Presentation Title - Mortgage Bankers Association by chenmeixiu


									    Legal Issues and Regulatory Compliance Conference 2009
 Government Program Update: H4H, Reverse Mortgages, and FHA, VA Agency Developments
                                              May 5, 2009, 1:30-2:45pm
                                               Chicago, Hyatt Regency

Allen H. Jones, AMP, Senior Vice President, Bank of America Home Loans

• Overview of Government Lending Landscape

• TOTAL Scorecard – Opportunistic for Risk Management

• FHA Opportunities

• FHA Hope for Homeowners

• Veterans Administration Home Loan Guaranty

• USDA Rural Housing Development

• Questions and Answer

Overview of Government Lending Landscape

• HUD Secretary Donovan – Meet the Leaders – C-SPAN, May 3, 2009

• Wall Street Journal Editorial: The Next Housing Bust, May 4, 2009, page A16

• FHA’s traditional role

• FHA’s traditional role in a once in 100 year economic downturn

• FHA volume running at 30% market share

• FHA reviewing the Mutual Mortgage Insurance Fund: Bill Apgar, Senior Advisor to the
  Secretary on Mortgage Finance and former FHA Commissioner, National Mortgage News

• FHA tightening credit policy especially on conventional to government refinances and cash-out

• FHA Office of Lender Approval planning release of Mortgagee Letter to announce monitoring of
  performance of correspondent lenders, Mark Ross at MBA Government Housing Conference,
  April 28, Washington, DC

• Status of Assistant Secretary for Housing, Federal Housing Commissioner nomination

• Mark Bologna, Director of the Office of VA Loan Guaranty
TOTAL Scorecard – Opportunistic for Risk Management

Automated Underwriting
   »   Historical Perspective
   »   Development of Loan Prospector
   »   Transition to TOTAL
   »   Current State

Use of the TOTAL Scorecard in 2008 and 2009
   » With market changes, GSE and MI tightening, FHA business soared
   » As the business grew, many lenders’ risk management teams applied
     countermeasures to ensure the tremendous growth in volume met their
     commitment to providing sustainable homeownership
   » At Bank of America, we increased review of FHA accepts and refers
   » Bank of America supported the FHA management tightening of cash-out
     refinances and participated in all of the FHA Industry Calls

FHA Opportunities

TOTAL Scorecard
      »   Fundamental Value of Automated Underwriting
      »   Bank of America Home Loans Current Use of TOTAL

Proposed Enhancements
      »   With appropriate funding, TOTAL can be enhanced to enable real time risk management
      »   In this market environment, FHA volume is likely to remain significant and enhancing technology
          will enable sustainable growth
      »   FHA is to be commended for maintaining its market role; and, be given the resources to enable
          the fruition of the original concept of automated underwriting
            •   With limited data input, TOTAL should provide a score and the rationale for the score, i.e., an Accept
                based on credit, reserves, etc; and a Refer should likewise pinpoint the areas of risk that a Direct
                Endorsement Underwriter can hone in on to decision the loan
            •   TOTAL could also be used to check CAIVRS, validate Social Security Numbers, and run fraud checks,
                and condominium approvals
            •   Further, TOTAL could be used to track upticks in volume (by score) and engage in lender monitoring prior
                to insurance endorsement
      »   Meet its mission and safeguard the Mutual Mortgage Insurance Fund
      »   Maintain traditional market role as economic cycle turns

FHA Hope for Homeowners

Recent Development on Hope for Homeowners

    »   Among announcements made on 4/28/2009, the Obama Administration announced steps to
        incorporate the FHA Hope for Homeowners Program into the Making Home Affordable Program.
    »   When evaluating a borrower for a modification under the program, servicers will be required to
        determine eligibility for a Hope for Homeowners Refinancing. Revised legislation is still pending.
    »   Where a Hope for Homeowners refinance proves to be viable, the servicer will be required to
        offer this option to the borrower.

Veterans Administration Loan Guaranty

Veterans Administration Loan Guaranty Program
New Veteran Profile
FICO Distribution

Funding Fee Structure for VA
Reservist, First time Users: 2.15%
Multiple Users: 3.30%
>5% and <10%1.50%
>= 10% 1.25%
Interest Rate Reduction (IRRRL) 0.50%
Cash-out refinancing 2.20%
Assumptions 0.50%

Appraisal Process


Veterans Administration Contact: William White, 202-461-9543   7
USDA Rural Housing Service

RHS Volume Growth
     »    2005 = $3.0 billion
     »    2006 = $3.1 billion
     »    2007 = $3.7 billion
     »    2008 = $7.0 billion
     »    2009 = $14+ billion (projected)

Portfolio Performance
     »    1.41% f oreclosure rate - holding steady

Why such performance
     »    30 year f ixed rate loan
     »    income always verif ied (no stated income loans)
     »    debt ratios always conf irmed (always af f ordable)
     »    every appraisal reviewed by agency (3 tier review)
     »    credit history reasonable
     »    no negative amortization, no balloons, no prepayment penalties

Guaranteed Underwriting System
     »    42% of loans run through GUS
     »    39% of loans "accepted" by GUS
     »    15 second decisions
     »    streamlined docs f or "accept"
     »    910 lenders using GUS
     »    LOS export/uploads ef fective Dec. 31
     »    f uture enhancements
          automatic CAIVRS check, automatic SAVE check, broker function (2010)

RHS Contact: Joaquin Tremols, 202-720-1465

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