PRINCIPAL REDUCTION ASSISTANCE PROGRAM ( PRP ) Operational Term Sheet

Transcription

1 PRINCIPAL REDUCTION ASSISTANCE PROGRAM ( PRP ) Operational Term Sheet All homeowner intake, counseling, eligibility and benefit determination, and KYHC program benefit processing will be performed by the CalHFA MAC Keep Your Home California Central Processing Center ( CPC ) except where specifically indicated in Section 4 (Servicer Program Requirements). KYHC-approved HUD counseling agencies are eligible to perform homeowner intake and counseling activities. 1. Homeowner/Loan Eligibility Criteria For the homeowner/loan to be eligible: 1.1 Homeowner* must qualify as a low-to-moderate income household. The low-to-moderate income limit for a household in the county in which the homeowner resides is as posted on the Keep Your Home California website at the time of the request for assistance. 1.2 Mortgage loan is delinquent or meets the CalHFA MAC definition of imminent default as substantiated by homeowner s hardship documentation. 1.3 A pre-assistance loan to value ratio of 120% or greater is considered a hardship indicative of imminent default. 1.4 Loans in foreclosure may be eligible. 1.5 Current, unpaid principal balance ( UPB ) (includes the interestbearing unpaid principal balance and any existing non-interest bearing forbearance balance) of the first lien mortgage loan is not greater than $729, Homeowner agrees to provide all necessary documentation to satisfy program guidelines established by CalHFA MAC. 1.7 Homeowner has adequate income to sustain the post-assistance contractual monthly first lien mortgage payment per CalHFA MACapproved investor guidelines. 1.8 When homeowner s pre-assistance contractual monthly first-lien mortgage payment is determined unaffordable by CalHFA MAC, the Servicer will reduce the qualifying principal balance in conjunction with a loan recast or modification to help the homeowner achieve an affordable contractual monthly first-lien mortgage payment and an appropriate level of debt per CalHFA MAC guidelines. Such loan modifications must meet the CalHFA MAC modification guidelines as defined in section * Homeowner is defined as a person(s) obligated to pay the loan as evidenced by the first lien Mortgage Note, and includes their legally married spouse or Registered Domestic Partner. PRP Ops Term Sheet Version 14.0 Page 1 of 12 Revised January 1, 2016

2 2. Property Eligibility Criteria For the property to be eligible the property is: 2.1 Located in California. 2.2 A single family, 1-4 unit home (an attached or detached house or a condominium unit). Mobile homes are eligible if they are permanently affixed to the real property that is secured by the first lien. 2.3 A Home Equity Line of Credit (HELOC) in first lien position is ineligible for consideration. Includes any open-ended Deed of Trust. 2.4 The homeowner s primary owner occupied residence. 2.5 Not abandoned, vacant, or condemned. 3. PRP Program Eligibility Criteria 3.1 Program-specific eligibility is determined by the CalHFA MAC CPC on a first-come/first-approved basis until program funds and funding reserves have been exhausted. 3.2 Homeowner is not required to complete Foreclosure Prevention or Debt Management counseling. KYHC counseling is for the sole purpose of determining conditional program eligibility and is not intended to meet, supplement or substitute for other HAMP or Servicer-required counseling. 3.3 Homeowner must complete, sign and deliver to the CPC a KYHC Hardship Affidavit / 3rd Party Disclosure and Homeowner Acknowledgement or a CalHFA MAC approved form that documents the reason for the hardship. 3.4 Homeowners who have recently encountered a financial hardship due to underemployment or unemployment, including those whose unemployment hardship is related to their military service. Including but not limited to: Members of the California National Guard or military reserves ordered to federal active duty. Any active duty military personnel who were transferred and required relocation. Any formerly active duty military personnel who have been honorably discharged within the prior six months. 3.5 Homeowner s pre-assistance monthly first lien mortgage payment (principal, interest, property taxes, insurance and homeowner s association dues or assessments, as applicable), calculated on UPB must be equal to or greater than 25% of the homeowner s gross monthly household income, excluding temporary income*, as determined by CalHFA MAC at the time of a homeowner s request for assistance. * Short term disability may be included if the homeowner is still employed. 3.6 Temporary income; e.g. unemployment benefits may not be used to qualify for PRP assistance. PRP Ops Term Sheet Version 14.0 Page 2 of 12 Revised April 1, 2016

3 3. PRP Program Eligibility Criteria (cont.) 3.7 Documentation to support income cannot be older than 90 days of the date of determination of eligibility for KYHC benefit. 3.8 PRP will provide monies to reduce the principal balance of the first lien mortgage in connection with a loan recast, modification or a stand-alone curtailment, each with the purpose of establishing an appropriate level of affordability and/or debt for eligible homeowner with qualifying properties. 3.9 Homeowner s pre-assistance, monthly first-lien mortgage payment (principal, interest, taxes and insurance, as applicable) including any escrowed homeowner s association dues or assessments, is greater than 38% of the gross household income excluding temporary income* (e.g. unemployment benefits may not be used to qualify for PRP assistance) and/or a homeowner s pre-assistance LTV ratio is greater than 100%. * Short term disability may be included if the homeowner is still employed Delinquent homeowners with a pre-assistance LTV of greater than 100% but less than 120% must be able to demonstrate that an eligible hardship caused their contractual monthly first-lien mortgage payment to be unaffordable (e.g., reduction of income or increase in unavoidable expenses as per program guideline) PRP funds may be combined with a HAMP or proprietary loan modification program (that meets the CalHFA MAC modification guidelines as outline in section 4.10) to help eligible homeowners achieve an Affordable Payment and an appropriate level of mortgage debt, per KYHC guidelines PRP funds may be used to reduce or eliminate an existing non-interest bearing forbearance balance from a previous loan modification provided in all cases the interest bearing contractual monthly first-lien mortgage payment meets KYHC s definition of an Affordable Payment (=<38% DTI) at the time of final KYHC eligibility determination and final application of PRP funds to the loan PRP Recast assistance may be applied to a permanent HAMP loan. In all cases, the contractual monthly first-lien mortgage payment must meet KYHC s definition of an Affordable Payment (=<38% DTI) at the time of final eligibility determination (after receipt of Servicer V record) and final application of PRP funds to the loan The homeowner s post-assistance contractual monthly first-lien mortgage payment must meet CalHFA MAC s definition of an Affordable Payment not to exceed 38% DTI of the gross household income excluding temporary income* (e.g. unemployment benefits may not be used to qualify for PRP assistance). * Short term disability may be included if the homeowner is still employed CalHFA MAC reserves the right to review and approve investor guidelines that utilize affordable mortgage definitions greater than 38% DTI for loan modification programs. PRP Ops Term Sheet Version 14.0 Page 3 of 12 Revised April 1, 2016

4 3. PRP Program Eligibility Criteria (cont.) 3.16 If a qualifying, first-lien mortgage loan is delinquent, the Servicer must utilize the PRP monies to bring the mortgage loan current before applying PRP monies to the homeowner s principal balance Homeowner that is less than 21 days from a scheduled Trustee Sale will be evaluated on a case-by-case basis. PRP Ops Term Sheet Version 14.0 Page 4 of 12 Revised April 1, 2016

5 4. Servicer Program Requirements 4.1 Servicer will comply with CalHFA MAC KYHC reporting requirements as provided for in the KYHC Memorandum of Understanding ( MOU ) or Data and Reporting Exhibit, as applicable. 4.2 Servicer is required to obtain investor and/or mortgage insurance approval as applicable prior to acceptance and submission of the Common Data File ( CDF ) to the CPC. 4.3 Servicer should report a full file status report to the credit reporting agencies for each loan that receives KYHC Program assistance in accordance with Fair Credit Reporting Act as well as other applicable laws. 4.4 Servicer must have a signed MOU with Exhibits on file indicating participation in the Keep Your Home California PRP program. 4.5 Servicer is responsible to complete the CDF entries and submit the required information to the CPC via a secured FTP site. Servicer is required to comply with all CDF protocols and amendments as approved by the CDF committee and/or KYHC. 4.6 CalHFA MAC will require that the Servicer waive all accrued and unpaid late charges, NSF fees and recast fees at the time of the final modification or recast. 4.7 PRP benefits will not be disbursed to the Servicer without completion of all required fields for applicable CDF records, including but not limited to information contained in the ( V and X records). 4.8 PRP Recast benefit assistance may be applied to a permanent HAMP loan. In all cases, the contractual monthly first-lien mortgage payment must meet KYHC s definition of an Affordable Payment (=<38% DTI) at the time of final eligibility determination (after receipt of Servicer V record) and final application of PRP funds to the loan. 4.9 PRP funds may be used in conjunction with a loan recast, loan modification or stand-alone curtailment to achieve long term sustainability for the homeowner. Loan modifications that include PRP assistance may or may not include a rate reduction, an adjustment to term or additional forbearance or principal forgiveness. Principal forbearance may be used in conjunction with a loan modification to help the homeowner achieve an Affordable Payment, per the CalHFA MAC guidelines. PRP Ops Term Sheet Version 14.0 Page 5 of 12 Revised April 1, 2016

6 4. Servicer Program Requirements (cont.) 4.10 When PRP is combined with a servicer-provided loan modification, the following CalHFA MAC (KYHC) modification guidelines must be met; The maximum modified Note rate shall be no greater than the prevailing, Western Region, Primary Mortgage Market Rate (PMMS rate plus FIVE hundred basis points (5%))*. The maximum modified loan term cannot be greater than 480 months. If the total arrearage (which includes past due payments, corporate advances and escrow amounts) is greater than the maximum PRP benefit available to the homeowner, the servicer will be required to forgive the remaining arrearage amount. In all cases, the post-ltv condition may not exceed the pre-ltv condition and may not be less than 100%. If the first mortgage payment is past due greater than 24 months, CalHFA MAC reserves the right to require the homeowner to make 6 months trial payment plan before PRP funds are disbursed. If the trial payments are paid as agreed, CalHFA MAC will disburse funds as agreed. If the trial payments are not paid as agreed, the file will be ineligible for PRP assistance. An impound account is required for expenses such as homeowner s insurance and property taxes. A loan modification that includes an adjustable, step rate period, when combined with PRP assistance must have an initial term of at least five years before the interest rate adjusts. Step rate adjustments may not exceed one percent (1%) per annum. Interest-only loans are ineligible for PRP assistance (all utilities) unless the interest-only feature has converted to a fully amortizing loan or is modified to a fully amortizing loan Servicer may apply PRP monies as a stand-alone curtailment to reduce the homeowner s UPB in order to help establish an appropriate level of mortgage debt as determined by CalHFA MAC only when all five of the following conditions exist: Loan restricts a loan recast or modification (as provided by the servicer in the CDF record), Pre-assistance LTV ratio of 120% or greater,* Homeowner must not have liquid/cash assets (excluding retirement assets) equal to or greater than the amount of PRP assistance,* Pre-assistance contractual monthly first-lien mortgage payment meets CalHFA MAC s definition of an Affordable Payment.* and Post-assistance LTV ratio is greater than 100%*. * As determined by CalHFA MAC. PRP Ops Term Sheet Version 14.0 Page 6 of 12 Revised April 1, 2016

7 4. Servicer Program Requirements (cont.) 4.12 PRP benefits may be used to reduce principal including past due capitalized PITI (principal, interest, tax and insurance, as applicable) and any escrowed homeowner s association dues or assessments and corporate advances such as attorney fees, property inspection fees, escrow shortage and/or delinquent property taxes, one year of force placed standard homeowner s insurance, and other fees and expenses if such costs are advances paid on behalf of the homeowner. [see section 4.6] 4.13 PRP benefits may be used in conjunction with the HAMP PRA program subject to the following: KYHC PRP funds may not be used to qualify for HAMP PRA investor incentive compensation. Investor principal used in addition to KYHC PRP funds to achieve the required LTV ratio is eligible for HAMP PRA investor incentive compensation subject to HAMP PRA program guidelines If a qualifying, first-lien mortgage loan is delinquent, the Servicer must utilize the PRP monies to bring the mortgage loan current before applying PRP monies to the homeowner s principal balance Servicer may elect not to have a particular mortgage loan or borrower participate in any PRP transaction Servicer agrees to use the information provided in the KYHC Servicer Bulletins and Operational Term Sheets to maintain program knowledge and ensure proficient participation levels Servicer is responsible to determine loan modification eligibility and provide KYHC with the modification terms as referenced in approved CDF protocols All funded benefits will require a Servicer to confirm payment application per CDF P record protocols within 30 days of receipt of funds. F record no later than 60 days from receipt of funds If KYHC determines servicer CDF information results in an overfunding or funding of a transaction that would have otherwise been determined ineligible, KYHC reserves the right to seek reimbursement from the Servicer for benefits disbursed. Potential reimbursement conditions include but are not limited to: Misstated Forbearance, UPB and/or Principal Forgiveness, Failure to report Forbearance. Misapplication of funds (e.g. approved for Recast applied as Curtailment). Other material discrepancies determined through CalHFA MAC QC review. PRP Ops Term Sheet Version 14.0 Page 7 of 12 Revised April 1, 2016

8 4. Servicer Program Requirements (cont.) 4.20 Servicer should object to or withdraw from KYHC assistance if the following condition(s) are present: First mortgage loan s interest rate exceeds 10% per annum. Subject property loan is actively involved in litigation and/or insurance claim. Loan was made for non-residential/commercial purpose. PRP Ops Term Sheet Version 14.0 Page 8 of 12 Revised April 1, 2016

9 5. PRP Benefit Administration 5.1 CPC will determine homeowner eligibility and benefits for all KYHC programs and submit to CalHFA MAC for funding (see funding exhibit). 5.2 Funding reservation and allocation will be tracked, monitored and reported by CalHFA MAC in the CPC. 5.3 In the event that the homeowner s post-assistance LTV is less than 100%*, CalHFA MAC will structure the assistance as a non-recourse, non-interest bearing subordinate loan in favor of CalHFA MAC secured by a junior lien recorded against the property in the amount of the HHF assistance. At the conclusion of (30) thirty years, the subordinate loan will be released. Loan funds will only be repaid to Eligible Entity (CalHFA MAC) in the event of a sale or a refinance that includes cash out and there are equity proceeds available prior to forgiveness. * Includes principal forgiveness provided by the servicer, as applicable. 5.4 In the event that CalHFA MAC receives less than 100% match in funds by the lender/servicer and the homeowner s post-assistance LTV is 100% or greater, CalHFA MAC will structure the assistance as a nonrecourse, non-interest bearing subordinate loan in favor of the Eligible Entity (CalHFA MAC) secured by a junior lien recorded against the property in the amount of the HHF assistance. At the conclusion of (5) five years, the subordinate loan will be released. Loan funds will only be repaid to Eligible Entity (CalHFA MAC) in the event of a sale or a refinance that includes cash out and there are equity proceeds available prior to forgiveness 5.5 In the event that CalHFA MAC receives a 100% or greater match in funds by the lender/servicer and the homeowner s post-assistance LTV is 100% or greater, then CalHFA MAC will not structure the assistance as a loan. 5.6 P RP benefits are: Subject to the PRP program cap of $100,000. Subject to the total KYHC maximum household benefit cap of $100,000 with respect to monies previously received under KYHC programs. Available more than once ONLY IF the homeowner has a valid, subsequent qualifying hardship sufficient to be awarded additional benefits. Subject to KYHC program interaction restrictions (See KYHC Program Eligibility Restrictions). 5.7 PRP benefits will be paid to the Servicer according to KYHC Funding Schedule as provided in the MOU and the CDF. 5.8 All funded benefits will require Servicer confirmation of payment application per CDF P record protocols within 30 days of receipt of funds. F record no later than 60 days from receipt of funds. PRP Ops Term Sheet Version 14.0 Page 9 of 12 Revised April 1, 2016

10 5. PRP Benefit Administration (cont.) 5.9 PRP benefits are required to be repaid to CalHFA MAC by the homeowner prior to the date of loan forgiveness in the event of a sale or a refinance that includes cash out with sufficient net equity proceeds. Recovered funds will be recycled in order to provide additional program assistance until December 31, 2017, at which time any recovered, unused funds will be returned to Treasury. PRP Ops Term Sheet Version 14.0 Page 10 of 12 Revised April 1, 2016

11 6. Program Exclusions 6.1 Homeowner in an active bankruptcy is ineligible for KYHC program assistance consideration. Homeowners who have previously filed bankruptcy are eligible for consideration with proof of court ordered Dismissal or Discharge. 6.2 Homeowner s contractual monthly first lien mortgage payment (principal, interest and any escrowed property taxes, insurance and/or homeowner s association dues or assessments, as applicable) will be deemed ineligible when the homeowner s post-assistance contractual monthly first lien mortgage payment fails to meet CalHFA MAC s definition of an affordable mortgage payment (=<38% DTI) of the gross household income excluding temporary income* (e.g. unemployment benefits may not be used to qualify for PRP assistance). * Short term disability may be included if the homeowner is still employed. 6.3 A principal curtailment, recast or final loan modification that would result in: Homeowner s post-assistance LTV ratio is greater than 140% or less than 100%. (Post-assistance LTV ratio may be less than 100% ONLY if it is necessary in order to provide the homeowner an Affordable Payment using the PRP-Affordability utility). Homeowner s pre-assistance contractual monthly first-lien mortgage payment (principal, interest, taxes and insurance, as applicable) and any escrowed homeowner s association dues or assessments, as applicable, calculated on the UPB, is less than 25% of the homeowner s gross monthly household income, excluding temporary income* (e.g. unemployment benefits may not be used to qualify for PRP assistance), as determined by CalHFA MAC at the time of a homeowner s application for assistance. * Short term disability may be included if the homeowner is still employed. Homeowner s post-assistance contractual monthly first-lien mortgage payment (principal, interest, taxes and insurance, as applicable) and any escrowed homeowner s association dues or assessments, as applicable, is less than 25% of the homeowner s gross monthly household income, excluding temporary income* (e.g. unemployment benefits may not be used to qualify for PRP assistance) or greater than CalHFA MAC s definition of an Affordable Payment. * Short term disability may be included if the homeowner is still employed. 6.4 A homeowner that is actively participating in a HAMP trial payment plan ( TPP ), which includes those who are not yet in a permanent HAMP, are ineligible for PRP consideration. The active, non-permanent HAMP period spans from the first trial payment until the loan modification has been fully executed. Homeowners in active Proprietary TPP s are eligible for consideration. PRP Ops Term Sheet Version 14.0 Page 11 of 12 Revised April 1, 2016

12 6. Program Exclusions (cont.) 6.5 Interest-only loans are ineligible for PRP assistance (all utilities) unless the interest-only feature has converted to a fully amortizing loan or is modified to a fully amortizing loan. 6.6 First mortgage loan s interest rate exceeds 10% per annum. 6.7 Subject property loan is actively involved in litigation and/or insurance claim. 6.8 Loan was made for non-residential/commercial purpose. 6.9 CalHFA MAC (KYHC) loan modification guidelines are not met A subordinate lien is in foreclosure as evidenced by a recorded Notice of Default (NOD) and/or Notice of Trustee s Sale (NOS). 7. Major Investor/Guarantor Inclusions and Exclusions 7.1 The KYHC PRP is approved for use by most major investors. 7.2 Servicer is required to obtain investor and/or mortgage insurance approval prior to acceptance and submission of the CDF to the CPC. 8. Program Documents 8.1 Documents Required: KYHC Memorandum of Understanding ( MOU ) with Exhibits Homeowner Action Plan ( HAP ) Hardship Affidavit / 3 rd Party Disclosure and Homeowner Liquid Asset Affidavit (as applicable for PRP Curtailment transactions) Benefit Award Letter Note Deed of Trust PRP Ops Term Sheet Version 14.0 Page 12 of 12 Revised April 1, 2016