Necessary Changes to the Home Affordable Mortgage Program

In order for the Home Affordable Mortgage Program (HAMP) to be effective, Treasury must move beyond asking servicers to participate and offering only incentives and move to a model where participation and performance are required.

1. Stop all foreclosure actions while borrowers are being evaluated for HAMP loan modifications.
2. Mandate faster response time from servicers. Servicers should respond to borrowers seeking modification within 30 days and protect borrowers from when their servicer is not responsive in a timely manner.
3. Institute an independent appeals process for borrowers.
4. Increase transparency in HAMP. Treasury should make the NPV model available to the public and should make loan level HAMP data – analogous to the data disclosed under the Home Mortgage Disclosure Act – available to the public.
5. Get rid of onestrike policies. Given the current economic environment, it is very likely that some homeowners who receive HAMP loan modifications will suffer subsequent reductions or interruptions in income. Under current HAMP policy, these homeowners cannot apply for a new loan modification. This policy should be changed for borrowers with involuntary reductions in income, such as unemployment, divorce or death of a spouse, or medical debt.
6. Provide access to HAMP for homeowners in bankruptcy. 
7. Mandate the use of principal reduction to achieve affordability and create sustainable loan modifications. 8. Use TARP funds to institute a program of grants or loans to unemployed homeowners facing default and foreclosure.