Administration Announces New Loan Modification Requirements

There’ s more good news for homeowners who are having difficulty making their mortgage payments. The Treasury Department and the Department of Housing and Urban Development (HUD) have announced new requirements designed to increase the number of permanent loan modifications granted, the LA Times reports. Unsatisfied with the success of the Home Affordabe Modification Program(HAMP),  so far, the administration is scheduled to begin the new guidelines June 1.

Previously, many borrowers who have applied to the program waited for months to hear back from the banks, only to learn their application had been denied. The banks have claimed this is because they temporarily approved many homeowners who didn’t actually qualify, and who failed to make their payments for the 3 month trial period. Also, the lenders claimed that many applicants failed to provide sufficient documentation.

Under the new system, homeowners must submit three documents. They are: A formal application for modification, along with a Letter of Hardship; Proof of Income, including 2 pay stubs or the most recent Profit/Loss statement for the self employed; and A form authorizing the IRS to release tax information to the banks.

For their part, lenders and servicers must respond to applicants within 10 days, and have 30 days from receipt of all documents to approve or deny the application. They must also calculate whether it is in the best interest of the owner of the loan (mortgage) to modify the loan and if so, they are required to grant the modification, the Times reports. If the homeowner successfully pays the modified loan on time for three months, the lender must make the modification permanent.

If you or anyone you know is having difficulty making their mortgage payments during these difficult times, I want you to know two things:

You are not alone, and you do have options. Millions of people are going through the same thing, most through no fault of their own. It can be frustrating, embarrassing and confusing. Many people are simply throwing in the towel and walking away from their home. Please don’t just give up.   I urge you to contact me today, before it’s too late.   I and my team of attorneys and tax accountants can provide valuable information on steps you can take that may help you.