New guidelines for the HAMP foreclosure prevention program:
- Borrowers who are being evaluated for HAMP suitability will not face a foreclosure sale during that evaluation period. However, they may still receive eviction notices and letters regarding their pending foreclosure.
- Borrowers who in an active bankruptcy case may still be able to apply for and participate in the HAMP foreclosure prevention plan. This could mean more leverage for homeowners in bankruptcy who want to keep their home and receive a mortgage loan modification.
- Borrowers cannot be sent into foreclosure until they have either been evaluated for mortgage help, have been deemed ineligible for the HAMP program or other foreclosure prevention plans and/or has been offered help that was turned down by the borrower facing foreclosure.
In addition, borrowers will have 30 days to respond to certain HAMP non-approval notices before a foreclosure sale takes place. A mortgage servicer also needs to provide a “written certification” to the foreclosure attorney stating a borrower has not qualified for HAMP before going through with the sale.
These new guidelines may do a little to give more homeowners leverage in their foreclosure fight. However, sample letters that are scheduled to go out to homeowners facing foreclosure may add to the confusion. Sample letters provided stated that while the homeowner would not have their home sold out from under them during their HAMP evaluation, they would still need to respond to notices and letters regarding their foreclosure or lose their rights under the foreclosure laws. This could get confusing for borrowers and potentially end up with many in a sticky situation if they are not approved for HAMP and want to still fight their foreclosure. It may be advisable for borrowers facing foreclosure to work closely with an attorney if they want to apply for the HAMP program.