The government's Making Home Affordable (MHA) program was launched by the Obama Administration in February 2009 as a way to stabilize the housing market and help struggling homeowners avoid foreclosure.
Now, more than seven years after the crisis hit, with the economy having significantly improved from 2008 and many housing fundamentals having returned to their pre-crisis levels, the government is turning its attention toward winding down the MHA program, which is scheduled to end on December 31, 2016. The Department of Treasury on Thursday issued its first set of guidelines to servicers for MHA program termination in the form of Supplemental Directive (SD) 16-02.
Included in the SD are guidelines for servicers on such topics as policies and procedures to accommodate deadlines; evidence of borrower transmissions and servicer transmissions; the Home Affordable Modification Program (HAMP), Home Affordable Foreclosure Alternatives (HAFA), the Unemployment Program (UP), Second Lien Modification Program (2LMP ), and Treasury FHA-HAMP and RD (Rural Development) HAMP.
The SD also provides guidance as to the eligibility of certain GSE HAMP loans to receive pay-for-performance incentives through the government's Troubled Asset Relief Program (TARP).
Servicers must either establish or update their policies and procedures to ensure that all relevant documents and information are processed in accordance with the requirements of version 5.0 of the Making Home Affordable Program Handbook for Servicers of Non-GSE Mortgages (Handbook), issued by Treasury on January 6, 2016. The policies and procedures should be designed to reasonably ensure that trial period plans, extinguishment, short sales and deeds-in-lieu of foreclosure can be converted into a permanent modification by December 1, 2007.
Servicers should design such policies and procedures to reasonably ensure that trial period plans, extinguishments, short sales and deeds-in-lieu (DIL) of foreclosure under MHA can be converted to a permanent modification, effected or closed, as applicable, by December 1, 2017. Click here to view a complete list of the updated requirements and a description of each one.
Click here to view the entire Supplemental Directive issued by Treasury on Thursday.