On January 28, 2010, the Treasury Department and Department of Housing and Urban Development (HUD) released updated guidance for the mortgage servicers who initiate the modifications and monitor the trial periods. The guidance refines the documentation requirements and other procedures in order to expedite conversions of current trial modifications to permanent ones.
Phyllis Caldwell, Chief of Treasury’s Homeownership Preservation Office states that the “guidance represents our commitment to more efficiently move qualified homeowners into permanent modifications.”
“Increasing the number of borrowers receiving permanent modifications under HAMP is critical to our efforts to preserve affordable and sustainable homeownership,” said HUD Senior Advisor for Housing Finance William Apgar. “While we continue to meet our goals to provide immediate assistance, the updates announced today should enable servicers to transition borrowers more quickly and easily from trial to permanent modification.
Supplemental Directive 10-01 provides guidance on two major issues:
- New Requirements that Documentation be Provided Before Trial Modification Begins
A simple, standard package of documents will be required prior to the servicer’s evaluation of the borrower for a trial modification. This process will be required for all new HAMP modifications that became effective after June 1, 2010, although mortgage servicers may implement it sooner. The following documents, referred to as the “Initial Package” must include:
- Request for Modification and Affidavit (RMA) Form
- IRS Form 4506-T or 4506T-EZ (Request for Transcript of Tax Return)
- Evidence of Income
Step 1 – Complete the RMA Form
The RMA Form provides the servicer with borrower and co-borrower financial information including the cause of the borrower’s hardship. The financial information and hardship sections of the RMA must be completed and executed by the borrower and, if applicable, the co-borrower. The RMA also solicits data related to the race, ethnicity and gender of the borrower and co-borrower, referred to as Government Monitoring Data (GMD). The borrower and co-borrower are not required to provide GMD. Servicers may not refuse to accept an RMA because the borrower or co-borrower did not complete this section. Click here for instructions for completing the form.
Servicers may require use of the RMA by all borrowers requesting consideration for HAMP or may continue to use other proprietary financial information forms that are substantially similar in content to the RMA. When provided by or on behalf of the borrower, the RMA form must be accepted by servicers in lieu of any servicer specific form(s). When the RMA is not used, servicers must obtain an executed MHA Hardship Affidavit.
The IRS Form 4506-T or 4506T-EZ gives permission to your mortgage servicer to request a copy of your most recent tax return you have filed with the Internal Revenue Service (IRS). After you have completed the form, print two copies – one for your records and one to send to your mortgage servicer. Only one taxpayer is required to sign to Tax Form. Click here for instructions for completing the form.
Step 3 – Gather Evidence of Income
Your mortgage servicer is required to verify your income to ensure that the modified mortgage payments will be affordable for you. The type of documentation you need to provide depends on the source of your income. The simple Proof of Income Checklist will tell you what documents you need to collect if you are a wage earner, self-employed, or receive retirement income. Be sure to make copies of your income documentation and keep the originals for your records.
***Note: The income evidence and financial information provided by the borrower may not be more than 90 days old as of the date the Initial Package is received by the mortgage servicer.***
Step 4 – Send the Documentation to your Servicer
After you complete, print, and sign the RMA and Tax Form, send these documents, along with your proof of income, to your mortgage servicer. You will find the correct mailing address and fax number at Contact Your Mortgage Servicer.
***Note: For all documents required by Treasury (other than the Tax Form), electronic submission and signatures are acceptable.***