Consumer Protection for Loan Modifications Under Making Home Affordable (HAMP)

On March 24, 2010, a Supplemental Directive was issued under HAMP.  The legislation, which takes effect on June 1, 2010, puts more pressure on mortgage servicers and banks to participate more in loan modifications when looking to foreclose on delinquent first lien mortgage holders.

The legislations requires Mortgage Servicers to do one of the following five items listed below before they can refer a loan to foreclosure or conduct a foreclosure sale.

1.    The servicer must evaluate the delinquent borrower under Making Home Affordable (HAMP) and determine that the delinquent borrower is ineligible; or

2.    The borrower is on a trial modification and fails making the monthly trial period payment in the month that is due; or

3.    The deliqnuent borrower does not respond to the servicer's "reasonable effort” to solicit the borrower to determine eligibilty within a specified timeframe; or

4.    The servicer is unable to establish "right party contact" with the borrower after making “reasonable effort” to solicit the borrower; or

5.    The servicer's servicing system indicates that borrower or co-borrower states disinterest in pursuing a modification under Making Home Affordable (HAMP).

Supplemental Directive 10-02 provides additional details.  If a homeowner needs help pursuing a loan modification and feels like his or her lender is less than helpful, a bankruptcy attorney or loan modification attorney may be helpful.  Many lawyers offer free consultations to prospective clients.