Loan and Mortgage Servicers get “schooled” by HUD this summer
School isn’t the only thing that’s out for the Summer. As it turns out, loan and mortgage servicers are getting “schooled” by HUD this Summer.
Just as thousands of swimming pool crazed kids on summer vacation will be instructed by parents to wait thirty minutes after eating before finally diving into the pool, thousands of loan servicers who purchase loan pools through HUD’s distressed asset stabilization program (DASP) will be instructed to wait one year before foreclosing on homes.
30 minutes, 6 months, 1 year!”
The U.S. Department of Housing and Urban Development (HUD) recently announced a massive change stating, that investors who purchased pools of distressed homes through HUD’s DASP program are now required to delay foreclosure for a year to first evaluate all borrowers for the Home Affordable Modification Program (HAMP) or a similar loss mitigation program.
This change doubles the wait time and makes the assessment of a borrower’s qualifications for loan mitigation programs not only an option, but a requirement.
Previously, servicers that purchased mortgages through DASP would be “encouraged”, but not required, to determine whether troubled borrowers trapped in nonperforming home loans were eligible for any loss mitigation programs. With HUD’s new changes, the number of homes that go into foreclosure will likely be reduce, which will result in beneficial effects for the housing market. Genger Charles, Acting Deputy Assistant Secretary of the Federal Housing administration, released a statement reading, “[t]hese changes reflect our desire to make improvements to encourage investors to work with delinquent borrowers to find the right solution for dealing with the potential loss of their home…”
Along with these changes HUD is subjecting buyers to stronger reporting requirements, tougher penalties for not complying with quarterly reporting responsibilities and a new requirement to report on borrower’s outcomes, even when a note is sold after the original purchase.
The change is set to become effective in early July. So…we can finally see the light at the end of the tunnel.