Obama Revises Mortgage Modification Program

The Obama administration continued its fight against the collapsing housing market on Thursday with a revised guidance of its mortgage modification program.

The U.S. Department of the Treasury, the Department of Housing and Urban Department (HUD) refined the requirements for documentations in order to speed up the aid to homeowners that are currently being crushed under the weight of debt from mortgages.

"With more than 850,000 homeowners in trial and permanent modifications, we are providing immediate relief to struggling homeowners," said Phyllis Caldwell, Chief of Treasury’s Homeownership Preservation Office. "Today's guidance represents our commitment to more efficiently move qualified homeowners into permanent modifications."

The Administration, as part of the Home Affordable Modification Program, had required starting in late December that trial modifications are placed under temporary review to make certain that borrowers are fairly evaluated under the program. This allowed for the number of trial modification to permanent ones to double in December.

The new guidance set forth by the Administration today will aid in improving this conversion process from now on. The new process makes it necessary for key documents, including a proof of income, be made available by the home owner before an evaluation can take place.

The new requirement of upfront documentation will allow servicers to better use their resources as the time taken to convert the trial modification into permanent modifications will be cut back.

The Home Affordable Modification Program was put in place to help homeowners in the U.S. maintain a sustainable monthly mortgage payment through a pay-for-success framework that aligns incentives of borrowers, lenders and servicers.

Since the program was implemented on December 23, 2009 there have been nearly 1 million Americans to begin trial modification, and since the end of 2009, 110,000 have been approved for permanent modifications.