Home Affordable Modification Program (HAMP) compliance agents are targeting the 10 largest servicers to see if they exhausted all loss mitigation options before proceeding with foreclosure sales, according to a Treasury Department official.

Under the HAMP, participating servicers are required to certify they tried a variety of solutions including a HAMP modification, a proprietary one, a short sale or some other option to help borrowers avoid foreclosure.

On Oct. 6, the U.S. Treasury reiterated this requirement in guidance to all HAMP servicers. The guidance also stated that servicers are "prohibited from conducting a foreclosure sale until the HAMP-required written certifications have been issued to foreclosure counsel or the trustees," according to Phyllis Caldwell, chief of Treasury's Homeownership Preservation Office.

More recently, Treasury ordered a review of the "10 largest servicers' internal policies and procedures for completing the pre-foreclosure certifications," Caldwell told the Congressional Oversight Panel, which oversees the Troubled Asset Recovery Program.

Treasury's Oct. 6 guidance also re-iterated instructions to HAMP servicers that they must comply with state foreclosure laws.

"We strongly support the state attorneys general" with their investigations into alleged mishandling of foreclosure documents, Caldwell said.

She noted that the Department of Justice i(DOJ) is working with federal agencies and regulators to investigate these foreclosure issues. "If material violations of law are discovered," Caldwell said,

The DOJ will pursue litigation "against servicers, their law firms, and third-party providers regarding their foreclosure and bankruptcy processes."

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