FHA Introduces Stand-Alone HAMP Initiative

ink=http://www.hud.gov/news/release.cfm?content=pr09-137.cfm/] Federal Housing Administration [/link] (FHA) has issued [url=http://portal.hud.gov/pls/portal/url/ITEM/6FECFC25D8294E87E04400144F9D3D85] guidelines [/url] pertaining to the agency's implementation of FHA-HAMP, a spin-off of the federal Home Affordable Modification Program (HAMP). The program, which the FHA expects all servicers to have up and running by Aug. 15, permanently reduces a monthly mortgage payment through the use of a partial claim, which defers the repayment of mortgage principal through an interest-free subordinate mortgage that is not due until the first mortgage is paid off. According to Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, "tens of thousands" of FHA borrowers will be able to modify their loans under FHA-HAMP. The FHA has used partial claims, which allow lenders to advance funds on behalf of borrowers, in the past to reinstate delinquent loans. Under the new program, HUD will bring the borrower's payment down to an affordable level by bringing the mortgage current, buying down the loan by up to 30% of the unpaid principal balance and deferring these amounts in a partial claim. Servicers participating in FHA-HAMP may receive incentive fees of up to $1,250, which includes $500 for the partial claim and $750 for the loan modification. Mortgagees may also claim up to $250 for reimbursement for a title search and/or recording fees, according to the FHA letter. Like with the broader HAMP, borrowers will need to make three trial modification payments before being considered FHA-HAMP eligible. SOURCE: [link=http://www.fha.gov]FHA


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