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Laurie Anne Maggiano, Senior Policy Advisor Office of Single Family Asset Management
HOPE for Homeowners(H4H)
Servicing
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Servicing H4H Loans
Preserving
the Dream
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• First mortgage serviced by holder/designee
• SEM and SAM mortgages serviced by
U.S. Department of HUD
c/o C&L Service Corp./Morris-Griffin Corp.
2488 East 81st Street, Suite 700
Tulsa, Oklahoma 74137
H4H – Loan Servicers
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• Standard FHA Requirements
• Loss Mitigation
• Prohibition on Subordinate Financing
• Refinance Restrictions
H4H – First Mortgage Servicing
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Home Retention Options
Special Forbearance – no change
Modification – HUD will subordinate SEM and SAM
Partial Claim – Subordination not required
H4H – Loss Mitigation
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Disposition Options
Pre-Foreclosure Sale – use existing ratios, $2,000 allowance for lien payoff only available for preservation liens
Deed-in-Lieu – $2,000 allowance for lien payoff only available for preservation liens
H4H – Loss Mitigation
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Impact of 1st Payment Default
Servicer must provide loss mitigation
HUD unable to pay claim
H4H – Loss Mitigation
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5-year prohibition on any
subordinate financing
except to
preserve and protect the property
H4H – Subordinate Financing
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• Only for health and safety or property deterioration • No cosmetic or routine maintenance• Cost must be reasonable• Closed-end loans only – no HELOCs• Loan cannot reduce HUD’s equity share • CLTV = to or less than 95% of new appraisal
Contact NSC for approval
H4H – Subordinate Loan Requirements
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• No refinance in year 1• No FHA streamlined refinance ever• No refinance to reverse mortgage• Limits on accessing equity and
appreciation• Any refinance must payoff SEM
H4H – Refinance Restrictions
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Equity Refinance
Equity Refinance Only in Years 2 to 5
30 year/fixed with lower payments
Proceeds must pay off HUD’s equity share
Only initial and earned equity can be used
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Property value at origination $100,000
Initial H4H loan balance $ 90,000
Loan balance 3 years after orig. $ 89,000
Property value after year 3 $110,000
Principal pay off $ 89,000
Initial and earned equity $ 11,000
Max refinance amount $100,000
Equity Refinance Example
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• New P&I must be lower than H4H mortgage
• $7,000 (70%) of proceeds must be used to pay off SEM
• Borrower has $5,000 for transaction costs and proceeds
• No impact on SAM
Equity Refinance Example (Cont’d)
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Limited Appreciation Refinance After Year 5
Cash out limited to initial and earned equity and 25% of appreciation
SAM modified to state fixed amount of appreciation due to HUD plus 50% of future appreciation
Appreciation Refinance
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Property value at origination $100,000
Initial H4H loan balance $ 90,000
Loan balance in year 6 $ 88,000
Property value year 6 $120,000
Principal pay off $ 88,000
Initial and earned equity $ 12,000
25% of appreciation $ 5,000
Max refinance amount $105,000
Appreciation Refinance Example
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• $5,000 of proceeds must be used to pay off SEM
• Borrower has $12,000 for transaction costs and proceeds
• SAM modified to reflect $10,000 due to HUD plus 50% of future appreciation
Appreciation Refinance Example (Cont’d)
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• SEM and SAM must be paid on sale
• Closing agent sends payoff demand and appraisal
• NSC receives SEM/SAM proceeds
• NSC pays ASC holders in exchange for surrender of certificates
Sale and Payoff of H4H Loans
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• Equity = value at origination less H4H loan amount
• Sliding scale for equity shareDuring Year 1 100% of equity due to FHADuring Year 2 90% of equity due to FHADuring Year 3 80% of equity due to FHADuring Year 4 70% of equity due to FHADuring Year 5 60% of equity due to FHAAfter Year 5 50% of equity due to FHA
H4H – Equity Share Payoff
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• Earned equity (decrease in loan balance) is property of the borrower unless net proceeds are not enough to pay FHA’s share
H4H – Equity Share Payoff (Cont’d)
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• SAM due only on sale – may not be paid earlier
• Appreciation = net proceeds from sale less appraised value at origination
• Arms length transaction
• Limit on closing costs
• Credit for capital improvements
H4H – Appreciation Share Payoff
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• Appreciation reduced by 75% of cost of capital improvements if
Cost was greater than $2,500Borrower can provide invoicesWork significantly enhanced property value Cost was reasonableNo interior décor, routine landscaping, or
repairsNo allowance for sweat equity
H4H – Capital Improvement Credit
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• H4H loans will not be included in Tier Ranking Scores
• Tier 1 lender benefits will apply to H4H claims
H4H and Tier Ranking
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NSC will monitor H4H loans through
Statistical analysis of lender default and FC rates
Servicing Desk Reviews
Referral to Quality Assurance/Mortgagee Review Board for noncompliance findings or failure to engage in loss mitigation
Monitoring H4H Servicers
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National Servicing Center
• FHA Call Center – 1-800-Call FHA
• Policy Guidance – [email protected]
• Data Requests – [email protected]
H4H Servicing Help