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18.9 ACCELERATION
When a servicer determines that a borrower is unable or unwilling to meet loan obligations and there is no reasonable prospect of resolving the delinquency the servicer should determine eligibility for streamline options as described below. If the borrower is ineligible for the streamline option or fails to complete the streamline option in any way, the servicer should initiate liquidation proceedings. In all cases, a demand letter should be sent to the borrower within five days of when the borrower missed their third consecutive payment and will include the following:
x Reason the notice is being sent (e.g., default or abandonment).
x The action required to cure the default.
x A date established to cure the default.
A. Final Offer (Streamline Option)
If the loan meets all the following criteria, the servicer may send a final alternative to foreclosure offer with no documentation required from the borrower. The lender should continue to meet all foreclosure obligations and timelines during this solicitation. If the borrower responds with the initial trial payment, the servicer may place the foreclosure on hold.
x The loan is greater than 90 days past due. x The loan has an unpaid principal balance of at least $5,000. x The borrower has made at least 12 mortgage payments since origination. x The borrower is not currently being reviewed for any loss mitigation. x The terms below must result in a reduction of the borrower principal and interest
payment by at least 10%.
The terms of the streamline option shall be as follows:
x The interest rate may be modified. x The loan repayment period may be extended in one month increments to the
maximum term allowable, not to exceed 480 months.
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x The borrower must demonstrate a willingness and ability to pay by making three
consecutive trial payments, all of which must be made in the month they are due. x Once the trial is complete the borrower must execute a final modification
agreement within 60 days of the last trial payment that includes a hardship affidavit attesting that they occupy the property as a principal residence and have suffered a financial hardship that created an involuntary inability to afford the current mortgage payment. This agreement can be sent after two trial payments are received.
Lastly, the borrower will not qualify for a streamline option if any of the following exclusions apply:
x The borrower has had two or more modifications. x The borrower is in bankruptcy proceedings. x The borrower is deceased. x A foreclosure sale is completed or scheduled in the next 60 days. x A deed-in-lieu/short sale has been completed. x The borrower is involved in any litigation impacting the loan. x There are indications of potential fraud.
Any streamline option made to the borrower shall have a 30-day expiration date. If the borrower fails to respond prior to the expiration of the solicitation, the servicer may, at its discretion, extend that offer an additional 30 days. If the borrower fails to respond with an initial trial payment or otherwise fails the trial, the borrower shall be ineligible for any future final offer under this section.