President Obama's administration announced new U.S. Department of the Treasury guidelines to allow servicers to start modifications of eligible mortgages under the administration's Homeowner Affordability and Stability Plan.
The new housing program was announced two weeks ago by the president.
The release of the detailed requirements for the Making Home Affordable program facilitates the implementation of the critical provisions that will help bring relief to responsible homeowners struggling to make their mortgage payments, while preventing neighborhoods and communities from suffering the negative spillover effects of foreclosure such as lower housing prices, increased crime and higher taxes.
The guidelines will implement financial incentives for mortgage lenders to modify existing first mortgages and set standard industry practice for modifications.
The Treasury announced today that the Making Home Affordable program will also include added incentives for efforts made to eliminate second liens on loans modified under this program. Extinguishing second liens will make mortgages more affordable, improve loan performance, as well as help prevent foreclosures.
Along with the release of the new guidelines, the Treasury, the Department of Housing and Urban Development and other members of a broad interagency task force have prepared a Q&A and eligibility assessment tools for borrowers available on the government's Web site FinancialStability.gov.
In an effort to implement the program as fast as possible, the agencies have also conducted an extensive outreach with housing counselors and mortgage servicers, such as the development of call center phone scripts, a training plan and detailed guides. These efforts are aimed at preparing them for incoming borrower inquiries with the guidelines' release.The government has made an expanded online resource available to borrowers. In the coming weeks, agency representatives will also be conducting outreach through homeownership events in communities across the country that were hardest hit by the housing crisis.
"Two weeks ago, the president laid out a clear path forward to helping up to nine million families restructure or refinance their mortgages to a payment that is affordable now and into the future. Today, we are providing servicers with the details they need to begin helping eligible borrowers," Treasury Secretary Tim Geithner said. "It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets, just as we work to stabilize our financial system, create jobs and help businesses thrive. Economic recovery requires action on all three fronts."
"Only two weeks after the President unveiled his plan to help promote homeowner affordability, we are moving forward today with these guidelines to implement that plan," HUD Secretary Shaun Donovan said. "This step forward represents a tremendous coordinated effort between major government and regulatory agencies to help bring relief to America's housing market and homeowners. This plan will help make home ownership more affordable for nine million American families and in doing so, help to stop the damaging impact that declining home prices have on all Americans."