The U.S. Dept. of the Treasury and the Dept. of Housing and Urban Development (HUD) have released updated guidance for servicers participating in the Obama administration’s Home Affordable Modification Program (HAMP). The guidelines, designed to help improve the conversion from trial loan modifications to permanent modifications, takes effect June 1; however, mortgage servicers may elect to implement the guidelines sooner.

The updated process requires that servicers collect three documents upfront: A formal application, including a description of the hardship created by the mortgage; proof of income, such as two recent pay stubs or the most-recent profit and loss statement for self-employed borrowers; and a form authorizing the Internal Revenue Service to release tax data to the servicer.

Under the plan, servicers also will be required to respond within 10 days to an initial request for a modification. Once documents are provided, the servicer will have one month to let borrowers know whether they qualify for a trial modification.

For more information about the new guidelines, please visit: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-021.