Update on Foreclosure Avoidance Programs by xiuliliaofz

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									Update on Foreclosure Avoidance Programs


           Presenter: Janet Hunt
          Associate General Counsel
              Bank of America
             September 27, 2010
Home Affordable Modification Program (HAMP)
  – Making Home Affordable Program Handbook for Servicers
     f N GSE M t
    of Non-GSE Mortgages
  – Verified trials for trials starting June 1, 2010
  – Prohibitions on foreclosure referrals and sales
  – Principal Reduction – Supplemental Directive 10-05
     • Servicers must run both standard HAMP and alternative principal
       reduction waterfall when mark to market LPV of first lien exceeds
       115%
     • Principal reduction optional
     • Investor incentives for principal reductions to as low as 105% LTV
  – Retroactive Principal Reduction – September
    Supplemental Directive
                                                                       2
Home Affordable Modification Program (HAMP)
  – Dodd-Frank Provisions
     • Net Present Value (NPV) Model
          Provide all borrower-related and mortgage-related NPV input data
           at the time of denial
          Treasury website to calculate NPV
                    y
     • Disqualification based on borrower criminal record – 10 year look
       back with respect to certain convictions
     • Public disclosure of HAMP data
  – Additional Supplemental Directives Expected to be
    released in September and October
     • Escalations/Appeals
     • Compliance – Fraud, other topics
     • Adminstrative (2 SDs)– 2MP updates, escrow guidance, disaster
                     (      )       p    ,        g       ,
       guidance, other topics.                                       3

     • Handbook updates for HAFA, FHA, HAMP & 2MP
Hardest Hit Fund
  – States in hardest hit housing and unemployment markets:
    Arizona, C lif i Fl id Mi hi
    Ai        California, Florida, Michigan, N     d North
                                              Nevada, N th
    Carolina, Ohio, Oregon, Rhode Island, South Carolina,
    Alabama, District of Columbia, Georgia, Illinois, Indiana,
    Kentucky, Mississippi, New Jersey and Tennessee
  – Underwater Borrowers – principal reduction alternatives
  –U        l
    Unemployed B                    i t     in     ti i to
                d Borrowers – assistance i continuing t
    make mortgage payments
  – Consistency vs. Creativity
  – Interactions with HAMP, Home Affordable Unemployment
    Program (UP) Second Lien Modification Program (2MP),
    H      Affordable Foreclosure Alt
    Home Aff d bl F           l             ti             d
                                     Alternatives (HAFA) and 4
    FHA programs- Supplemental Directive 10-07
Refinance Programs
  – FHA “Short” Refinance
       Borrower must be current and owe more th hi or h h
     • B                tb          t d             than his her home iis
       worth
     • Owner of loan must agree to write off at least 10% of the unpaid
         i i l balance
       principal b l
     • New LTV of 1st not greater that 97.75%, CLTV not greater than
       115%
     • New loan must satisfy standard FHA underwriting requirements
     • All lien holders must consent – incentives for second lien holders
       to fully or partially extinguish their liens
     • The loan that is being refinanced need not be an FHA loan
  – Hope for Homeowners
                       2009-43
     • Mortgage letter 2009 43
                                                                            5
  – Home Affordable Refinance Program (HARP)
Second Lien Modification Programs
  – 2MP – Supplemental Directive 09-05 Revised
       Relationship to modification of the first li
     • R l ti    hi t     difi ti    f th fi t lien
     • Principal forgiveness/extinguishment under Supplemental
       Directive 10-05
     • LPS Matching
     • Due Dates other than the first of the month
  – FHA 2LP – complement to FHA Refinance
     • 115% CLTV requirement for FHA Refinance
     • Incentives for servicer to fully or partially extinguish the second
       lien
     • Optional


                                                                             6
Other Modification Programs
  – GSE HAMP and GSE “second look” loan modification
    programs
  – FHA HAMP
                                       2009 23
     • FHA mortgages – Mortgage Letter 2009-23
     • Incentives addressed in Supplemental Directive 10-03
  – VA HAMP
     • Circular 26-10-6
  – RD HAMP (USDA)
  – Servicer Proprietary Programs


                                                              7
Other Foreclosure Avoidance Programs
  – Home Affordable Unemployment Program (UP)
       Supplemental Di ti 10 04
     • S    l      t l Directive 10-04
     • Borrowers that are unemployed and request HAMP must first be
       looked at for UP forbearance eligibility.
     • Unemployment benefits no longer considered a source of income
       under HAMP
     • UP forbearance for lesser of 3 months or borrower reemployment
  – Home Affordable Foreclosure Alternatives (HAFA)
     • Supplemental Directive 09-09
                                                         eligible
     • Short sales and deeds in lieu of foreclosure for “eligible” loans
       under HAMP
  – GSE short sale and deed in lieu programs
                                                                           8
Programs Interact with each other and frequently
  have common issues
  – Example: HAMP and PRA and FHA short refinance and
    FHA2LP
  – Reporting required under all programs – data integrity
    and interpretation of reporting requirements.
  – Resources – www.hmpadmin.com




                                                             9
MHA Annual Certification of Compliance –
 Supplemental Directive 10-06
             p           ,                                               ,
  – Due September 30, 2010 with a certification date as of June 30, 2010 for
    signers of Servicer Participation Agreements on or before October 31, 2009.
  – Control testing activities to assess compliance and submit annual
    certification
  – Examples of control objectives – compliance with HAMP underwriting
    guidelines, solicitation of borrowers, investor and third party analysis and
    outreach, evaluation of borrower and property eligibility, appropriately
    forestalling foreclosure initiation/sales and offering alternative foreclosure
    prevention programs, execution of waterfall and net present value (NPV)
    processes, documentation management, borrower payment processing,
    incentive payment processing, reporting requirements and data integrity,
    servicer governance, loan file reviews.
  – Cover letter disclosures of material instances of noncompliance and
    remediation plans
    Confidentiality
  – C fid ti lit
  – Future certifications will address entire time period from prior certification 10
    date and additional programs
Fair Lending and Servicing
  – Nondiscrimination Working Group of the Financial Fraud
    Enforcement Task Force roundtable on fair lending and
    E f          tT kF            dt bl      f i l di       d
    loan modifications held at Dept. of Justice in July 2010
                               p
  – Consistent treatment and policies where there is
    discretion (HAMP discretion is limited)
  – Government Monitoring Data to be released this fall
  – Accommodations for non-English speaking borrowers
  – Complicated analysis - modification not always the best
    outcome for the borrower
  – Concerns with foreclosure process continuing during the
    modification process
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