Uncooperative Mortgage Servicers Face Still Penalties

Traditionally, the FHA loan program was focused on helping buyers purchase homes. But as a result of the HOPE for Homeowners Act, passed as part of the Housing and Economic Recovery Act, the program is being opened up to homeowners who want to refinance in order to avoid foreclosure. According to the U.S. Housing and Urban Development (HUD) website, "an estimated 400,000 borrowers in danger of losing their homes will be able to refinance into more affordable government-insured mortgages."

The problem is, there are lenders that do not want to cooperate with this new legisation. So, HUD has to resort to stronger measures, so that homeowners facing foreclosure have a better alternative. Now, HUD is going to start assessing civil money penalties on uncooperative mortgage servicers for failing to provide mortgage loan modifications (loss mitigation) to borrowers having trouble paying their mortgages, as indicated in Mortgaee Letter 2208-27 below.

MORTGAGEE LETTER 2008-27

TO: ALL HUD-APPROVED MORTGAGEES

SUBJECT:

The purpose of this Mortgagee Letter is to provide information regarding the Civil Money Penalty that will result in Treble Damages for a mortgagee's failure to engage in loss mitigation.

Treble Damages may be assessed when a mortgagee fails to engage in loss mitigation. On April 26, 2005, the Department published a final rule, "Treble Damages for Failure to Engage in Loss Mitigation", advising the industry of this Civil Money Penalty. A copy of the final rule is available at http://www.gpoaccess.gov/fr/index.html.

HUD defines failure to engage in loss mitigation as a mortgagee's (lender's) failure to evaluate a loan for loss mitigation before four full monthly mortgage installments are due and unpaid to determine which, if any, loss mitigation techniques are appropriate (see 24 CFR § 203.605); and/or a subsequent failure to take appropriate loss mitigation action(s). Mortgagees must be able to provide documentation of their loss mitigation evaluations and actions. Mortgagees will be considered to be in compliance with 24 CFR § 203.501 where plausible loss mitigation options were offered to eligible borrowers. The Department will not consider a mortgagee to have "failed to engage in loss mitigation" where the mortgagee can demonstrate that a borrower was uncooperative or ineligible.

How Lenders Can Avoid Fees
HUD is taking this matter of home foreclosures very seriously. As long as homes continue to foreclose, housing prices can't stabilize. This is why such strong measures are needed to help curb the tide of foreclosures. HUD has made a resource available to lenders to help them become compliant with the new legistation through their National Servicing Center (NSC). The NSC is available to assist mortgagors and mortgage industry professionals in complying with FHA servicing requirements, including loss mitigation evaluation. Interested lenders can call the NSC toll-free at 1-888-297-8685 or visit them on the web at: http://www.hud.gov/offices/hsg/sfh/nschome.cfm.


		Quick Links: Privacy : About Us : Contact Us : Loan Application : FHA Loan Calculators : Site Map FHA Loan Products: FHA Mortgage : Cash Back Refinance : FHA Refinance : Streamline Refinance : 1st-Time Homebuyer Loan : Talk to a Loan Officer Direct : FHA Streamline : Fixed Rate Mortgage : FHA Secure Refinances : HUD and FHA Mortgage News : FHA Loan Requirements : Loan Modifications : Obama Mortgage : FHA Refinancing : FHA Mortgage-Loan FHA Mortgage Rates: FHA 30-Year Mortgage : FHA 15-Year Mortgage : FHA Rates Resources: FHA Resources : Home Affordable Refinance Programs : Bad Credit Mortgage Refinance : HUD : Internet Marketing : Streamline Info from HUD : US Dept. of HUD Fair Market Rents : FHA Loan : Debt Settlement ©2008 FHA Mortgage Refinance Loans, FHAMortgageRefinanceLoans.com, All Rights Reserved FHA mortgage rates displayed are subject to change available loan information can provided by the mortgage lenders directly after application is submitted for further underwriting review. The FHA Mortgage Refinance Loan Company is not directly affiliated with any government agency. We provide an online marketplace for consumers searching for FHA loans and HUD resources. We are affiliated with HUD approved FHA mortgage lenders. If you would like to contact HUD directly please visit their website online.