The U.S. Treasury today released important new guidelines to mortgage service companies responsible for modifying home loans held by responsible but financially pressed homeowners under the Obama administration’s Home Affordable Modification Program, or HAMP. The new HAMP guidelines are a solid improvement for homeowners at risk of foreclosure because of a simplified application process, but the new rules unfortunately fall just short of really streamlining the process through which eligible borrowers can receive permanent changes to their loans in order to continue to pay on their mortgages and stay in their homes.
The new guidelines—known as Supplemental Directive 10-01—provide a big step forward in terms of simplifying documentation requirements and mandating a timeframe in which mortgage service companies must respond to borrowers’ requests for mortgage modifications. Yet even as the directive sets out clear obligations for timely responses from servicers—acknowledgement of receipt within 10 days of a borrower’s request for modification and a requirement for a decision on a modification within 30 days—the lack of penalties for servicer noncompliance or a true appeals process is disappointing.
Andrew Jakabovics is associate director of housing and economics at the Center for American Progress. To read more about the Center’s foreclosure prevention and housing finance reform proposals, please go the Housing page on our website.