Supplemental Directive 11-06: Making Home Affordable Program - Updates to Servicer Incentives

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 Today, July 6, 2011, Supplemental Directive (SD) 11-06: Making Home Affordable (MHA) Program - Updates to Servicer Incentives was issued providing updated policy guidance related to servicer compensation for completed permanent modifications under the Home Affordable Modification Program (HAMP). Overview This SD is effective October 1, 2011, and is applicable to all permanent HAMP modifications with a trial period plan (TPP) effective date on or after October 1, 2011. It amends and supersedes the notated portions of the MHA Handbook. This guidance does not apply to mortgage loans that are owned or guaranteed by Fannie Mae or Freddie Mac, insured or guaranteed by the Veterans Administration or the Department of Agriculture's Rural Housing Service, or insured by the Federal Housing Administration. Details Servicers will be entitled to receive completed modification incentives on a sliding scale, based on the number of days the mortgage loan is delinquent as of the effective date of the TPP. The new scale for servicer completed modification incentives is as follows: No. of Days

Delinquent at Trial Period Plan Effective Date Incentive Amount Less than or equal to 120 days delinquent (150 days from last full paid installment (LPI) date) $1,600.00 121 days or more delinquent to and including 210 days delinquent (151 to 240 days from LPI date) $1,200.00 Greater than 210 days delinquent (greater than 240 days from LPI date) $ 400.00 For permanent HAMP modifications with TPP effective dates on or after October 1, 2011, the additional $500 compensation payable to the servicer if a borrower was current under the original mortgage loan is eliminated. Servicer Pay-for-Success incentives and all borrower and investor incentives remain unchanged. The SD also states that following a servicer's standard collection efforts and during consideration of a borrower for HAMP, servicers may not take additional collection measures for the purpose of reducing the delinquency period in order to qualify for a higher up-front servicer incentive. MHA-Compliance will perform testing of loan payment histories to ensure that such activities do not occur. More details, including guidance on the reporting process and information on how to handle the compensation change in the case of a servicer transfer can be found in SD 11-06. E-mail the HAMP Solution Center or call 1-877-345-3330.


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