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More Concerns from Industry Groups on Federal Mod Guidelines

Industry trade organizations continue to step up and voice their concerns over the government's Home Affordable Modification Program (HAMP) servicing guidelines. [IMAGE] Following complaints from lawmakers and consumer advocacy groups that servicers were not offering sufficient help to distressed homeowners and, in some cases, violating HAMP provisions, the Treasury Department in July proposed a new set of program guidelines. The "American Legal and Financial Network":http://www.e-afn.org (AFN), the Housing Policy Council of the "Financial Services Roundtable":http://www.fsround.org/, and the "Mortgage Bankers Association":http://www.mortgagebankers.org, in consultation with "HOPE NOW":http://www.hopenow.com, submitted a detailed letter to the Treasury Department's Homeownership Preservation Office last week. "The letter":http://rs6.net/tn.jsp?et=1102679824583&s=4355&e=001peEPtPkXYLTSS38ZhOz4Re8ZdLdzAdjBa03biuDTcsJcw3FvF7jxgibX8waUJxBCVJRnIZIFxpnE_6PTGPTHQERStAH1rOOT96ai-R2gDDAPIeMRX0aeae4d3sui2GtknaajUFjmAm07fACRIdHooJLKYC8u-rQuyUBSUJsTFAYFlVr-tQDqjw addresses issues with the newly drafted guidelines that the groups say, while well-intentioned, impose requirements that will make "an already complex and burdensome process even more difficult for the servicing industry to implement" and impede efforts to assist at-risk homeowners. "Any new procedures must not further tax an industry working at maximum capacity," the mortgage groups wrote. "Addressing the complexities in the program would go a long way towards resolving concerns for staffing, communication, and timeliness of resolutions." The organizations specifically expressed concern that the guidelines would increase servicers' legal risk; create [COLUMN_BREAK] inconsistencies with other regulatory organizations who were not involved in the process; would involve considerable staffing and monetary support to track and report borrowers' complaints; and do not recognize that smaller servicers may not have the economies of scale, capital, or market size to justify the expense and operational changes necessitated by some of the new guidelines. The mortgage groups also argue that the guidelines impose standards outside of the program parameters, such as dictating staffing obligations. "This item presumes staffing is the answer rather than automation and leveraging outsourcers for various functions," the organizations said. In addition, they are recommending the Treasury create a 45-60-day immediate special task force to assess how to streamline the program so that it is more efficient, less costly, and compliance-friendly. The trade groups say that in less than four months, HAMP has already generated voluminous documentation and specific procedural requirements, from providing notices to collecting fair lending data, to being proactive about contacting potentially eligible borrowers. "These requirements are considerable and comprehensive and should be given a chance to work without imposing yet another layer of expectations on an already over-burdened servicing industry," AFN and its fellow organizations wrote. As they are laid out today, the requirements for particular modification activities vary depending on whether the servicer is working under the non-GSE HAMP program or for Fannie Mae or Freddie Mac as investors. The organizations argue that introducing yet another set of procedural steps will create additional problems at this time. "We suggest that there is no need for a separate and additional set of guidelines beyond those already issued ... At the very least, these [new proposed guidelines] should be offered as suggested ‘best practices' for the industry rather than guidelines upon which servicer performance will be measured," the mortgage trade groups said.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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