Streamline HAMP Modification Process. Training for Servicers

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1 Streamline HAMP Modification Process Training for Servicers

2 Agenda Overview Eligibility Criteria Streamline HAMP Policy and Streamline HAMP NPV Tool Streamline HAMP Process Resources 2

3 MHA Offers Solutions MHA and related programs work together to help borrowers avoid foreclosure Transition from Home Ownership Historically Low Mortgage Interest Rates AVOIDING FORECLOSURE Breathing Room for Unemployed Help When You Owe More Than the Home is Worth More Affordable Payments 3

4 Overview What is Streamline HAMP Provide assistance to borrowers who: Meet the basic HAMP eligibility criteria; and Have not completed an application by the time their loan is 90 days delinquent (or 60 days delinquent within a 12 month period following an interest rate step up under HAMP Tier 1). Effective Date January 1, 2016 Prior to January 1, 2016, servicers could begin offering Streamline HAMP once the servicer s Streamline HAMP Policy was in place. 4

5 Agenda Overview Eligibility Criteria Streamline HAMP Policy and Streamline HAMP NPV Tool Streamline HAMP Process Resources 5

6 Streamline HAMP Eligibility Scenarios Criteria Guideline Streamline HAMP Origination The mortgage loan is a first lien originated on or before January 1, Property Condition Financial Hardship The property securing the mortgage loan has not been condemned. The borrower must be able to certify as to a financial hardship. Unpaid Principal Balance Limits Single Family Property The unpaid principal balance, prior to capitalization, must be less than or equal to: $729,750 for a one unit property $934,200 for a two unit property $1,129,250 for a three unit property $1,403,400 for a four unit property The mortgage loan is secured by a one to four unit property. 6

7 Streamline HAMP Eligibility Program Cut off A borrower is NOT required to submit an Initial Package; however, to be considered for an offer under Streamline HAMP on or after December 31, 2016, a borrower must submit at least one component of the Loss Mitigation Application on or before December 30, 2016, and the servicer must not have already sent a Non Approval Notice in response to such application. o A servicer may also make a Streamline HAMP offer after December 30, 2016 in response to a borrower s oral request to be evaluated for a loss mitigation solution on or before December 30, Such offer can be made regardless of whether the borrower has submitted at least one component of a Loss Mitigation Application and provided that the borrower meets all eligible criteria and the servicer s Streamline HAMP Policy allows for oral requests. The Modification Effective Date must be on or before December 1,

8 Streamline HAMP Eligibility Scenarios (continued) Criteria Guideline Streamline HAMP Owner Occupied The mortgage loan must be secured by a single family property that is either owner occupied (i.e. occupied by borrower as his or her principal residence) or used for rental purposes. Rental Property The mortgage loan is secured by a single family property that is used by the borrower for rental purposes only and not occupied by the borrower, as a principal residence, second home, or vacation home. Delinquency The mortgage loan is at least 90 days delinquent; or 60 days delinquent if within the 12 month period following an interest rate step up under HAMP Tier 1. 8

9 Streamline HAMP Eligibility Scenarios (continued) Criteria Previous Solicitation for HAMP Previous HAMP Tier 1 or Tier 2 Permanent modification Unexpired Loss Mitigation Offer Active Loss Mitigation Solution Guideline The borrower was previously solicited for a HAMP modification. If the loan was previously evaluated for, but not offered a HAMP modification, the servicer may, but is not required to, offer Streamline HAMP. 12 months have passed since the previous Modification Effective Date; or The borrower has experienced a change in circumstance. The mortgage loan is not subject to a loss mitigation offer for which the acceptance period has not expired. The mortgage loan is not currently performing under a loss mitigation solution. Streamline HAMP 9

10 Streamline HAMP Eligibility Limit on Multiple Modifications Borrowers may receive permanent HAMP modifications on up to six properties. Borrowers or co borrowers may receive one permanent modification under Streamline HAMP on an owner occupied property. If the borrower receives a HAMP Tier 1 or HAMP Tier 2 modification, the borrower may also receive a Streamline HAMP permanent modification on the same loan. If the borrower receives a Streamline HAMP permanent modification, the borrower may also receive either a HAMP Tier 1 or a HAMP Tier 2 modification on the same loan. Borrowers may receive a permanent modification under Streamline HAMP for each of five other properties. Borrowers may not receive more than two permanent modifications or default on more than two Trial Period Plans, or TPPs (or a combination of both) with respect to the same loan under HAMP. 10

11 Streamline HAMP Eligibility Bankruptcy Servicers may, but are not required to, offer Streamline HAMP to borrowers in active Chapter 7 or Chapter 13 bankruptcy cases. Borrowers who are currently in a Streamline HAMP TPP and subsequently file for bankruptcy may not be denied a permanent modification due to bankruptcy. Non Borrowers and Co Borrowers Non borrowers who inherit or are awarded sole title to a property may be eligible for a Streamline HAMP modification. Servicers must send written notice to the new titleholder (subject to applicable law and investor guidelines). If the loan is currently in a Streamline HAMP TPP, the new titleholder may continue the existing Streamline HAMP TPP if he or she complies with the terms of the plan, as well as signs and returns the Streamline HAMP Documents. If eligible for HAMP Tier 1 or HAMP Tier 2, the servicer should also provide information necessary for the new titleholder to submit an Initial Package. 11

12 Prohibitions on Streamline HAMP Modifications Guidelines The borrower is not eligible to receive a subsequent Streamline HAMP modification on the same loan if: The borrower previously failed a Streamline HAMP TPP after accepting the trial by making the first payment; The borrower successfully completed a Streamline HAMP TPP but failed to return the Streamline HAMP Modification Agreement and/or the Streamline HAMP Affidavit in a timely manner; or The borrower previously lost good standing under a Streamline HAMP permanent modification. However, if the borrower submits an Initial Package, the borrower may be eligible for a HAMP Tier 1 or HAMP Tier 2, subject to limitations on multiple modifications. 12

13 Streamline HAMP Ineligibility HAMP Tier 1 or Tier 2 Consideration Aloan that is not eligible for Streamline HAMP may be considered for HAMP Tier 1 or HAMP Tier 2 if: The borrower has submitted an Initial Package; The loan meets the eligibility criteria for HAMP Tier 1 or HAMP Tier 2; and The borrower has not previously received two permanent modifications or defaulted on two TPPs (or a combination of both) with respect to the same loan under HAMP. 13

14 Agenda Overview Eligibility Criteria Streamline HAMP Policy and Streamline HAMP NPV Tool Streamline HAMP Process Resources 14

15 Streamline HAMP Policy The Streamline HAMP Policy describes the basis on which servicers will consider borrowers for Streamline HAMP. A servicer s Streamline HAMP Policy must include (as applicable): The date by which the servicer will begin to offer Streamline HAMP (if servicer decides to participate) Frequency with which the servicer s portfolio will be evaluated using the Streamline HAMP NPV Tool The manner in which the servicer will offer Streamline HAMP using an alternative waterfall Description of the servicer s continued outreach efforts for Streamline HAMP offers Segmentation of the servicer s portfolio for evaluation with the Streamline HAMP NPV Tool Eligibility Criteria (if in addition to or more restrictive than standard Streamline HAMP criteria) The percentage of P&I reduction (if any) required by the servicer for Streamline HAMP Whether Streamline HAMP offers will be made to borrowers who default on HAMP Tier 1 or HAMP Tier 2 TPPs on or after December 31, 2016 Servicers must provide a copy of their Streamline HAMP Policy to Treasury and the Program Administrator upon request. 15

16 Streamline HAMP NPV Tool Streamline HAMP NPV Tool Treasury requires that servicers use the Streamline HAMP NPV Tool to evaluate their entire servicing portfolio that satisfies the eligibility criteria for participation in Streamline HAMP. o Servicers may perform a consolidated run of their portfolio or evaluate segments of their portfolio through separate runs of the Streamline HAMP NPV Tool, provided that all eligible loans are run through the tool. Servicers are encouraged, but not required, to offer Streamline HAMP to eligible borrowers when the NPV result of doing so is estimated to be positive on a portfolio basis. Servicers must retain all records which relate to use of the Streamline HAMP NPV Tool in determining whether Streamline HAMP is offered on a population of loans. The Streamline HAMP NPV Tool and related documentation are available on 16

17 Streamline HAMP NPV Tool Streamline HAMP NPV Tool Servicers will be able to input certain characteristics of their portfolio into the Streamline HAMP NPV Tool to determine the estimated NPV of the portfolio with corresponding expected NPV ranges and NPV pass rates. The Tool will generate the results across different PMMS rates to demonstrate the impact of different market rates on the NPV calculation. Servicers must maintain documentation describing: o o How the Streamline HAMP NPV Tool will be used; Inputs to the Streamline HAMP NPV Tool; and o NPV results. Servicers are required to use the most recent version of the Streamline HAMP NPV Tool when evaluating their portfolio for Streamline HAMP. Note: The Streamline HAMP NPV Tool may not be used to evaluate the servicer s portfolio for non HAMP modifications. 17

18 Standard and Alternative Modification Waterfalls Servicers must apply the steps in the Streamline HAMP Standard Modification Waterfall to determine the borrower s modified monthly mortgage payment under Streamline HAMP. Capitalization Interest Rate Adjustment Term Extension Principal Forbearance/ Forgiveness P&I Payment Alternative Modification Waterfall Outstanding UPB + Accrued Interest + Out of pocket Servicing Expenses. PMMS Rate + Risk Adjustment (expressed in basis points). 480 months from date the servicer determines the borrower s Streamline HAMP modification terms. If the estimated post modification MTMLTV ratio is greater than 115%. Forbear or forgive an amount equal to the lesser of: A post modification MTMLTV ratio of 115%; or 30% of the post modification UPB. Modified principal and interest payment is less than or equal to the principal and interest payment at the time of Streamline HAMP consideration. Principal Forbearance is replaced with PRA. 18

19 Agenda Overview Eligibility Criteria Streamline HAMP Policy and Streamline HAMP NPV Tool Streamline HAMP Process Resources 19

20 Streamline HAMP Process Streamline HAMP Offer Upon determination that a loan is eligible for Streamline HAMP in accordance with its Streamline HAMP Policy, the servicer must send the borrower a Streamline HAMP Offer within 15 calendar days. For the initial population of loans, servicers will have 60 calendar days to send Streamline HAMP offers. The Streamline HAMP Offer must also include: Sufficient information to enable the borrower to submit an Initial Package if he or she is potentially eligible for HAMP (Tier 1 or Tier 2); and The date by which the borrower must return an Initial Package in order to be evaluated for HAMP Tier 1 or Tier 2. Note: Effective September 1, 2016 servicers are no longer required to specify a date by which a borrower must submit an Initial Package and may specify submission of a Loss Mitigation Application in lieu of an Initial Package. Note: Servicers are not required to offer a Streamline HAMP modification within 60 calendar days prior to a scheduled foreclosure sale date. 20

21 Streamline HAMP Process Streamline HAMP Offer Describes the terms and conditions of the three month trial period and outlines the required payment due dates. Borrower is not required to sign or return the Streamline HAMP Offer. A copy must be retained in the mortgage file and include the date the Streamline HAMP Offer was mailed to borrower. Effective Date Streamline HAMP Offer is transmitted on or before the 15th calendar day = TPP Effective date is the first day of the next month. Example: Transmit date June 5th = TPP Effective Date July 1 st. Streamline HAMP Offer is transmitted on the 16th calendar day or later = TPP Effective Date is the first day of the second month (or following month, if borrower agrees). Example: Transmit date June 17 th = TPP Effective Date August 1 st or (July 1 st, with borrower s consent). Servicers required or who have elected to offer counseling under the Handbook, must refer any borrower who accepts a Streamline HAMP Offer to financial counseling, promptly following acceptance. 21

22 Streamline HAMP Process Streamline HAMP TPP Offer After a Streamline Offer is sent, a loan will continue to be eligible for Streamline HAMP even if the borrower subsequently makes payments that reduce the delinquency of the loan less than 90 days, or 60 days as applicable, provided the loan is at least 30 days or more delinquent at the start of the TPP. Servicers may include the Streamline HAMP Affidavit with the Streamline HAMP Offer, but may not require the borrower to sign or return the Streamline HAMP Affidavit as a condition of the acceptance of the Streamline HAMP TPP. If the servicer receives the executed Streamline HAMP Affidavit before the servicer sends the borrower the Streamline HAMP documents for signature, the servicer does not have to re send the Streamline HAMP Affidavit with the Streamline HAMP modification agreement. 22

23 Streamline HAMP Process Streamline HAMP Offer Servicers are not required to verify the borrower s income, nor is there a Debtto Income (DTI) ratio required. Receipt of the first payment (on or before the last day of the month in which the payment is due) is evidence of borrower acceptance of the Streamline HAMP Offer and the terms. A borrower that fails to make a current trial period payment for a Streamline HAMP TPP is not eligible for a Streamline HAMP permanent modification of that loan. 23

24 Streamline HAMP Process Protections Against Unnecessary Foreclosure The servicer may not refer a loan to foreclosure or conduct a scheduled foreclosure sale after the borrower has accepted a Streamline HAMP Offer. If the loan already has a scheduled foreclosure date, servicers must state in the Streamline HAMP Offer that the borrower must make the first trial payment before the scheduled foreclosure sale date (or an earlier date as specified by the servicer). 24

25 Evaluation Upon Submission of an Initial Package Evaluation Submits Initial Package before Streamline HAMP Offer Guideline Borrower must be evaluated as defined in section of Chapter II of the Handbook before the servicer may send the Streamline HAMP Offer. If the borrower is not eligible for HAMP Tier 1, HAMP Tier 2, or other modification alternative, servicer may send a Streamline HAMP Offer. Submits Initial Package after Streamline HAMP Offer Submits Initial Package following acceptance of Streamline HAMP Offer If the borrower has not accepted the offer, and the period of acceptance has not expired, the borrower must be evaluated as defined in section of Chapter II of the Handbook. If the borrower is not eligible for HAMP Tier 1, HAMP Tier 2, or any other modification alternative, the borrower remains eligible for that offer of Streamline HAMP as long as the Streamline HAMP TPP is accepted before the period of acceptance has expired. If the servicer has not sent the Streamline HAMP Documents to the borrower for signature, the borrower must be evaluated for HAMP Tier 1 or HAMP Tier 2 only. If the borrower is not eligible for HAMP Tier 1 or HAMP Tier 2, the borrower remains eligible for Streamline HAMP, per the terms of the Streamline HAMP Offer. Note: On and after December 31, 2016, servicers may, but are not required to, consider a borrower for HAMP Tier 1 or HAMP Tier 2 who submits an Initial Package on or before December 30, 2016 and has either accepted a Streamline HAMP offer or received an offer that has not been accepted and the acceptance period has not expired. 25

26 Streamline HAMP Process Communication of Evaluation Outcome Following the acceptance of a Streamline HAMP TPP Offer: Servicers may not offer a HAMP Tier 1 or 2 with a P&I payment greater than the Streamline HAMP P&I payment. If the borrower is determined to be eligible for a modification under HAMP Tier 1 or 2 with revised terms, the servicer must notify the borrower in writing stating the revised terms, provided the borrower makes all trial payments on time and returns the modification agreement. If the borrower is ineligible for a modification under HAMP Tier 1 or 2 with revised terms, the servicer must notify the borrower in writing that they will receive a permanent Streamline HAMP, provided the borrower makes all trial payments on time and returns the modification agreement and Streamline HAMP Affidavit. 26

27 Streamline HAMP Process Permanent Modification The borrower s permanent modification will become effective when: The borrower has satisfied all of the Streamline HAMP TPP requirements; The borrower has provided an executed Streamline HAMP Affidavit; The borrower and the servicer have signed the Modification Agreement and a fully executed copy of the Modification Agreement is returned to the borrower (no later than 30 calendar days after receipt of the agreement executed by the borrower); and The Modification Effective Date provided in the Agreement has occurred. Note: The Streamline HAMP Offer, Streamline HAMP Affidavit, Streamline HAMP Modification Agreement Cover Letter, and HAMP Document Summary setting forth the changes to the Modification Agreement for Streamline HAMP can be found on HMPadmin.com. 27

28 Streamline HAMP Process Non Approval Notice The Servicer should send the borrower a Non Approval Notice if: After making the first payment, a borrower in a Streamline HAMP TPP fails to make one or more subsequent TPP payments in a timely manner; The borrower in a Streamline HAMP TPP makes timely payments, but fails to return the executed Streamline HAMP Documents on a timely basis; or The borrower in a Streamline HAMP TPP makes timely payments and returns the Streamlined HAMP Documents in a timely manner, but is not approved for a Streamline HAMP permanent modification due to failure of other terms or conditions. The Servicer should NOT send the borrower a Non Approval Notice if: The borrower is in a Streamline HAMP TPP, submits an Initial Package and is determined to be eligible for HAMP Tier 1 or Tier 2; or The borrower fails to accept a Streamline HAMP Offer by making the first payment. The Servicer is not required to send the borrower a Non Approval Notice if: The borrower is in a Streamline HAMP TPP, submits an Initial Package and is not eligible for HAMP Tier 1 or Tier 2, but remains eligible for Streamline HAMP. 28

29 Streamline HAMP Incentive Compensation Servicers Completed Modification Incentive Borrowers Pay for Performance Incentive (principal balance reduction) Investors Payment Reduction Cost Share Home Price Decline Protection (HPDP) PRA 29

30 Streamline HAMP Process Interactions With Other MHA Programs Second Lien Modification (2MP) Program First lien loans in TPPs or permanent modifications under Streamline HAMP are not eligible for a matching second lien mortgage modification under 2MP Home Affordable Unemployment (UP) Program Aloan may not be in a HAMP TPP and an UP forbearance plan simultaneously. A borrower in a Streamline HAMP permanent modification that loses good standing may be eligible for an UP forbearance plan. A borrower who, while making timely payments under a prior Streamline HAMP TPP, became unemployed and requested UP forbearance, continues to be eligible for Streamline HAMP on that mortgage loan. A borrower who experienced a payment default under a prior Streamline HAMP TPP, or who lost good standing in a prior Streamline HAMP permanent modification, is not eligible for another Streamline HAMP on that mortgage loan. 30

31 Agenda Overview Eligibility Criteria Streamline HAMP Policy and Streamline HAMP NPV Tool Streamline HAMP Process Resources 31

32 Resources Additional Resources Servicer Integration Team HAMP Solution Center MHA Programs Learning Center Resources News Contact Us 32

33 Discussion/Questions Thank You 33