Thursday, January 28, 2010
Loan Modifications - Part Deux'
Under fire for the low number of people receiving long-term mortgage help, the Treasury Department on Thursday announced new guidelines that will require applicants to provide all paperwork before getting a trial modification.
The new rules, which start June 1, will effectively shift the paperwork burden to the start of the process.
"They aim to make it easier and quicker to provide permanent modifications," said Treasury Assistant Secretary Herb Allison. "These changes also will enable servicers to process more efficiently and handle more volume effectively so we can help more people more rapidly."
Distressed borrowers will have to fill out a three-page request form that asks them to explain their hardship and list their income and expenses. They will also have to sign an IRS 4506-T form that allows servicers to pull their tax returns. Both forms are available on the Making Home Affordable program's Web site.
Also, applicants will have to verify their income. For those earning a salary, two recent pay stubs will be sufficient. Other earnings, such as income from self-employment, benefits, or rental properties, must still be documented.
Those who are approved for trial adjustments and make three timely payments will be automatically converted to long-term modifications.