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Three federal agencies—the U.S. Department of the Treasury, the U.S. Department of Housing & Urban Development (HUD) and the Federal Housing Finance Agency (FHFA)—teamed up to release a white paper that is being presented as “a guide for future loss mitigation programs that draw on the lessons learned from implementing the government’s crisis-era housing recovery programs.”
In view of the Making Home Affordable (MHA) program concluding this year, the three agencies designed their white paper based on principles that would serve as the basis for future federal loss mitigation programs, ranging from user-friendly simplicity and transparency at all stages of the process to the guarantee that the program addresses the needs of all stakeholders involved.
"The financial crisis of 2008 revealed that the mortgage servicing industry was ill-equipped to adequately respond to the needs of struggling homeowners," the paper said. "Indeed, there was no standard approach among mortgage servicers and investors about how to respond to homeowners who wanted to continue making payments, but were in need of mortgage assistance. Most solutions offered by servicers simply added unpaid interest and fees to the mortgage balance, which often resulted in higher—and thereby less sustainable—payments for homeowners, regardless of a hardship."