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The Mortgage Bankers Association has launched One Mod: Principles for Post-HAMP Loan Modifications, which is a proposed successor program to the Home Affordable Modification Program (HAMP). One Mod draws upon the experiences of lenders familiar with HAMP to formulate universal principles that should be applied to a future program.
One Mod was developed by The Future of Loss Mitigation Task Force, a diverse MBA working group consisting of representatives from 20 member companies. The program offers at least a 20 percent payment reduction for eligible borrowers while minimizing the excessive documentation requirements that have caused hardship for HAMP applicants. The Task Force is co-chaired by Alex McGillis of Quicken Loans and Erik Schmitt of JP Morgan Chase.
“MBA’s task force recognizes that the industry, borrowers and investors need a successor to HAMP that is consistent and can be widely scaled,” said Pete Mills, senior vice president of Residential Policy & Member Services at the Mortgage Bankers Association. “Application of the Task Force’s principles and the ‘One Modification’ or ‘One Mod’, will go a long way towards offering deep payment relief for struggling homeowners and a positive economic outcome for investors. We look forward to continued discussions with government agencies, the GSEs and other stakeholders about these principles and the proposal.”
“Developing One Mod was a tremendous collaborative effort by lenders and other stakeholders, big and small, to develop a simpler and more streamlined process that provides meaningful help to those who are under serious hardship,” said Mike Malloy, vice president of Servicing for Quicken Loans. “One Mod resolves many of the barriers that homeowners seeking payment relief faced during the process of applying for a home loan modification. Our goal is to engage lenders, regulators, investors and community groups across the industry and receive their feedback on next steps to adopt and implement One Mod.”
One Mod incorporates four guiding themes that drive successful loss mitigation programs: Accessibility, Affordability, Sustainability and Transparency. From these themes, the Task Force developed 10 core principles:
►Eliminate “gaps” that consumers can fall through.
►Only require the consumer submit documentation that is directly related to their eligibility for the modification.
►Produce a positive outcome for the investor.
►Result in a decrease in mortgage payments for the consumer immediately following modification.
►Distinguish between short-term hardships and longer-term hardships.
►Use waterfall of options and loss mitigation solutions that are based on criteria that have a clear impact on re-default rates.
►Provide a solution that maximizes the relief that the consumer is eligible for in the first loss mitigation offer.
►Offer home retention and liquidation options at the same time.
►When a term extension is utilized, educate the consumer about how additional money applied to monthly payments can change the amortization schedule.
►Provide clear disclosure to the consumer of their loss mitigation options and the rationale for the selected loss mitigation option presented to the consumer.
“As an industry we have a shared responsibility to offer clear and consistent solutions to homeowners who are struggling,” said Peter Muriungi, head of Mortgage Banking Servicing at JPMorgan Chase. “This proposal is the product of strong industry collaboration with the common goal of providing a simpler customer experience and meaningful payment relief for families in need.”