New rules will speed up mortgage modifications
Mortgage modifications have turned out to be far more difficult than the Obama administration apparently initially thought they'd be. Many homeowners complain they can't get lenders to award them permanent modifications after a required three-month trial. Servicers often blame the borrowers for submitting incomplete applications and other documents. And there goes any hope of a permanent mortgage modification.
Until now! (Or this June, to be exact).
Coming on the heels of President Obama's first State of the Union speech, the Treasury Department has announced new rules that are supposed to speed up the process and make it less prone to screw-up (deliberate or otherwise) on the part of the mortgage servicers.
Starting June 1st, servicers must have all the required borrower documents before the requisite three-month trial modification program even gets going. That way, when the three-month trial is over, the mortgage servicers can't use lack of proper documents as an excuse not to convert to a permanent mortgage modification.
It sounds so simple, it makes one wonder why this wasn't the case from the get-go? But, then again, we are talking about the government here. At least the folks in D.C. finally figured it out!
"We've learned a lot along the way," said Assistant Treasury Secretary Herb Allison in an interview with McClatchy Newspapers.
On the Treasury Department's Web site, Phyllis Caldwell, Chief of Treasury's Homeownership Preservation Office, is quoted as saying, "With more than 850,000 homeowners in trial and permanent modifications, we are providing immediate relief to struggling homeowners." Talking about the new rules, Caldwell says they will "more efficiently move qualified homeowners into permanent modifications."
Of course, like must rules, this new one can cut both ways: Before this change, you could get the modification process started even if you didn't have all of your documents and other required forms and applications in order. Beginning this June, you will have to take care of all that paperwork up front.
But the good news is, once you this is done, you should greatly reduce the odds of having the mortgage servicer deny you a permanent mortgage modification on the grounds that you failed to produce the required documents in time.
Charles Feldman is a journalist, media consultant and co-author of the book, "No Time To Think-The Menace of Media Speed and the 24-hour News Cycle."