HAMP Update
October 19th, 2010
The U.S. Department of the Treasury issued a HAMP Update titled, Supplemental Directive 10-14: MHA Program -- Principal Reduction Alternative Update.
Supplemental Directive 10-14: MHA Program -- Principal Reduction Alternative Update
Today, October 15, 2010, Supplemental Directive 10-14: Making Home Affordable Program -- Principal Reduction Alternative Update was issued on HMPadmin.com. This guidance is being issued as a new Section 6.4 of Chapter II, Principal Reduction Alternative, of the Making Home Affordable Program Handbook for Servicers of Non-GSE Mortgages. Supplemental Directive 10-14 incorporates and supersedes Supplemental Directive 10-05 issued in June 2010. In addition, this Supplemental Directive includes the following new guidance:
- Servicers that forgive at least five percent of the borrower's unpaid principal balance in conjunction with a HAMP modification will have new flexibility in the application of the alternative modification waterfall steps. This flexibility provides the ability to substitute principal forgiveness for discounted interest rates or extended terms in accordance with investor guidelines.
- Investors that enter into equity share arrangements with borrowers in conjunction with a Principal Reduction Alternative (PRA) modification may be eligible for PRA investor incentives so long as certain borrower protections are included in the equity share agreement. These arrangements provide investors with the potential to recoup some or all of the unreimbursed portion of the principal forgiveness if the property value increases in the future.
- Guidance has been issued regarding PRA consideration for loans that were in trial period plans or permanently modified under HAMP prior to the PRA Effective Date. Servicers are required to develop written policies and procedures that describe the basis on which they will retroactively identify loans potentially eligible for PRA. If the policy permits the retroactive evaluation for PRA, then those loans must be evaluated no later than January 31, 2011.
- Direction regarding the impact of applying PRA retroactively on second lien mortgage loans through the Second Lien Modification Program (2MP) is also provided.
The Supplemental Directive's guidance applies to servicers of first and second lien mortgage loans that are not owned or guaranteed by Fannie Mae or Freddie Mac, or insured or guaranteed by a federal agency, such as the Federal Housing Administration, Veterans Administration, or the Department of Agriculture's Rural Housing Service.
The File Formats section of HMPadmin.com (login required) has been renamed "File Formats for Servicers Submitting Loan Data" and some files have been replaced. Other headings have also been revised in that section.
To see the changes, log in to HMPadmin.com. Then select "HAMP Loan Reporting: Tools & Documents." A bookmark is available in the column on the right for convenience.
Questions?
If you have questions regarding the Principal Reduction Alternative Update, do not reply to this e-mail; please contact the HAMP Solution Center at support@hmpadmin.com or 1-866-939-4469.
To view the online HAMP Update, please click here
About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with approximately 800 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.