HAMP Loan Modification Program Set to End December 30, 2016

Dec. 31, 2016 marks the end of a seven-year government program designed to save struggling homeowners who are behind on their mortgage; the Home Affordable modification Program or HAMP.  HAMP’s sibling, the Home Affordable Refinance Program, or HARP, which was created at the same time, was extended in August until Sept. 30, 2017 in order to create a smoother transition period for a new refinance product.

Freddie Mac announced that the Freddie Mac Flex Modification foreclosure prevention program will replace HAMP that expires at the end of this year.  According to Freddie Mac, it developed Flex Modification after getting input from a wide range of industry participants, and it learned lessons from earlier variations of the program.  But the main fear is that there will no longer be any consistency anymore since HAMP unified everyone.

But a report says otherwise; the currently servicers first perform full reviews of applications for acceptability to HAMP guidelines and then ineligible candidates are usually subsequently screened for acceptability under proprietary modification programs.  So with HAMP ending, this initial step is removed and servicers will likely be able to make faster modification decisions.

Proponents also point to the fact that proprietary loan modifications (each servicer’s own variety) will increase to fill the void that losing HAMP left.

Servicers must implement the new program by Oct.1, 2017.  In the meantime, Freddie Mac’s Standard and Streamlined Modifications will remain in effect until then.  HAMP expires on Dec. 30, 2016.

4th DCA Finds Lender Did Not Violate Mortgage By Accepting Partial Payments After Sending Default Letter

The Florida 4th District Court of Appeal (DCA) reversed the trial court’s ruling in favor of borrowers after the lender accepted partial payments after default.

After sending borrowers a notice of default due to non-payment of their mortgage, the lender accepted partial payments of the amount due.

The lender sued to foreclose and the case went to trial.  At trial the judge found in favor of the borrowers, holding that because the lender accepted partial payments after the default letter, that the bank failed to comply with paragraph 22 of the mortgage requiring the default letter to state the default and amount owed.

The appellate court reversed finding that paragraph 1 of the mortgage allowed the lender to accept any partial payment without waiving any of its rights.   The Appellate Court disagreed with the trial court’s ruling that the lender failed to comply with paragraph 22 because the partial payment notices were confusing and “did not adequately inform Borrowers of the necessary steps to cure.”

The appellate court found that the lender substantially complied with the mortgage and did give the default letter which stated what the borrowers had to do to bring the loan current.