March 19, 2012
n March 9, 2012, the U.S. Department of the Treasury issued Supplemental Directive 12-02 that extends the Making Home Affordable (MHA) program to the end of 2013, and makes several changes to the Home Affordable Modification Program (HAMP) to increase the number of eligible participants. The directive also makes eligibility changes to the HAFA program that should increase the number of short sale transactions eligible under the program.
Specifically, Supplemental Directive 12-02 implements the following key changes:
- Establishes a second level HAMP evaluation protocol (HAMP Tier 2) to expand borrower eligibility for HAMP modifications to borrowers who were previously ineligible for, or did not successfully complete, a HAMP modification. The Treasury Department estimates servicers to begin evaluating borrowers for HAMP Tier 2 trial periods in June 2012.
- Rental properties may now be eligible under HAMP Tier 2 if they are used by borrowers for rental purposes only (not principal residence, second or vacation home). Borrowers must be behind two or mortgage payments and are not eligible for imminent default consideration.
- Removes all occupancy requirements for HAFA eligibility (effective immediately).
- Amends payment guidelines to allow servicers to accept full monthly mortgage payments, if the borrower requests to make full contractual payment in order to stay current (effective immediately).
- Increases maximum incentive to subordinate mortgage holder(s) to $8500 in exchange for a lien release and full release of borrower liability.
Beginning in March, the Treasury Department will provide detailed training webinars on these new program enhancements which will be accessible by real estate professionals and other trusted advisors.