The Obama Administration is considering further sanctions against Lenders who foreclosure before all Home Affordable Modification Program options have been explored.  The HAMP guidelines strongly urge Lenders to look at all options before foreclosing, but falls short of requiring Lenders to examine every severely delinquent account one by one before sending out a Notice of Default.  If the more stringent requirement is enacted Lenders would need to contact all borrowers who are 60 days or more late in order to determine eligibility for a HAMP modification or HAFA short sale.

The change would also require Lenders to stop all foreclosure activity against those who have been accepted into the modification program.  There have been many complaints from families who have begun making approved modified payments and have still been subjected to foreclosure filings.

The Administration says an outright ban on foreclosures before all other measures are exhausted is just one of the options under consideration in order to salvage what has widely been seen as a failed foreclosure rescue program.

Another proposal under consideration is a mortgage write down, which will require rewriting the net present value formula used by lenders to determine whether they will make more money by foreclosing or by modifying the loan.