White House is Seeking out New Ways to Contain Foreclosures
President Obama and his team is seeking out new ways to contain foreclosures by making more homeowners qualify for mortgage modification said sources close to the financial industry. In all probability new plans and methods would be chalked out for the banks under the HAMP plan (Home Affordable Modification Program.) Financial incentives are already being offered to lenders and borrowers to encourage modification but so far the results have been negligible.
One of the changes being mulled over is to mandate banning foreclosure for many months. Till now the firms suspend foreclosure voluntarily while negation proceeds on implementing HAMP. There is a three month trial period after which the borrower may or may not qualify for permanent modification. But there is no legal binding for the lender to put on hold foreclosure action – it is entirely voluntary on the part of the lenders.
If these new changes are actually brought about then it will spell relief to some of the borrowers. But the opposite camp is worried that this would only postpone genuine foreclosure cases. The sources said, “It’s all drafty, but it’s pretty far along.”
The Assistant Treasury Secretary who is overseeing the implementation of HAMP did not make any comments about the potential changes. However he said, “We are continually assessing HAMP and looking at ways of improving it. As we refine those, we make announcements from time to time. I’m not making any announcements today, but I can assure you we are actively looking at all aspects of our program continuously.”
The suggested proposals would also give a new meaning to “reasonable solicitation efforts” being made by the servicers. It would be made compulsory for them to make a minimum of four telephone calls to the borrower for a period of 31 days informing them about HAMP. Two written notices would have to be mailed to them regarding the plan – one of these would have to be certified mail that would have a signed receipt. A “borrower response period” of 30 days would have to be newly created for those who have so far been refused by HAMP by the service firm that during that time has failed to sell off the foreclosed unit. The servicers would now be expected to give in writing that the borrower is not qualified for the HAMP relief prior to selling the foreclosed unit.
