by neighborworksamerica

Article by Professor Loan Mod

Applying for a loan modification can be very daunting at times and the thought of filling out all that paperwork would have some running into the streets. However, the government is trying to make things a little easier by offering forms and services to help many homeowners through the cumbersome process. With loan modifications now needing the Dodd Frank Certification to complete the application process, many homeowners are probably still lost on how to fill out the many forms and may even not fill out the applications completely. This certainly even applies to the Dodd Frank certification, however, now some changes have been made to this form and we will review the differences below.

?The servicer is required to date stamp the certification, regardless of whether it was dated by the borrower, and retain a copy in the servicing file.?If borrower forgot to check off the boxes or date the form, borrower shall be deemed to have complied with the requirement to deliver the form. ?If borrower dated the form the servicer will use date provided, however if borrower forgot to date the servicer shall use its own date stamp as the compliance date.

In regards to new updates for servicers to monitor and process applications for HAMP, there is a list of new protocols required by the servicer to develop and implement. A better checks and balances for the servicers to better serve the many struggling homeowners. Some of these changes we will high light below. Verification of IncomeThe HAMP program eligibility is determined by the borrower and co borrower?s total gross income. To have better consistency throughout the review process servicers now need to document how they will calculate income for both borrower, co borrower?s, non borrower income. There are four key points that will need to be documented.

?Under what circumstances documentation in addition to the documentation described in Section 5 of Chapter II of the Handbook may be requested;

?How the servicer will reconcile discrepancies between the Request for Modification and Affidavit (RMA), tax documents and income documents;

?How the servicer will calculate non-traditional income scenarios such as underemployment, recent employment, overtime and seasonal or sporadic income; and

?Circumstances under which servicing personnel may exercise business judgment in calculating borrower income.

Other enhancements to the guidelines set forth in Exhibit B to this Supplemental Directive include: ?Verifying, in certain circumstances, that a borrower?s trial period payment amount was correct if the borrower fails a trial period plan (TPP) for non-payment, and when appropriate, providing the borrower with a new TPP with the corrected payment amount;

?Requiring up to four consecutive months of bank statements as an alternative to obtaining a profit and loss statement or if, following receipt, it is determined that the information in the profit and loss statement is insufficient;

?Identifying the specific sources and amount of a borrower?s passive or non-wage income;

?Verifying the occupancy of a non-borrower (after obtaining written consent to obtain the non-borrower?s credit report) in the same manner the servicer verifies the occupancy of a borrower;

?Excluding income (e.g., income tax refunds, severance payments and grants) and establishing guidance around what must not be considered when verifying the borrower?s monthly gross income; and

?Prohibition on the use of the monthly gross income of a borrower, co-borrower or non-borrower occupant as the basis for a TPP or permanent modification if that income was previously used as the basis for a permanent modification, even if that individual?s principal residence has changed.

The reason why we write these articles and especially articles about the HAMP program and the updates to the HAMP manual for servicers is to keep the homeowner informed and in the loop on how servicers are suppose to be processing the applications for the loan modification program HAMP. By understanding a little how the other half of this process works will help you understand how your application gets processed and if your servicer is following the guidelines.

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