Over the past seven years, the foreclosure prevention programs established by Treasury, HUD and FHFA have transformed the way in which the mortgage servicing industry has interacted with and assisted struggling homeowners. In total, through government programs and private sector efforts, 10.5 million modification and mortgage assistance arrangements were completed between April 2009 and the end of May 2016.
Additionally, Making Home Affordable (MHA) and other crisis-era homeowner assistance programs resulted in improved homeowner engagement in the loss mitigation process, new guidelines for the types of loss mitigation options offered to homeowners and standardized procedures for how such products are provided. The programs also supported the recovery of the housing market and demonstrated that a mortgage modification can be a sustainable option for homeowners seeking to avoid foreclosure.
The MHA programs will close at the end of the year. With some exceptions, mortgage servicers will no longer be required to evaluate homeowners for a standard mortgage modification, like the Home Affordable Modification Program (HAMP). This paper is one important part of an ongoing effort to assist the mortgage servicing industry and other stakeholders to develop a framework for the future of loss mitigation.
In particular, the white paper outlines five principles that the agencies believe were essential to the success of the government’s programs and should provide a foundation for any future loss mitigation programs. The principles are:
Accessibility: Ensuring that there is a simple process in place for homeowners to seek mortgage assistance and that as many homeowners as possible are able to easily obtain the needed and appropriate level of assistance.
Affordability: Providing homeowners with meaningful payment relief that addresses the needs of the homeowner, the servicer and the investor to support long-term performance.
Sustainability: Offering solutions designed to resolve the delinquency and be effective long-term for the homeowner, the servicer and the investor.
Transparency: Ensuring that the process to obtain assistance, and the terms of that assistance, are as clear and understandable as possible to homeowners, and that information about options and their utilization is available to the appropriate parties.
Accountability: Ensuring that there is an appropriate level of oversight of the process to obtain mortgage assistance.
Since 2009, government agencies, servicers, investors and consumer advocates have collaborated to stabilize the housing market and help homeowners avoid foreclosure following the financial crisis. With the formal end of the crisis-era programs, the mortgage servicing industry will shoulder more responsibility for assisting struggling homeowners through proprietary modifications and other programs. Going forward, Treasury, HUD and FHFA will continue engaging with a variety of stakeholders – particularly mortgage servicers – to assess how foreclosure alternative options will incorporate and further develop the core principles presented in the white paper.
The white paper is available at Treasury.gov.