President Obama and his administration are floating an idea to prohibit lenders from foreclosing on a home unless the borrower has been considered for the government's Home Affordable Modification Program (HAMP). The proposal would require servicers to initiate contact with all borrowers who are 60 or more days behind on their mortgage payments and offer them access to the federal modification program. Only after the homeowner has been screened under the HAMP guidelines and it is determined that the loan cannot be saved, could foreclosure proceedings commence. The proposal would also halt any foreclosures already in process once a borrower has been accepted into the trial phase of the program.
The proposal was reviewed by lenders last week on a White House conference call and "prohibits referral to foreclosure until the borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed," Bloomberg News reported, citing a Treasury Department document outlining the plan. A Treasury spokesperson confirmed that a foreclosure ban is under consideration, but stressed that it is one of many ideas on the table and has not been approved yet.
