Obama Considers Foreclosure Ban, by Carrie Bay, Dsnews.com


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President Obama and his administration are floating an idea to prohibit lenders from foreclosing on a home unless the borrower has been considered for the government’s Home Affordable Modification Program (HAMP).

The proposal would require servicers to initiate contact with all borrowers who are 60 or more days behind on their mortgage payments and offer them access to the federal modification program. Only after the homeowner has been screened under the HAMP guidelines and it is determined that the loan cannot be saved, could foreclosure proceedings commence. The proposal would also halt any foreclosures already in process once a borrower has been accepted into the trial phase of the program.

The proposal was reviewed by lenders last week on a White House conference call and “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMPor reasonable contact efforts have failed,” Bloomberg Newsreported, citing a Treasury Department document outlining the plan.

Some lenders have been voluntarily suspending foreclosure proceedings while they evaluate a homeowner’s eligibility for HAMP, but under the program’s current guidelines there is no requirement to do so, and a number of homeowner advocacy groups have submitted complaints to the administration that even borrowers who are making their trial payments are being hit with foreclosure litigation.

A Treasury spokesperson confirmed that a foreclosure ban is under consideration, but stressed that it is one of many ideas on the table and has not been approved yet.

Laurie Goodman, a senior managing director at the Amherst Securities Group who has been highly critical of the government’s modification program, told the New York Times that even if the proposal came to pass, it would.

not be “a major change. We think there is a large public relations element to this,” she said.

As the Times noted, the government could use some favorable public relations for its modification program. Lawmakers have begun to openly express their disappointment with the program. On Thursday, members of the House Committee on Oversight and Government Reform said matter-of-factly in a report, that by every practical measure, “HAMP has failed.”

Reps. Darrell Issa (R-California) and Jim Jordan (R-Ohio) called the program a misuse of taxpayer money, theWashington Post said. The program has been allocated $75 billion to pay incentives to servicers, investors, and borrowers for loan restructurings, but the paper says that so far only $15 million has been spent.

As of the end of January, 116,297 troubled mortgages had been permanently modified under HAMP. About 830,000 more were in the trial phase of the program. The administration’s goal is to help three to four million borrowers save their homes through the program by the end of 2012.

News of a draft document by the Treasury outlining additional changes to HAMP also circulated this week. Besides the proposed ban on foreclosures until after aHAMP review, the administration is also considering implementing a mandatory 30-day appeal period for borrowers that are denied a federal modification. Servicers would not be allowed to proceed with a foreclosure sale during this time.

The proposal would also require servicers to prove that they have made multiple attempts to contact delinquent borrowers both by phone and via written notices, and would require them to consider HAMP applications from homeowners that have already filed for bankruptcy.

Lenders have expressed concern that the proposed requirements would prolong foreclosure delays beyond the current 12 month timeline that it typically takes to resolve the loans that don’t qualify for a modification.

Earlier this month at the American Securitization Forum’s annual meeting, Seth Wheeler, a senior advisor at the Treasury Department, told mortgage bond investors and lenders that the administration is also considering revising HAMP’s net present value (NPV) model in order to incorporate more principal writedowns into the equation. The NPV test is applied to determine if the mortgage owner can recoup more money by restructuring the loan or by foreclosing.

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Fannie Mae and Freddie Mac HARP Refinancings Increase in Third Quarter, Rismedia.com


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RISMEDIA, December 27, 2010—Refinancings through the Home Affordable Refinance Program (HARP) increased 26% in the third quarter of 2010. Fannie Mae and Freddie Mac loan modifications through the Home Affordable Modification Program (HAMP) increased 16% in the quarter, although the overall volume of loan modifications and the pace of HAMP modifications declined from previous periods. The data were released in FHFA’s Third Quarter 2010 Foreclosure Prevention & Refinance Report, which includes data on all of the Enterprises’ foreclosure prevention efforts.

Findings of the report include:

-Loans modified in the last three quarters are performing substantially better three months after modification, compared to loans modified in earlier periods.

-More than half of the loan modifications completed in the third quarter lowered borrowers’ monthly payments by over 30%.

-Loans that are 30-days delinquent increased by 17,600 loans or 2.7% during the third quarter to approximately 682,000.

-Loans 60-plus-days delinquent declined for the third consecutive quarter. The 60-plus-days delinquent loans decreased by 109,700 loans, or 6.8% during the third quarter to approximately 1.5 million.

-Nearly 35,400 HAMP trial modifications transitioned to permanent during the third quarter, bringing the total number of active HAMP permanent modifications to nearly 260,000.

For more information, visit http://www.fanniemae.com and freddiemac.com.

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