There have been many problems with the program put out by the Obama administration referred to as MHA or Making Homes Affordable but things may be changing for the better. Frequently, homeowners over the past year have only seen an 18% success rate while companies such as our own would not be able to operate under our “No Costs to You unless successful program” with such poor results! So what is going on with their program? Well many will speculate and possibly that is why many of the changes set to take place and be implemented after June 1, 2010 are probably set to take place. Even homeowners who have filed a Chapter 7 Bankruptcy or Chapter 13 BK may still seek assistance.
A summary of the new guidelines in regards to foreclosure includes:
- The servicer must evaluate the borrower’s eligibility under HAMP and determine ineligibility before referring the borrower to foreclosure (or make “reasonable solicitation efforts”).
- If foreclosure activity has already been initiated, the foreclosure sale cannot occur until after the servicer determines if the borrower is ineligible under HAMP (or makes “reasonable solicitation efforts”).
- The servicer must give the borrower 30 days to respond to HAMP “Non-Approval Notices” in certain circumstances before conducting the foreclosure sale.
- The servicer must provide, in writing, to the foreclosure attorney certification that the borrower is ineligible for HAMP before conducting the foreclosure sale.
A summary of the new guidelines and how they will affect homeowners who have filed Bankruptcy (BK) Charter 7 or Chapter 13:
- A borrower in active Chapter 7 or Chapter 13 bankruptcy or the borrower’s attorney or bankruptcy trustee can request the servicer to consider the borrower under HAMP. The servicer can no longer decline the borrower as a “proper exercise of discretion.”
- If the borrower has been approved on a trial loan modification and files a Chapter 7 or Chapter 13, the servicer may not deny the borrower a permanent modification simply for filing bankruptcy.
- If a delinquent borrower has a discharged Chapter 7 and chooses not to reaffirm, the first lien mortgage debt is still eligible under HAMP with the following provision added to the permanent modification agreement: “I was discharged in a Chapter 7 bankruptcy proceeding subsequent to the execution of the loan documents. Based on this representation, the lender agrees that I will not have personal liability on the debt pursuant to this Agreement.”
What is important to know is that every lender interprets the rules differently. Even for the same investor’s loan could be serviced totally different by different loan servicers so always check with your lender for guidelines.