NEW YORK (TheStreet) -- Mortgage servicers have begun accepting applications for the government's expanded Home Affordable Modification Program that took effect on June 1, the U.S. Treasury said on Wednesday.
The expanded program announced in January will triple the incentives paid to investors to offer principal reductions under the HAMP program.
It will also require servicers to consider homeowners who rent out their properties for mortgage modifications, as well as provide more assistance to borrowers struggling with other debt burdens besides first mortgages, such as second liens and medical bills.
"The Administration's programs have established critical standards and accountability for mortgage servicers that have compelled the industry to provide higher quality assistance to struggling homeowners; however, servicers still have more work to do," said Treasury Assistant Secretary for Financial Stability Tim Massad in a statement. "This month, expanded eligibility for the Making Home Affordable Program becomes available to help more families benefit from the program's sustainable assistance and homeowner protections."The Department of Housing and Urban Development and the Treasury released on Wednesday the May edition of the Obama Administration's Housing Scorecard. As of April, more than one million homeowners have received a permanent HAMP modification, saving approximately $535 on their mortgage payments each month, and an estimated $12.7 billion to date, the Treasury said. Eighty-six percent of homeowners entering the program in the last 22 months have received a permanent modification, with an average trial period of 3.5 months. Seventy percent of non-GSE customers entering HAMP in recent months have received some form of principal reduction with their modification. Those participating in the HAMP Principal Reduction Alternative (PRA) have seen a median principal reduction of $68,267 - or 31 percent. Mortgage servicers continue to show broad improvement in implementation of the modification program. No servicers were found in need of substantial improvement in the first quarter, the Treasury said. Last year, Treasury withheld incentives to some of the biggest banks including JPMorgan Chase (JPM) and Bank of America (BAC) after finding them falling short on implementing the mortgage modification program. -- Written by Shanthi Bharatwaj in New York.
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