Homeowners have begun to be evaluated under the latest enhancements to the Obama Administration’s foreclosure rescue program, but many of the biggest lenders are not ready to fully implement the upgrade, missing the June 1 deadline set by Treasury officials.
The Home Affordable Modification Program (HAMP) is expanding eligibility to include borrowers whose debt-to-income ratio is below 31 percent, those with properties occupied by a tenant and vacant properties that the borrower intends to rent.
So-called HAMP Tier 2 was announced in January by President Obama, with a June 1 start-up date.
However, some of the biggest lenders are not ready. Bank of America said it would not fully implement Tier 2 upgrades until Oct. 15; JPMorgan Chase (Aug. 3); GMAC Mortgage (July 10); PNC Mortgage (June 15) and Wells Fargo (June 22).
CitiMortgage said it met full implementation on June 1.
The Treasury this week imposed additional requirements on all servicers that did not fully implement HAMP Tier 2 by the June 1 effective date.
These servicers must:
• develop a process to identify potentially eligible Tier 2 borrowers;
• stop foreclosure referrals and foreclosure sales for those borrowers; and
• ensure that a single point of contact is assigned to each of those borrowers.
Additionally, mortgage servicers who are unable to fully implement HAMP Tier 2 by mid-July will be required to evaluate and offer borrowers proprietary modifications similar to HAMP Tier 2, and “either automatically convert or re-evaluate those borrowers for HAMP Tier 2 modifications following implementation,” Treasury said in its monthly update on HAMP.
Treasury also said it will conduct compliance reviews to ensure all servicers “appropriately implement” HAMP Tier 2 and adhere to the interim requirements if they missed the deadline.
Treasury officials have said Tier 2 would encourage investors to consider or expand the use of principal reduction by tripling financial incentives for investors who agree to reduce principal for eligible “underwater” borrowers – those who owe more than the value of their homes.