HAMP extended… but with balance forgiveness??? With federal homeowner assistance programs set to expire this December, federal agencies outlined principles to provide a foundation for any future loss mitigation programs. In a white paper, the Treasury Department, HUD and the Federal Housing Finance Agency examines lessons learned from the government’s financial crisis-era programs, calling the paper “one important part of an ongoing effort to assist the servicing industry to develop a framework for the future of loss mitigation.” “Over the past seven years, the foreclosure prevention programs established by Treasury, HUD and FHFA have transformed the way in which the servicing industry has interacted with and assisted struggling homeowners,” the paper said, noting through government programs and private sector efforts, 10.5 million modification and assistance arrangements were completed between April 2009 and this past May 31. The government’s Making Homes Affordable Program and other homeowner assistance programs will close at the end of December. The paper, Guiding Principles for the Future of Loss Mitigation: How the Lessons Learned from the Financial Crisis Can Influence the Path Forward, discusses circumstances leading to creation of MHA and HAMP and measures their success. “The financial crisis of 2008 revealed that the industry was ill-equipped to adequately respond to the needs of struggling homeowners,” the paper said. “Indeed, there was no standard approach among servicers about how to respond to homeowners who wanted to continue making payments, but were in need of assistance. Most solutions offered by servicers simply added unpaid interest and fees to the balance, which often resulted in higher–and thereby less sustainable–payments for homeowners, regardless of a hardship.” The paper said HAMP “provided a standard for modifications, with the goal of reducing struggling homeowners’ monthly payments to an affordable and sustainable amount.” As the program continued, the agencies expanded options by introducing additional loss mitigation programs and standard practices for homeowner outreach and engagement. Today, the agencies said, the industry is “generally better prepared” to provide assistance to struggling homeowners than it was before the crisis, due in part to adoption of homeowner engagement standards including continuity of contact, solicitation time frames and notice and appeal processes required by the Consumer Financial Protection Bureau. Source: The Mortgage Bankers Association