WASHINGTON — The Federal Housing Administration issued a mortgagee letter last week reminding lenders that it can hit them with treble damages if they don’t try to work with distressed borrowers.

“There is really nothing new here. We already had both incentives and treble damage penalties in place. But, given the increase in defaults and foreclosures, FHA thought it was important to remind servicers of the requirement for effective loss mitigation and the consequences of failing to provide borrowers with this support,” said FHA spokesman Lemar Wooley.

“Our average conveyance claim is $110,000. That means if a servicer fails to offer loss mitigation to a customer, it could be liable for a $330,000 penalty,” he explained.

Lenders can avoid the penalty by taking three steps: First, mortgagees must ensure that loss-litigation evaluations are completed for all delinquent mortgages before four monthly installments are due and unpaid.

Second, mortgagees must ensure that the appropriate action is taken based on these evaluations.

Third, mortgagees must maintain documentation of all initial and subsequent loss-mitigation evaluations and actions taken.

The FHA said it will not consider a mortgagee to have failed to attempt loss mitigation where the mortgagee can demonstrate that a borrower was uncooperative or ineligible.

Earlier this year, Freddie Mac increased the financial incentive it pays servicers who help families avoid foreclosure and launched a mass modification pilot program in addition to its regular modification programs. Fannie Mae increased its financial incentives to lenders in July, offering $700 for loan modifications and $400 for repayment plans.