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New HAMP Rules Require Single Point of Contact for Loan Modification Applications

May 24, 2011

Our Highland loan modification attorneys have frequently criticized the Home Affordable Modification Program, the federal loan modification effort, for not offering many enforcement mechanisms. So we were pleased to see a small step in that direction when the Treasury Department released new rules requiring loan servicers to offer a single point of contact for people applying for loan workouts through HAMP. According to a May 18 article from HousingWire, the new rule applies to the 20 largest loan servicers participating in HAMP and will take effect Sept. 1. The requirement echoes other efforts at loan modification reform, including the robo-signing settlements lenders made with the largest banks last month.

The Treasury Department said the new rules are an attempt to respond to the most common complaints it gets from borrowers: servicers losing documents and difficulty connecting with someone at the servicer that can help. Establishing a single point of contact, called a relationship manager in the article, is intended to give a specific person responsibility for each individual's case. The rules require the relationship manager to be a full employee of the bank, not a contractor, and must be assigned when the servicer first contacts the borrower about the delinquency. While the borrower is being evaluated for a modification, the relationship manager must contact the borrower with updates, keep track of documents and discuss ways to resolve the deficiency. However, borrowers will still have to call if they have changes in their financial status or questions.

As Placentia loan modification lawyers, we wish the Treasury Department would go further. A single point of contact is a great step, since it should make it more difficult for banks to lose paperwork (or claim they did). This is a major positive improvement in HAMP. While it may not stop loan modification shenanigans, it will likely force banks to think of new ones. However, HAMP's problems go deeper than a single point of contact. As we've written here repeatedly, one major problem with HAMP is its lack of any accountability mechanism. That lack makes it difficult (though not impossible) to hold servicers responsible for violating the rules that already exist, as well as this new one. For example, a rule on making timely decisions seems to be frequently ignored.

Based in Anaheim, Howard Law PC represents Californians of all backgrounds who are fighting foreclosure and predatory lending practices. In fact, we believe many predatory lending practices commonly lead to foreclosure. Most recently, our Carson loan modification attorneys have handled numerous cases of people whose lenders denied them HAMP modifications or declined to make a temporary modification permanent, even though they met all the qualifications. This is against the rules, and we let the lenders know by filing lawsuits when they do this with our clients. We also represent people in predatory lending cases created by violations of California law, such as a law requiring lenders to discuss alternatives with you before foreclosing.

If your home is in danger of foreclosure and you don't believe your lender is interested in helping, call Howard Law to discuss your rights and your options. For a free consultation, you can send us an email or call 1-800-872-5925 today.