The ""Federal Housing Administration"":http://www.fha.gov (FHA) recently announced a new mechanism that encourages servicers to report non-incentivized loan modifications using ""FHA Connection"":https://entp.hud.gov/clas/index.cfm, an online system that provides FHA-approved lenders and business partners with secure access to ""HUD"":http://www.hud.gov computer systems.
A mortgagee letter will make this reporting a requirement in the future, but until then, lenders are encouraged to use the new feature.[IMAGE] [COLUMN_BREAK]
In a statement, FHA emphasized the importance of accurate and timely reporting of loan modifications, including timely incentive claim filing.
Servicers are eligible to collect an incentive payment if they file a claim within 60 days of the execution date of a loan modification. Many servicers miss the 60-day deadline or neglect to file a claim for the incentive payment, according to the FHA.
In addition to providing compensation for the recasting effort, the data provided to FHA within the incentive claim process captures information about the recasting of mortgages. The modified terms and conditions of the loan disclosed to HUD provide a more accurate view of the active insured FHA portfolio.
In the past there was no way for servicers to supply FHA with information about the modified loan -- such as the new principal, term, or interest rate Ã¢â‚¬" except through the incentive claim process.
As a result, servicers not only lose the opportunity to recover costs for completing a modification, but they may incur monetary damages by delaying possible future claims activity after the original loan maturity date automatically terminates the FHA insurance.