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What To Do When Your Servicer Says “the Investor Is Not Participating” in HAMP

1. Ask who the investor is.

  • Servicers participate, not investors.
  • You can do a 15 U.S.C. 51641(0(2) request to the servicer to identify the holder of your loan; the servicer is liable for statutory damages and attorney fees if it doesn't respond. Note: Send this request by certified mail.
  • Under HAMP Sup. Dir. 10-02, after June 1, 2010, servicers must provide Fannie Mae with a list of investors who are not participating. You can request this list and if your servicer does not provide it, this list could be obtained by your lawyer if a lawsuit is filed on your behalf.
  • If the loan is a Freddie, Fannie, or FHA loan, the servicer has to review for HAMP and offer a Freddie, Fannie or FHA HAMP modification if the homeowner qualifies. (Freddie and Fannie are the "investors," and you can find out if they hold your loan from their websites; FHA is the mortgage guarantor and requires FHA HAMP participation).

2. If there is mortgage insurance on the loan, contact the mortgage insurance company.

  • FHA-insured loans must be evaluated for FHA HAMP.
  • Private mortgage insurers may be involved in evaluating loans for modification; unlike the servicer, they stand to lose money if the loan forecloses.

3. Ask the servicer to identify the document forbidding the servicer from offering a HAMP modification.

  • Investors do not make these decisions on a case-by-case basis; the directive will likely be in a PSA. Few PSAs forbid all modifications.
  • Even if there is a conflict between the PSA and a HAMP modification, HAMP allows the servicer to skip steps in the waterfall if required by the PSA or to substitute amortization extension for term extension. See HAMP FAQs 2301, 2304.

4. Ask the servicer what "reasonable efforts" they've taken to get the investor to waive the restrictions on HAMP modifications in the PSA.

  • Reasonable efforts are required by HAMP Sup. Dir. 09-01, p. 1.
  • Under HAMP Sup. Dir. 10-02, effective June 1, 2010, the servicer must write to the investor requesting a waiver at least once.

5. Call Howard Law, P.C. at 1-800-872-5925 for assistance with your loan modification today. We have helped many homeowners who have been previously rejected by their lenders for a HAMP or other loan modification.

- July/August 2010, NCLC Reports Bankruptcy and Foreclosures Edition