U.S. Wants Servicers to Verify HAMP Participant Eligibility Up Front

The Obama administration wants servicers to start verifying borrowers' income and eligibility for the Home Affordable Modification program upfront before they start the three-month payment trial. Under the new guidance from Treasury and the Department of Housing and Urban Development, HAMP servicers are expected to a use a "simple, standard package of documents" including pay stubs, to qualify borrowers starting June 1 or sooner. This update "should enable servicers to transition borrowers more quickly and easily from trial to permanent modification," said HUD senior advisor William Apgar. In jump-starting the HAMP program last spring, servicers were allowed to place borrowers into trial modifications without checking their income. This rush has resulted in a low rate of conversions to permanent modifications. Some servicers, including CitiMortgage, have already started verifying income up front. "We believe this will limit the number of borrowers who ultimately fall out of the trials," said a Citi official.