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Treasury Department Considers Adding Appeal Period to HAMP

February 25, 2010

Our Fullerton loan modification attorneys were very interested to learn that the federal government is still looking for ways to improve the Home Affordable Modification Program. A Feb. 22 article in the Wall Street Journal says the Treasury Department, which administers HAMP, is considering several changes that would give borrowers more chances to fight an unfair denial by their lenders. Most importantly, the proposed rule would require lenders to give borrowers thirty days after a denial of a HAMP application to respond. The idea is to allow borrowers to appeal the lender's decision without fear that the lender will foreclose.

The proposal is part of internal federal documents and is not final. A spokesperson for the Treasury Department said it was one of many ideas under consideration and that no announcements are scheduled. Other parts of the proposal included:

  • Expanding the requirement to make "reasonable solicitation efforts" to let borrowers know they qualify for HAMP. The proposal would specify that lenders must contact any borrower whose payments are late by 60 days or more and who is eligible for HAMP, with at least four phone calls and two letters, one certified.
  • A requirement to certify in writing that the borrower is not eligible for HAMP before a foreclosure sale.
  • A requirement to suspend foreclosure proceedings while a HAMP application is being considered. This is not currently mandatory, although many lenders say their policy is to suspend foreclosures.

The article says the proposals would slow down the already slow foreclosure process. That may be an implicit criticism, but we're not sure we see anything wrong with slowing it down. These proposals seem designed to address common complaints about lenders' behavior in HAMP, particularly complaints about incorrect denials and foreclosures happening during a loan modification application. Many borrowers have gone to the media with stories about being foreclosed on after a loan modification was granted, suggesting that lenders' left hands don't talk to their right hands often enough. If another month is what it takes to prevent this sort of seeming incompetence, our Colton loan modification lawyers are okay with a delay -- especially since lenders already routinely drag their feet on applications.

At Howard Law PC, we have represented struggling homeowners since the mortgage crisis started. We negotiate aggressively with lenders on behalf of our clients, and file lawsuits whenever the facts require one. Our Huntington Beach loan modification attorneys have been able to help numerous clients reach a fair deal with their lenders and stay in their homes. Our clients have gotten lower interest rates, changes to loan structures, longer repayment periods and sometimes even reductions in principal. Our goal is always to reduce our clients' monthly payments to a realistic amount that they can keep paying in the long term.

If you're tired of repeating the same information over and over to a mortgage lender or servicer that doesn't seem to care, call Howard Law and repeat it to us instead. We offer free, confidential consultations at which we can tell you more about how we can help. You can reach us through our site or call 1-800-872-5925.