Federal Foreclosure Bailout Program - Home Affordable Modification Program

The Obama administration revealed their program to facilitate families to save their homes from getting foreclosure through encouraging mortgage modifications. This program, called the Home Affordable Modification Program (HAMP) was intended to create wide guidelines for the mortgage industry on modifying loans, along with offering incentives to lenders as well as servicers to offer modifications.

Contribution in the HAMP plan, as with most of the other federal foreclosure assistance programs, is charitable for most servicing companies along with lenders. Number of the largest servicers, though, has signed agreements to connect in the plan. Companies that received funds from the government under the Financial Stability Plan are also required to participate in the program, along with Fannie Mae and Freddie Mac.

One of the main benefits of the program to homeowners is that it essentially requires participating mortgage servicing companies to review the eligibility of homeowners for a loan modification prior to being able to conduct a sheriff sale. In actual fact, servicers participating in the home loan modification program shouldn't even begin the procedure of foreclosure until the review has been complete and the borrowers have been resolute to be ineligible for a modification. Because of this program, there're a few latest defenses to foreclosure which homeowners might lift up due to a lender or servicing company's failure to fulfill through the requirements of the program.

For example, if a servicing company participates in the HAMP loan modification program but does not review a borrower's financial material to determine whether a modification would make sense for the investor and the homeowners, the foreclosure shouldn't be allowed to progress. The failure to fulfill with the guiding principle of HAMP prior to foreclosing could mean that the homeowners aren't even in default of the mortgage contract.

Thus, due to this new guideline that the Obama administration has put into consequence for the residential mortgage servicing industry, homeowners might have further chances to be eligible for a loan modification or defend their property from foreclosure. Even though lots of of the government foreclosure support programs have failed to deliver so far, it is likely that borrowers could use these laws in self-defense, if not actually to meet the criteria for workout solutions to protect their homes.