The U.S. Treasury and Department of Housing and Urban Development (HUD) unveiled measures that will make modifications under the Home Affordable Modification Program (HAMP) currently in the trial phase into permanent loan modifications by the year end.
Loan Servicers could face monetary penalties and sanctions of they fail to fullfill modifications.
The Obama Administration has taken several steps to ensure a smooth conversion such as extending the deadline for homeowners to submit required information, streamlining the application process to minimize paperwork and simplify the submission process, developing metrics to measure servicers' performance and improve their accountability, and also enhancing borrowers' resources like the MakingHomeAffordable.gov website.
The Treasury said that loan servicers will have to offer a schedule on plans for converting trial loans. It is also planning to start reporting data on permanent loan modifications as well as trial ones.
“This modification thing is clearly becoming a big axe to grind for the treasury/government,” said Jefferies mortgage trader Jesse Litvak. “I just think the sheer volume of properties/borrowers that need help is too large to address with a quick timeline. Unfortunately it doesn’t look like Washington wants to be patient on this one. Looks like 2010 will be the year where more color on the modification issue will play out.”