Residential Forclosure Mediations: More Proposed Mortgage Loan Modificiations, HAMP.

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   This is an update on news affecting the Residential Foreclosure Mediation Tools that are discussed in the post here on February 25, 2010 and which are discussed on the Insurance Claims and Issues Web Log, under the Category of "Mediation".  See in particular the posts there of January 27, 2010; January 29, 2010; and February 8, 2010.

   Major changes to the Home Affordable Modification Program ("HAMP") are under discussion in Washington, D.C.  There is a proposal being considered by the current Administration which would, if adopted, modify HAMP and thus restrict the availability of Foreclosure Lawsuits in two ways:

1. Lenders would henceforth be prohibited from filing new Foreclosure Lawsuits until screening of the homeowners'-borrowers' application to HAMP was complete, whereas at present there is no such impediment to filing for Foreclosure; and
2. Lenders would be required to stay or abate pending Foreclosure Lawsuits against homeowners-borrowers who are participating in a trial modified repayment plan.  At the present time, Lenders are required to stay or abate their pending Foreclosure Lawsuits only when the Defendants are in a permanent HAMP modified repayment plan (of which there are relatively very few since HAMP began).

Dawn Kopecki, "Obama May Prohibit Home-Loan Foreclosures Without HAMP Review" (Bloomberg. com, Thursday, February 25, 2010).

   This proposed modification to HAMP could, if adopted, have major effects on the roughly 2,820,000 homeowners who are currently Defendants in Foreclosure Lawsuits, and the estimated 4,500,000 homeowners who are predicted to become Foreclosure Defendants this year, as well as the total set of 12,000,000 likely-to-potential Residential Foreclosure Defendants.  "About 89 percent of outstanding residential mortgage loans are covered by the voluntary HAMP program."  Id. 

   The proposal to modify HAMP could, in the end, have the effect of a ban on Residential Foreclosures unless homeowners-borrowers have been rejected by HAMP.  See id.  

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