Loss Mitigation: US Treasury/GSE Programs
US Treasury Programs
HAMP
HAMP is part of the US Treasury’s Home Affordability & Stability Plan and is designed to help at-risk homeowners by providing a framework for consistent handling of modifications.
Servicers have delegated authority from MGIC to modify loans that meet HAMP criteria:
See the US Treasury’s HAMP website for more information.
US Treasury Home Affordable Foreclosure Alternatives Program (HAFA)
The US Treasury’s HAFA program provides additional options to avoid foreclosure and offers incentives to borrowers, servicers and investors who use a short sale or deed-in-lieu to avoid foreclosures.
MGIC delegates authority under HAFA if the short sale complies with MGIC Delegated Guidelines for short sales. To better understand MGIC’s guidelines with regard to HAFA, please review this overview document.
Home Affordable Unemployment Program (HAUP)
The US Treasury's HAUP program provides assistance to borrowers who are unemployed. Servicers are now required to consider borrowers for this program, which grants a forbearance plan during which regular monthly mortgage payments are reduced or suspended for unemployed borrowers.
You have delegated authority to modify MGIC loans that meet HAUP criteria as set by the US Treasury as long as it complies with MGIC's guidelines for forbearance.
US Treasury — Hardest Hit Funds (HHF)
Program Overview
Most states involved in the Hardest Hit Funds ("HHF") have developed several programs which may be administered by the Housing Finance Agency ("HFA") within each state designed to assist borrowers with either home retention or disposition alternatives to foreclosure. The basic program types are described below (specific criteria of each program may vary from state to state) along with MGIC's position on approval of each.
Unemployment Assistance
Borrowers may be eligible to receive subsidy payments to assist them in making their mortgage payments during periods of unemployment or underemployment.
- MGIC requirements: Participation does not require MGIC approval.
Mortgage Reinstatement Assistance
Borrowers may be eligible to receive funds to pay up to half of their mortgage loan arrearage. Typically, the lender must agree to match that amount in order to facilitate the full reinstatement.
- MGIC requirements: Participation does not require MGIC approval.
Modifications
Some states have supplemented standard modifications with a principal forgiveness element which allows for HHF money to be applied to the outstanding principal balance to reduce negative equity. Typically, the lender must agree to match the amount of principal forgiveness paid by the HHF.
- MGIC requirements:
- Modifications that meet MGIC Delegated Guidelines do not require prior approval. However, these modifications must be reported to MGIC.
- Modifications that fall outside of the MGIC Delegated Guidelines must be approved before they are completed by submitting a request for approval to MGIC.
Transition Assistance
In the event a borrower has no retention option and participates in a short sale or deed in lieu transaction, relocation assistance may be provided through the HHF.
- MGIC requirements:
- A short sale or deed in lieu would either fall under MGIC's Delegated Guidelines or be approved on a case-by-case basis.
- The acceptance of transition assistance would not require MGIC approval.
Second Lien Reduction Assistance
In cases where a subordinate lien may be preventing a loan modification, short sale or deed in lieu, HHF funds may be available to assist the borrower in negotiating a payoff of those liens.
- MGIC requirements:
- Short sales or deeds in lieu do require MGIC approval.
- Acceptance of this assistance would not require MGIC approval.
