HAMP AND FHFA (GSE) LOAN MODIFICATION UPDATE July 17, 2012 Diane Thompson, NCLC, Moderator Jeff Gentes, Connecticut Fair Housing Center Lisa Sitkin, Housing and Economic Rights Advocates 0 The World of Loans Portfolio Private / securitized, a/k/a non-gse Owned/Guaranteed by a GSE (Fannie Mae, Freddie Mac) Insured/Guaranteed by a federal agency (FHA, VA, USDA) 1 1
Scope of Presentation Non-GSE HAMP Tier 1, Tier 2 GSE HAMP Will not be covering Agencies HAMP programs (FHA-HAMP, VA-HAMP, etc.) 2MP Other loss mitigation options 2 Other Loss Mitigation Options Refinance GSE = HARP (over 80% LTV) Non-GSE = AG settlement for big 5 if portfolio owned Reinstatement Repayment plan Forbearance Unemployment Special circumstances 3 2
What is Non-GSE HAMP? Servicer-driven, voluntary program: Does servicer participate in Making Home Affordable? Check www.mha.gov, Contact Your Mortgage Company If loan not owned/guaranteed by a GSE, covered by the MHA Handbook and Treasury s Supplemental Directives 4 Where to Find HAMP Rules for Non-GSE Loans MHA Handbook (currently version 3.4) Supplemental Directives Posted on www.hmpadmin.com Subscribe to email updates via www.hmpadmin.com 5 3
HAMP Tier 1 Eligibility criteria -- see Assessment Protocol provided in materials Waterfall steps -- see Assessment Protocol provided in materials Investor restrictions Principal forbearance/reduction Qualification criteria NPV test Factors affecting NPV outcomes 6 HAMP Tier 2 Went into effect June 1, 2012 Delayed implementation by BofA and other servicers Eligibility criteria see Assessment Protocol Includes people who defaulted on a HAMP Tier 1 perm or trial mod Waterfall steps see Assessment Protocol Forbearance calculations 7 4
HAMP Tier 2, cont d Qualification criteria Minimum P&I reduction: at least 10% Target DTI range: 25-42% See Assessment Protocol re how to calculate DTI for rental property NPV test may be simultaneous with Tier 1 NPV test Doesn t have to be owner-occupied, but must meet non-owner-occupied requirements no vacation homes May allow for some principal reduction 8 Non-GSE Foreclosure Rules Generally cannot refer a loan to foreclosure or conduct a foreclosure sale if: Loan is being evaluated for HAMP 30 days following the issuance of a Non-Approval notice Case has been escalated for review to the HAMP Solution Center or the HOPE Hotline 9 5
Non-GSE Foreclosure Timeline Cannot conduct foreclosure sale if Request for HAMP consideration is submitted at least 7 business days prior to the sale date (subject to certain eligibility criteria); and Borrower conformed with servicer delivery/mailing requirements for packages submitted later than 30 calendar days before the sale 10 Servicing Transfers Non- GSE Transfer to another servicer Both servicers must cooperate to cause as little disruption as possible to the borrower Supp. Dir. 11-12 clarifies which loans are eligible for protected treatment 11 6
Does My Client Have a GSE Loan? fanniemae.com/loanlookup/ freddiemac.com/corporate/ (note: requires last 4 digits of borrower s SSN) 12 GSE Guidelines for Loss Mitigation and Foreclosures Servicing Alignment Initiative (SAI) Effective date: 10/1/11 FHFA announcement: fhfa.gov/webfiles/21190/sai42811final.pdf Note: issues arising before 10/1/11 13 7
Where to Find Fannie s Rules Fannie Mae 2012 Servicing Guide, Parts VII & VIII (last updated 10/1/11) News and updates: efanniemae.com/sf/servicing/delmgt/index.jsp SAI FAQs: efanniemae.com/sf/servicing/pdf/alignedrequir ementsfaqs.pdf (last updated 4/25/12) SAI Overview: efanniemae.com/sf/guides/ssg/annltrs/pdf/2011 /svc1108.pdf 14 Where to Find Freddie s Rules Freddie Mac Single Family Seller/Servicer Guide, Vol. 2, Chs. 64-66 News and updates: freddiemac.com/singlefamily/service/servicing_align ment.html SAI FAQs: freddiemac.com/singlefamily/service/servicing_align ment_faq.html SAI Overview: freddiemac.com/service/factsheets/pdf/servicing _alignment.pdf 15 8
Post-SAI Modification Options for GSE Loans GSE HAMP Standard Modification freddiemac.com/singlefamily/service/ standard_modification.html efanniemae.com/sf/servicing/fmmod/i ndex.jsp 16 GSE vs. Non-GSE (Treasury) HAMP Tier 1 Same waterfall steps and NPV test (except for principal forgiveness) Somewhat different rules and procedures re: Application forms -- Form 710 vs. RMA Note: 710 and RMA are available in Spanish Outreach timelines and requirements Borrower notices Foreclosure timelines and procedures 17 9
GSE Standard Modification Fixed rates as of 7/1/12: 4.625% (for both) freddiemac.com/singlefamily/service/standardmodrate.html efanniemae.com/sf/servicing/fmmod/index.jsp Eligibility criteria Financial hardship Loan originated at least 12 mos. before review Prior modification issues Pre-modification LTV 80% Not condemned (vacant ok) Owner- or non-owner-occupied 18 GSE Standard Modification, cont d Waterfall steps Capitalize arrears and allowable costs If LTV > 115%, forbear lesser of 30% UPB or amount needed to bring LTV to 115% Amortize over 480 mos. at rate specified Qualification criteria Minimum P&I reduction: at least 10% Target DTI range: 10-55% (!) No NPV test 19 10
GSE Foreclosure Rules and Procedures Pressure on servicer to complete the process within maximum time frames (by state) with limited exceptions Dual-track restrictions Foreclosure postponements 20 GSE Rules re: Foreclosure Referrals and Postponements Postpone referral while borrower under review for modification Pre- and post-referral review, certification and solicitation requirements 21 11
GSE Deadlines for Foreclosure Postponements Trial plan offer with a sale date pending indicating acceptance before 1 st payment due Borrower submits application 30 days of post-referral solicitation letter Borrower submits > 30 days after postreferral solicitation letter and there is a pending sale date > 30 days before sale 15-37 days before sale <15 days before sale 22 What Are the Loan Modification Options if Borrower lives in the property Borrower doesn t live in the property Property is underwater Borrower is current on payments (or less than 60 days delinquent) Borrower has previously been denied for HAMP or defaulted on a HAMP trial plan or modification 23 12
Owner-Occupied Non-GSE Loans HAMP (Tier 1 and Tier 2) In-house modification GSE Loans GSE HAMP GSE Standard Modification 24 Non Owner-Occupied Non-GSE Loans HAMP Tier 2 (only if 60+ days delinquent) In-house loan modification (sometimes) GSE Loans GSE Standard Modification (only if 60+ days delinquent) 25 13
Underwater Is Principal Reduction Available? Non-GSE loans HAMP PRA Increased incentives Still voluntary National Mortgage Settlement Limited to the Big 5 Can be part of a HAMP or an in-house modification No entitlement for any individual borrower GSE loans nope. 26 Current (or Less than 60 Days Delinquent) Requires imminent default determination Non-GSE Loans HAMP (Tier 1 and Tier 2) In-house loan modification (sometimes) GSE Loans HARP (refinance if over 80% LTV and qualify) GSE HAMP GSE Standard Modification 27 14
Previous HAMP Denial or Default Non-GSE Loans HAMP Tier 2 (if default was on HAMP Tier 1) In-house modification GSE Loans GSE HAMP GSE Standard Modification Changed circumstances requirements Passage of time requirements 28 Options for Unemployed Borrowers (Both) Up to 12 months arrears of forbearance via. MHA-UP GSE Forbearance Hardest Hit Funds programs (select states) State emergency assistance programs (select states) 29 15
HAMP and GSE Escalations Tips re: preparing complaints Use proper forms and include authorization Be clear and succinct Request specific action/resolution Using HSC in GSE-loan cases Be persistent and insistent Contact information at: hmpadmin.com 30 16