A special indulgence is only available to the unemployed and constitutes a written agreement between a service provider and a borrower to skip or make part-time payments for a period of time. Borrowers who are at least three months behind on payments may be eligible for payments. The maximum allowable delinquency is 12 months of payments, with all unpaid payments added to the mortgage balance and paid over time. Specific leniency agreements must provide a minimum of 12 months for re-employment and require an after-the-fact evaluation for a more sustainable solution (loan modification, FHA-HAMP) in order to finally get the loan back on track. Recommendation: The HUD Secretary should order that the contractor`s recommendations regarding training agreements and silos be closely monitored. In order to strengthen HUD`s adherence to the contractor`s recommendations, HUD should implement the recommendations of the Inspector General`s report of October 20, 1982 and adopt the Statement of Principles on Staff Designation in each office, outlined in the June 18, 1982 Statement of Principle, to engage in the areas of training analysis and modification. Informal indulgence is usually a verbal agreement negotiated between you and the loan guarantor, and is intended for temporary interruptions in your payment flow of three months or less. Formal leniency plans are written agreements for catch-up periods of more than three months, but not more than six months. This is a 90-day extension granted to those who have been denied a credit change and whose mortgage and property are transferred to the enforcement procedures. Borrowers who wish to keep their home will have additional time to appeal and continue mortgage changes or to remedy the default. Recommendation: The HUD Secretary should order that the Region III contract be further amended to clarify the payment rules for partial payments resulting from a number of non-monthly payments, the transfer of credits from additional payments to the following months and the calculation of fees for lump sum payments collected under training agreements.
Similar measures should be taken for the proposed national contract if HUD decides to maintain the payment rules for Region III.