New HAMP Rules Help Those Already in Foreclosure, Bankruptcy


MakingHomeAffordable.govNew guidelines for the government’s increasingly criticized mortgage reduction effort prohibits taking foreclosure action until after a borrower has been evaluated and rejected for the program, and those who are in “active bankruptcy”  must be given the opportunity to apply for assistance.

The new borrower protections during eligibility take effect June 1.

Borrowers cannot be referred to foreclosure until either an evaluation for mortgage help has been completed and the borrower deemed ineligible, or “reasonable solicitation efforts” have failed.

And borrowers in bankruptcy must be considered for the program if a request is received by the borrower, borrower’s counsel or bankruptcy trustee.

For several months, consumer advocates have urged the government to clarify that those borrowers in bankruptcy, or those already in some stage of foreclosure, can apply for reduced mortgage payments under the Obama Administration’s one-year-old Home Affordable Modification Program, HAMP.

“This Supplemental Directive represents an ongoing effort to improve program effectiveness by amending policies and procedures related to borrower outreach and communication,” said a statement by HAMP administrators.

The new guidelines posted by administrators on their website for servicers also state that if a borrower already in the foreclosure process is being evaluated for eligibility in HAMP, a “foreclosure sale cannot be conducted” until after the evaluation is complete and a borrower found ineligible.

In addition, borrowers will have 30 days to respond to certain HAMP non-approval notices before a foreclosure sale takes place. A mortgage servicer also needs to provide a “written certification” to the foreclosure attorney stating a borrower has not qualified for HAMP before going through with the sale.

Administrators have provided sample letters to send borrowers already in foreclosure.

“Your loan has been previously referred to foreclosure and we will continue the foreclosure process while we evaluate your loan for HAMP. However, no foreclosure sale will be conducted and you will not lose your home during the HAMP evaluation,” states one sample.

However, the same later cautions the borrower that he or she may see steps taken to proceed with the foreclosure process and receive eviction notices.

“While you will not lose your home during the HAMP evaluation, to protect your rights under applicable foreclosure law, you may need to respond to these foreclosure notices or take other actions,” the sample letter states.

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5 Responses to “New HAMP Rules Help Those Already in Foreclosure, Bankruptcy”

  1. Lynn Nix says:

    My husband and I have been on the Mortgage Reduction Program ( trial stage ) since Sept. 2009. During that time we have complied with all that has been asked of us. The trial period was suppose to end Dec. 2009 and then they were suppose to lock in the mortgage reduction or decide we were not eligible. Due to the vast number of applicants and computer error, where a good many of applicants were accidentally booted out of the program, we are still in the trial stage. We have recently had to file for bankruptcy but we want to keep our home. Due to bankruptcy laws if we are considered “not current” on our mortgage loan we are at risk of foreclosure on the home. Since our mortgage is on the MRP and at a stand still we are considered ” not current”. This is not fair. We feel that we are in a worse situation than we would have been in if we had not gone into the program. We have lost everything to keep our home and due to the never ending trial period we may loose our home. Is there anything that can help us keep our home at this point?

  2. Marie Rhodes says:

    I have an FHA loan. Within 30 days of FHA inclusion in the HAMP program, I filed my application. My bank did not process the application untill 9 months after my filing. Therefore, according to FHA rules, I am no longer eligible for the HAMP program. I filed in sufficient time to be eligible. I have found NO avenue to pursue to right this.

  3. W.Palmer says:

    Why was it so difficult to find the OBama mortgage help? Everywhere I went no one could direct me to the help I was seeking. My home is now going to foreclosure(6/14/2011). Lost my job 2/2010, no health insurance(with heart issues)& now lost my home. Currently 57 yrs. old, I now have nothing & no home(no where to live). I’ve been job searching for 2 years. I graduated from a fast track course to increase my chances of finding a job in the healthcare industry to no avail. It’s so humiliating being homeless, jobless. So degrading with really low self confidence.

  4. If you do not have “Sale Date” you still have a good chance to save your home with the help of an attorney and their team of negotiator’s. Don’t give up.

  5. michael b says:

    just recieved forscloser paper from sheriff today.I am in the hamp process with bank was told cant foreclose but now have twenty days to respone to court.what do i do?guess boa kicks me out b4 im even approved/denied HAMP

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