

[BobandArlyn]

Feel a little silly, but what are they considering when they talk EXCESSIVE FORBEARANCE? Are they talking debt to income? or are they talking about what's behind on mortgage payments?

[litehouse01]

I am not sure....I think we should ask MOE or Evan for clarification...

[BobandArlyn]

Am I reading the new directive correct??? It seems that the Servicers are NOT having to report WHY they deny permanent loan modifications for those loans in trial mods BEFORE 12/1/09???? THAT could be why trial mods seem to be getting approved faster these days??? Before 09-06 becomes effective!

[ama125]

I believe the amount of allowable principal forbearance is driven by the loan-to-value ratio and the LTV should not go below 100% (anything under that gives the homeowner equity). Let's say you owe 150K and the house is worth 100K. They could forbear 50K and the LTV would be 100%, anything over 50K would be considered "excessive forbearance". I thought that excessive forbearance would cause one to fail the NPV test anyway so I'm not sure why there would be a separate code for it. I have read in the news that they were supposed to use the new codes starting 10/1, but if the directive says 12/1 then I guess that would be right. Of course, that's assuming they follow the directives (which we all know they don't!).

[litehouse01]

its an ever changing game were in folks...your guess is as good as mine.......read all 15 pages there is alot of info there I think I read somewhere in there a question what was the borrowers credit scores when they took out the loan originally?

[MyHAMP]

Originally Posted by ama125

I believe the amount of allowable principal forbearance is driven by the loan-to-value ratio and the LTV should not go below 100% (anything under that gives the homeowner equity). Let's say you owe 150K and the house is worth 100K. They could forbear 50K and the LTV would be 100%, anything over 50K would be considered "excessive forbearance". I thought that excessive forbearance would cause one to fail the NPV test anyway so I'm not sure why there would be a separate code for it. I have read in the news that they were supposed to use the new codes starting 10/1, but if the directive says 12/1 then I guess that would be right. Of course, that's assuming they follow the directives (which we all know they don't!).

I think you are very close, ama125!

I just want to add that this kind of "excessive forbearance" - which would put the LTV below 100% and lead to a HAMP-denial ONLY applies if the NPV-test is negative. If the NPV is positive, your LTV doesn't matter.

So if you have a negative NPV-result, that still doesn't mean you are denied. It's still up to the lender to modify your loan UNLESS your LTV is below 100% due to your forbearance. So I guess this new code is for the folks who fall into this category.