Original posted on Bloomberg by Jodi Shenn:
Servicers can’t cancel an active Home Affordable trial modification scheduled to expire before Jan. 31 for any reason other than property eligibility requirements, according to a posting today on a government Web site. They must write to borrowers to inform them about missed payments or needed documents, and give them at least 30 more days to submit them.
“The Treasury Department believes that this further guidance and associated requirements will provide more certainty and transparency regarding the final determination of eligibility for borrowers in trial modifications,” Meg Reilly, a department spokeswoman, said in an e-mailed statement.
The extension follows the Obama administration announcing a “Mortgage Modification Conversion Drive” on Nov. 30, meant to aid borrowers with trial plans set to expire at year end. The drive began after servicers struggled to acquire the documentation from homeowners required by the government to make loan changes permanent under its $75 billion program. Officials have placed some of the blame on both servicers and borrowers.
In October, the U.S. loosened documentation requirements and said an initial round of trial modifications could be completed over an extra two months, rather than the three-month standard.
Through November, servicers have permanently modified 31,382 of as many as 4 million mortgages targeted by the Home Affordable program, the Treasury said Dec. 10. A total of 728,000 were under way. The Treasury said last month that 375,000 trial modifications were scheduled to be converted into permanent repayment plans or expire by the end of the year.
“Servicers have made substantial progress in staffing up and dedicating further resources in support of HAMP,” Reilly said.
The official message can be downloaded here.