HAMP Application Rejections Become More Transparent

The success rates for the HAMP modifications have been extremely low and the program was best labeled a failure. While there are a few reasons for this disappointment Many servicers have improperly denied homeowners HAMP eligible loan modifications due to improper evaluation procedures, poorly trained employees or due to faulty data; but homeowners who’ve been rejected will now be able to question the validity of these denials.

A new HAMP appeals process will help borrowers understand why they were rejected for the program. This new test falls under the Dodd Frank Wall Street Reform and Consumer Protection Act. Here are some highlights to this new process;

• The HAMP appeals process gives you an opportunity to see what information was used to determine that you were ineligible for the HAMP program.

• Servicers must reveal up to 33 test factors on some mortgages.

• Borrowers have 30 days to dispute the accuracy of the disclosed data

As of Feb 1st, if you are not approved for a trial HAMP modification plan or a permanent HAMP loan modification, your servicer (this does not include Freddie Mac or Fannie Mae backed mortgages) is required to send you a Non-Approval Notice which explains the reason you were not approved and provide you with an opportunity to submit evidence that the information used in the evaluation was inaccurate.

These notices are required to disclose up to 33 key data factors as to why a homeowner has been rejected for the HAMP program. And once the appeal process has been started, the lender is required to provide reasons and justifications within very specific time frames.

Under the Dodd Frank Wall Street Reform and Consumer Protection Act, servicers are also required to supply guidance to you such as how to communicate with the servicer if you wish to dispute the reasons for the non-approval determination and where you can send your evidence.

But is the transparency just more hype because it looks more like a blessing in disguise. Won’t this add a heavy load to servicers who are already under water with mounds of paperwork? Borrowers cannot test the HAMP model's accuracy, and they will never be able to test their servicers' assumptions. Although borrowers now have an appeals process, the last word still lies with the servicer; there is no third party to settle any dispute.

Soon homeowners’ will be able to evaluate whether their situation might pass the HAMP test; the US Treasury is setting up a website for consumers to run their own practice HAMP tests.

This should give you a better outlook as to where you stand and how the servicer might view your paperwork.