HAMP (Home Affordable Modification Program) and Bankruptcy

The Los Angeles Times is reporting that three of the nation’s banks have been chastised by the Obama administration for failing to make what the administration declares are “substantial improvements” in the Home Affordable Modification Program or HAMP.

Bank of America, JPMorgan and Wells Fargo may lose out on large financial incentives that they have been receiving through the HAMP foreclosure relief program if their business practices do not substantially improve.

The Federal HAMP program has offered over $75-billion to banks to give them incentives to help owners with the mortgage modification program. This program has been consistently criticized by Republicans and other consumer advocates as ineffective and opponents claim it continues to fall short of its goal to solve the housing crisis.

The Treasury Department has stated that there will be no more payments made to these banks until they can improve their performance. Paul Leonard, California director for the Center for Responsible Lending applauded the action of the Treasury Department stating, “We’re two years into the modification program and only now is the Treasury Department taking action to enforce its own program rules. Unfortunately, it comes too late for all the thousands of borrowers who have already passed through the program into foreclosure.”

The banks had mixed reaction to the news. JPMorgan Chase and Wells Fargo did not agree with the Federal Governments evaluation of their progress with the program, and Wells Fargo said they would attempt to contest the data. Bank of America claims they have made significant progress with their efforts but concede that they may still have work to do.

A spokeswoman for Bank of America claims that. “The report reviews activities that date back a year or more and in no way reflects the improvements Wells Fargo has made in our processes and the work we have done to help homeowners.”

The Federal Government highlights the failures of Bank of America and their need to improve their efforts to contact and identify borrowers who may participate in the program, identify how the bank makes their decisions and evaluate whether the right incentive payments are being made through the HAMP program.

Apparently, out of the top 10 HAMP service providers, no company has managed to meet the Federal Governments benchmarks. Republicans and proponents all agree; substantial improvements are needed by everyone if the goal of helping 3 million to 4 million borrowers escape foreclosure by December 2012 is to be met.

HAMP and Bankruptcy

According to a news reports, the Home Affordable Modification Program (HAMP) now allows desperate homeowners to qualify for HAMP, even if they have filed for bankruptcy. Under the new guidelines, bankruptcy filers may ask their lender for a loan modification even if they have filed a Chapter 7 or Chapter13 Bankruptcy. Now services providers are required to consider the filer’s request and the bankruptcy attorney or the trustee may be asked to submit the HAMP request.

Keep in mind that if you have already filed for Chapter 13 Bankruptcy the trail period for the loan modification, which is generally required, may be waived or a waiver request may be made by your bankruptcy lawyer.

How do you apply for a modification? Talk to your bankruptcy attorney and find out all the details of what you need to do. In general, to request a loan modification you will need to submit a Request for Modification and Affidavit (RMA), a Tax Authorization Form (form 4506-EZ) and proof of income. Bankruptcy filers will also have to submit copies of their bankruptcy petition and bankruptcy schedules.

Hiring a Bankruptcy Lawyer

Everyone’s financial situation is different, and filing for bankruptcy is an important financial decision. Do not file for bankruptcy without understanding how it can affect your financial future. Keep in mind that filing for bankruptcy may allow you to avoid home foreclosure, wage garnishments, bank account levies and creditor harassment.

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Beth L. is a content writer for Better Bankruptcy. Good content and information is one of many methods we utilize to bring you the answers you need.