PMI Performing Loan Modification
Frequently Asked Questions Program Overview Q1:
What is PMI’s Performing Loan Modification Program? A1: The performing loan modification program has been developed to provide guidance to servicers for intervention on PMI-insured loans that are now current but are at risk of becoming delinquent.
Q2:
What types of loans are at risk of becoming a delinquent?
A2: “At risk” borrowers include those whose loans are subject to a payment increase
that is beyond their repayment capacity due to the reset rate on a short fixed-term hybrid ARM, recast of a negatively amortizing loan, or expiration of an interest only term; or, where the current property value is less than its original value due to negative amortization and/or a declining market and it will be very difficult to refinance through available financing vehicles.
Program Criteria Q3:
What criteria should the lender follow when modifying these loans? A3: In an effort to simplify the process for servicers requesting a performing loan modification, PMI has developed a comprehensive performing loan modification program. In addition, PMI supports Home Affordable Refinance Program (HARP) and Home Affordable Modification Program (HMP). The Performing Loan Modification, HARP and HAMP guidelines can be found by clicking the link below: http://www.pmi-us.com/homeownership/index.html
Q4:
What happens if a servicer has a program that doesn’t conform to the PMI Performing Loan Modification program guidelines? A4: The servicer should contact their National Account Operations Vice President or Director who will review the guidelines and make a recommendation to Senior Operations/Risk Management. The National Account Operations Vice President or Manager will notify the lender of senior management’s acceptance, rejection or revisions to the program.
Q5:
Is PMI’s Performing Loan Modification Program a delegated program? A5: Yes; as long as the servicer follows the guidelines set forth in the eligibility criteria or the modification conforms to the servicer’s proprietary program which has been previously-approved by PMI. The servicer should complete the Delegated Workout Reporting Template by clicking the link below and scroll to the Performing Loan Modification Section http://www.pmi-us.com/homeownership/index.html
Q6:
What happens if the modification does not conform to PMI’s guidelines and the lender’s guidelines have not been previously approved? A6: The servicer should complete the Non Delegated Modification Request Form— Performing Loans that can be found by clicking the link below and scroll to the Performing Loan Modification section. http://www.pmi-us.com/homeownership/index.html The request will be reviewed and the servicer will be contacted for clarification, if needed, and of PMI’s decision on the modification request.
Q7:
If a credit report is required, does the lender or servicer need to review the creditworthiness of the borrower? A7: No; under the PMI program criteria, a credit report is only required if the new P&I payment increases by more than 20%. PMI expects the servicer to review the credit report only to verify the borrower’s outstanding debts in order to calculate a new debt-to-income ratio.
Q8:
The program requirements call for a verbal verification of employment. How should I handle the loan if the borrower is self-employed or self-employed for less than one year? A8: It must be determined that the borrower is gainfully employed, whether salaried or self-employed. If the borrower is self-employed, a web search under the business name, telephone communication with the borrower’s accountant or tax preparer, a business license search, or other appropriate means of verification should be conducted. If the borrower has no discernable means to meet the financial obligation, the loan should not be modified.
Q9:
If the new P&I payment is more than 20% higher than the existing payment, the guidelines require a W-2 or a paystub. Does the W-2 or paystub have to be within a certain time frame? A9: Yes; the W-2 should be the most recent W-2 available at the time the modification is being processed. For example: For modifications processed in 2008, the W-2s should be from 2007. The paystub should be from the most recent pay period.
Q10: The guidelines do not address property value assessment. Is a full appraisal required or
will an AVM be acceptable? A10: When modifying the PMI certificate, the loan-to-value will be based on the LTV at time of origination. We do not require an updated property value assessment. The servicer must comply with the requirements of investors, as applicable.
Processing Modifications of PMI Certificates Q11: How will the servicer notify PMI that they have modified or refinanced a loan and want
PMI to modify the certificate? A11: The servicer should download and complete the required fields in the Delegated Workout Reporting Template by clicking the link below and scroll to the Performing Loan Modification Section. In addition, the guidelines contain details of the process for sending the template securely to PMI. http://www.pmi-us.com/homeownership/index.html
Q12: Does the coverage or premium payment change based on the new loan terms?
A12: PMI will document that the loan has been modified and update our systems of record with all relevant information provided by the servicer. PMI will not modify the coverage percentage or the premium rate.
Q13: Will the customer be notified once the modification has been processed by PMI?
A13: No; there is currently no process in place for notifying customers of completed loan modifications. There will be an automated email reply to the customer that the securely emailed modification worksheet was received by PMI. PMI will contact the servicer if we are unable to process the modification (due to incomplete information or inactive coverage) or if the request is submitted on a non-delegated basis. Because the servicer has delegated authority to approve the modification under the PMI Performing Loan Modification eligibility criteria, PMI will not be rendering a decision on the loan and will not provide feedback once the loan is modified. Note, a label has been added to the ePMI Servicing loan header. If the loan has been modified, “Loan Modification Type” will display and the field will be populated with modification program name. If the servicer requires an updated PMI certificate once the loan has been modified, and provided that they have provided complete detail of the new loan terms with the notification of the modification, they can print a copy of via ePMI Servicing.
Q14: How long will it take for the certificate to be modified?
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A14: For submissions received between the 1 and the 10 business day of the month, the certificate will be updated by month end.
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For submissions received between the 11 business day and the end of the month, the certificate will be updated by the end of the following month.