The new rules would mean that mortgage lenders would have to give those denied under HAMP 30 days to appeal the denial. During that time, mortgage lenders could not put the home in question into foreclosure or for sale at auction.
The lender would also have to certify in writing that the borrower was denied under HAMP. This is most likely in response to a new practice of collecting on delinquent homeowners. Many underwater homeowners are choosing to walk away from their home rather than pay outrageous mortgage rates. As a result, more and more banks are filing lawsuits or seeking the money owed.
The proposed laws would slow down the foreclosure process and give distressed homeowners a chance at keeping their homes. For instance, one new measure under consideration, would force lenders to see whether borrowers 60 days or more delinquent on payments qualify for HAMP. This would entail at least four phone calls and two written notices.
Currently, nearly 2.0 million households nationwide face foreclosure, or are behind 90 days on mortgage payments. Thus far, mortgage relief programs have been plagued by red tape and paperwork. Efforts to streamline the process will no doubt leave mortgage lenders and borrowers with less stress. Moreover, if these changes are indeed implemented, then foreclosures will become fewer and more homeowner will be given a second chance.
Written by Lani Shadduck