Dec. 31, 2016 marks the end of a seven-year government program designed to save struggling homeowners who are behind on their mortgage, or in danger of imminent default due to financial hardship.
The government’s Home Affordable Modification Program also came with incentives for servicers and investor, which worked to help unify the industry after the financial crisis.
HAMP’s sibling, the Home Affordable Refinance Program, which was created at the same time, was extended in August until Sept. 30, 2017 in order to create a smoother transition period for a new refinance product. HAMP, on the other hand, is still slated to end at the end of this year.
Borrowers aren’t out of luck though. A new report from Fitch Ratings explains that 2017 brings the start of a new system that can still be beneficial for all parties involved. There are just a few wrinkles that the system would need to be ironed out.
Up until this point, Fitch stated that HAMP loan modifications have accounted for approximately 50% of all loan modifications completed this year, and this number is dropping. HAMP monthly applications are now approximately 70% below the monthly average at the start of the program.
The main benefit Fitch outlines is that modification decision timelines will shorten.
“Currently servicers first perform full reviews of applications for acceptability to HAMP guidelines; ineligible candidates are usually subsequently screened for acceptability under proprietary modification programs,” the report stated.
With HAMP ending, this initial step is removed and servicers will likely be able to make faster modification decisions.
This is likely to then translate into shorter liquidation timelines for the portion of loans that do not qualify for proprietary modifications.