Presentation Title - Mortgage Bankers Association by chenmeixiu

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									    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
Agenda


• 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




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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
  refinances

• 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
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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


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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
          adjustments
      »   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
FHA
      »   Meet its mission and safeguard the Mutual Mortgage Insurance Fund
      »   Maintain traditional market role as economic cycle turns

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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.




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Veterans Administration Loan Guaranty


Veterans Administration Loan Guaranty Program
Volume
New Veteran Profile
Performance
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

VALERI


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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