The Mortgage Bankers Association has detailed the features of a proposal to succeed the soon-to-be-defunct Home Affordable Mortgage Program.
The proposed successor program is currently called "One Mod" and was developed by an MBA task force focused on the future of loss, which included representatives from 20 member companies. The program would offer at least a 20% payment reduction for eligible borrowers.
"MBA's task force recognizes that the industry, borrowers and investors need a successor to HAMP that is consistent and can be widely scaled," said Pete Mills, MBA senior vice president of residential policy and member services, in a news release Friday.
"Application of the task force's principles and the 'One Modification' or 'One Mod' will go a long way towards offering deep payment relief for struggling homeowners and a positive economic outcome for investors."
The program proposal features 10 principles along four themes: accessibility, affordability, sustainability and transparency.
For instance, One Mod would only require consumers to submit documents related specifically to their eligibility for a modification. Additionally, the program would provide modification options based on criteria that has a noted effect on default rates and that aims to maximize relief received with the first offer. The decrease in mortgage payments would also be immediate following modification.
The program would also work to differentiate between short- and long-term financial hardships and would engrain disclosure regarding the loss mitigation options available and why consumers received an approval for a particular option.
On the investor side, One Mod should produce favorable results and would allow for simultaneous home retention and liquidation options.
MBA members hailed the proposal, with Mike Malloy, vice president of servicing at Quicken Loans, saying in the release that it "resolves many of the barriers that homeowners seeking payment relief faced during the process of applying for a home loan modification."
