A recent court decision highlights the federal Home Affordable Modification Program (also known as “HAMP”). HAMP was established to assist eligible home owners with loan modifications on their home mortgage debt, and it is part of the Making Home Affordable Program which was created by the Financial Stability Act of 2009.
In Aames Funding Corporation v. Houston, 2011 NY Slip Op 5642 (2d Dept.), a judgment of foreclosure sale was entered against the homeowner, and a year later the Supreme Court granted the lender’s motion to extend a notice of pendency for an additional three years. Several years after the notice of pendency was granted, the homeowner was notified by America’s Servicing Company (also known as ASC, which is the homeowner’s loan servicer) that the homeowner might be eligible for federal HAMP assistance. As a result, the homeowner submitted an application to ACS. When the application when pending, however, the lender published a notice of foreclosure sale.
In response to the notice, the homeowner moved for an emergency stay (postponement) of the foreclosure sale pending a determination on his HAMP application. The Appellate Division, Second Department held for the homeowner and ordered the stay, citing Version 2.0 of the “Making Home Affordable Program Handbook,” which states the following: “a servicer may not refer any loan to foreclosure or conduct a scheduled foreclosure sale unless and until the borrower is evaluated for HAMP and is determined to be eligible for the program.”
Salvatore R. Marino, Esq.