On Friday, April 24 2015, the FHA and HUD issued a press release detailing “significant changes” to the Distressed Asset Stabilization Program or DASP. According to HUDNo 15-048, “In an effort to better serve homeowners looking to avoid foreclosure, loan servicers will now be required to delay foreclosure for a year and to evaluate all borrowers for the Home Affordable Modification Program (HAMP) or a similar loss mitigation program.”
“HUD is making additional improvements to the Neighborhood Stabilization Outcome (NSO) sales portion of DASP which are aimed at increasing non-profit participation. Updates include giving non-profits a first look at vacant properties, allowing purchasers to re-sell notes to non-profits, and offering a non-profit only pool.”
That is a major alteration from the old standard, which permitted lenders to foreclose on a home, “6 months after they received the loan”.
The press release adds that lenders were encouraged, “to assess a borrowers qualifications for loss mitigation programs.” Lenders were not required to do so under the old program. The previously mentioned requirement that a lender assess delinquent borrowers for suitability for a home loan modification program did not include a start date for that requirement, but it’s likely FHA/HUD will publish more information on this new program that includes start dates.
“These changes reflect our desire to make improvements that encourage investors to work with delinquent borrowers to find the right solutions for dealing with the potential loss of their home and encourage greater non-profit participation in our sales,” says Genger Charles, Acting General Deputy Assistant Secretary, Office of Housing. He adds, “The improvements not only strengthen the program but help to ensure it continues to serve its intended purposes of supporting the MMI Fund and offering borrowers a second chance at avoiding foreclosure.”
The FHA and HUD press release adds that the new changes, “will be subject to stronger reporting requirements including tougher penalties for not complying with quarterly reporting responsibilities and a new requirement to report on borrower outcomes, even when a note is sold after the original purchase.”
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