In the wake of the 2008 financial crisis, many people blamed the housing bubble. This was apparently a combination of over-construction of houses as well as systemic use of bad lending practices in the banking and mortgage industries. Whatever the reasons, many Americans, including Illinois residents found themselves facing losing their homes to foreclosure. Because of this, in 2009 the federal government introduced the Making Home Affordable Program. This initiative consisted of two parts, one of which was the Home Affordable Modification Program. HAMP expired at the end of 2016, but Fannie Mae and Freddie Mac, two government-sponsored corporations that deal in secondary mortgage markets, have announced replacements.
First, let’s take a look at what the HAMP program meant for people who were in danger of having their houses foreclosed on by their mortgage holders or servicers. Many homeowners are likely familiar with letters received periodically about their mortgages that say that such-and-such a company is now servicing the loan. In many cases, the institution that originally extended the mortgage to the customer has sold the asset of the mortgage to a servicer. These are the entities that collect the money for the mortgage and, if necessary, begin foreclosure proceedings. Many of these servicers are connected in one way or another to Fannie Mae and Freddie Mac.
HAMP required that mortgage holders and servicers evaluate homeowners for eligibility for HAMP modification in their mortgage payments before referring a case for foreclosure or conducting foreclosure sale. If the borrower has requested a modification or appealed a denial of a modification at least seven business days before a foreclosure sale, the sale must be suspended. If a homeowner is accepted for a trial plan under the program, foreclosure must be suspended.
As stated above, the HAMP program is no longer active. However, when announcing the now Flex-Modification program that will begin in October 2017 as a replacement for HAMP, Fannie Mae and Freddie Mac have said that servicers are still required to evaluate debtors for modification until that time. Whether any homeowner’s situation will qualify for this kind of foreclosure alternative will depend on very specific circumstance in each individual case, so those with questions may wish to consider consulting an experienced Illinois attorney.