The government-established and monitored modification program known as HAMP (Home Affordable Modification Program) ended somewhat quietly at the end of last year for applications submitted in the new year or for loans transferred from one servicer or lender to another after September 30, 2016. HAMP was established to help the countless homeowners who become unable to afford their mortgage payments during and after the housing crisis. While HAMP had not provided the means for homeowners to bring private lawsuits against lenders and servicers for HAMP violations, it provided a set of beneficial guidelines that federally-subsidized lenders and most major servicers were required to follow. We are now in somewhat uncharted territory for post-housing crisis residential mortgage loan workouts.
However, New York homeowners still have protection notwithstanding HAMP’s termination. Borrowers are required to enter mediation in foreclosure actions and are required under New York law to consider borrowers for non-foreclosure options in good faith before having the opportunity to foreclosure a residential property.
In addition, New York bankruptcy courts maintain loss mitigation programs that impose similar obligations on lenders and sevicers along with other provisions providing borrowers a seat at the negotiating table and a shift in the leverage between a debtor and a creditor.
While HAMP was a valuable tool in standardizing loan modification schemes for disparate borrower/servicer relationships, well guided homeowners still have remedies to ensure fair treatment and the ability to convince lenders that, very often, a modification of a mortgage in default is often the best resolution for both a homeowners and a lender.