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Fannie Mae. The Making Home Affordable logo is a trademark of the United States Department of the Treasury and is used under license.

Home Affordable ModificationProgram

An introduction for servicingnon-GSE loans

Guidance Effective for Verified

Trial Period Plans

Revised May 2011

Welcome to this presentation on the Home Affordable Modification Program or HAMP. This

presentation is designed for servicers of non-GSE loans that is, loans that are not owned orguaranteed by Fannie Mae or Freddie Mac.

With respect to non-GSE loans, your participation as a servicer in HAMP is voluntary. This presentationwill introduce you to HAMP, and provide you with the information you need to make an informeddecision about your participation.

If you alsoservice loans that are owned or guaranteed by Fannie Mae or Freddie Mac, note that yourparticipation in HAMP is requiredfor those loans.

IMPORTANT NOTE: With the release of Supplemental Directive 10-01, a new process has beenintroduced. The new process must be used for all HAMP trial period plans with effective dates on or

after June 1, 2010 but can be used prior to this date. This overview describes the new process.

While every effort has been made to ensure the reliability of the content of this presentation, theprovisions of the Supplemental Directives (as further supplemented or clarified in FAQs) govern, andmust be adhered to in the event of any conflict.

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2February 2010 | Making Home Affordable

What is HAMP?

A uniform loan modification process through whicheligible borrowers can have their loans modified to amore affordable monthly payment targeted at 31

percent of their gross monthly income

Lets begin by defining HAMP which is a uniform loan modification process through which borrowers

who are in default, at risk of imminent default, or in foreclosure can have their loans modified to a moreaffordable monthly payment targeted at 31 percent of their gross monthly income. Before themodification is finalized, the borrower must successfully complete a trial payment period.

HAMP is a key component of the Obama Administrations Making Home Affordable initiative that wasintroduced on March 4th, 2009. It is intended to provide relief to millions of homeowners who arestruggling to make their mortgage payments. The program will accept new borrowers throughDecember 31, 2012 and offers significant benefits to borrowers, servicers, and investors alike.

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Benefits to eligible borrowers

Help for those who are struggling to keep their loanscurrent or are already behind with their mortgagepayments

Reduced mortgage payments to sustainable levels

Annual pay for performance principal balancereduction for first five years as incentive to keepmodified loan current Applies to borrowers whose monthly payments are reduced by

at least 6 percent

Calculated as lesser of $1,000 ($83.33/month) or half ofreduction in borrowers annualized monthly payment

Borrowers who satisfy eligibility requirements for HAMP will receive much-needed help, whether they

are struggling to keep their loans current or have already fallen behind with their mortgage payments.

With HAMP, borrowers monthly mortgage payments will be reduced to sustainable levels.

Plus, borrowers whose monthly payments are reduced by at least six percent, will have an additionalfinancial incentive to keep their modified loan current. For the first five years following completion of themodification, they will receive a pay for performance reduction in their principal loan balance, providedtheir modified loan is in good standing. The amount of this reduction is calculated as the lesser of$1,000 or one-half of the reduction in the borrowers annualized monthly payment.

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Benefits to participating servicers

Avoid foreclosures and help make mortgages moreaffordable for borrowers

Financial incentives $1,000 for each completed modification

$500 additional for a modification of a current loan for whichpayment default was imminent

Additional annual incentive for modifications that reduceborrowers monthly payments by at least 6 percent

For first three years

Provided modified loan is in good standing

Calculated as lesser of $1,000 ($83.33/month) or half ofreduction in borrowers annualized monthly paymentamount

As a participating servicer in HAMP, youll contribute to the housing recovery effort by avoiding

foreclosures and help make mortgages more affordable for borrowers.

For doing so, youll be compensated in the amount of $1,000 for each modification you complete plus,$500 for each modification of a current loan for a borrower facing imminent default.

Additionally, youll receive an additional payment for modifications that result in reducing the borrowersmonthly payment by at least six percentprovided the loan remains in good standing. This incentivewill be paid for the first three years of a modification and calculated as the lesser of $1,000 or half ofthe reduction in the borrowers annualized monthly payment amount.

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Benefits to investors

Monthly payment subsidies for the first five years ascompensation for reduction in borrower payments ofhalf of the payment difference between:

Borrowers monthly payment at target monthly mortgagepayment ratio of 31 percent, and

Lesser of borrowers monthly payment at 38 percent, orborrowers pre-modification monthly payment

One-time bonus payment of $1,500 for each loan thatwas current prior to the start of the trial paymentperiodprovided monthly payments are reduced by atleast 6 percent

Additional incentive payments will be paid in marketshardest hit by falling home prices

Investors in non-GSE loans that agree to a loan modification under the Home Affordable Modification

Program receive financial incentive payments, provided the loan servicer has entered into a ServicerParticipation Agreement. Note that for loans held in a lenders portfolio, the lender is considered theinvestor.

During the first five years of a loan modification, the investor will receive monthly payment subsidies ascompensation for agreeing to reduced borrower payments. Each subsidy payment is equal to half of thepayment difference between the borrowers monthly payment at the target monthly mortgage paymentratio of 31 percent and the lesser of the borrowers monthly payment at 38 percent or theborrowers monthly amount prior to the modification.

Additionally, for each modified loan that was current at the start of the borrowers trial payment period,the investor will receive a one-time payment of $1,500 provided the borrowers monthly payments are

reduced by at least 6 percent.

For loans on properties that are located in markets that are hardest hit by falling home prices, additionalincentive payments will be automatically calculated and payable to the investor. For details, refer toTreasurys Supplemental Directive 09-04, which can be accessed from the Web site,www.HMPadmin.com.

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GSEs roles with HAMP on behalf of Treasury

Fannie Mae serves as financial agent, including

Program administrator

Record keeper

Paying agent

Freddie Mac serves as compliance agent

For non-GSE loans, the Treasury has contracted with the GSEs to act on its behalf with regard to

HAMP.

Fannie Mae is serving as the programs financial agent, including acting as its program administrator,record keeper, and paying agent.

Freddie Mac has been designated as the programs compliance agent to monitor participatingservicers to ensure their compliance with all terms and provisions of the program.

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How to become a participating servicer

1. Complete HAMP Registration form

2. Send completed form to HAMP Solution Center via e-

mail to [email protected]

3. Receive e-mail confirmation from HAMP SolutionCenter that includes additional required forms, HAMPRegistration Number(s), and additional instructions

To participate in HAMP, you must enter into a Servicer Participation Agreement with Fannie Mae no

later than October 3, 2010. By entering into this Agreement, you become contractually obligated toparticipate in the program which means you then must consider all loans that may be eligible for amodification. Plus, you agree to all terms and conditions of the program, including--

adhering to all applicable laws, regulations, and practicesfollowing all procedures that are required to maintain eligibility to participate in the programcooperating fully with any compliance reviews or investigations of potential fraud casesand more.

Before initiating the process of becoming a participating servicer, youll want to review the Agreementcarefully to ensure that you are aware of, and prepared to comply with, all terms and conditions. TheServicer Participation Agreement can be accessed from Treasurys HMP website for mortgageservicers, www.HMPadmin.com.

Once you have reviewed the Servicer Participation Agreement and are ready to move forward with theprocess your first step is to complete the HAMP Registration form. The HAMP Registration form, andinstructions for completing it, also can be found on the website, www.HMPadmin.com.

Your next step is to send the completed HAMP Registration form to the HAMP Solution Center by e-mail. To do so, save it in electronic format such as .pdf, then attach it to your e-mail.

Within a few days, you will receive an e-mail from a representative of the HAMP Solution Center,confirming receipt of your HAMP Registration form that includes additional required forms, a HAMPRegistration Number, HAMP Servicer Number(s), and further instructions for completing the registrationprocess.

You also must register for the HAMP Reporting Tool. The HAMP Reporting Tool is available on thesecure servicer area of the HAMP Web site www.HMPadmin.com and is used to report data to the USTreasury. Once you are a HAMP Participating Servicer, you must register for the HAMP Reporting Toolby contacting Lender Processing Servicer, Inc. (LPS) at (866)939-4469 and select Option 1, thenOption 5.

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The HAMP Process

3 Inform the borrower2

Verify eligibility, calculate proposed payment

amount and perform NPV test

1 Request that borrower provide Initial Packagedocuments

5 Conversion from Trial to Permanent Modification4 Trial Period Plan Start

Once you enter into a Servicer Participation Agreement, you are then obligated to consider allborrowers who may qualify for HAMP. The process of completing a modification under HAMP at ahigh level is illustrated here.

Remember, this is the new process that has been introduced as part of Supplemental Directive 10-01and must be used for all HAMP trial period plans with effective dates on or after June 1, 2010 but canbe used prior to this date.

Step 1 Request that borrowers provide Initial Package documentsStep 2 Verify eligibility, calculate the proposed payment amount and perform NPV testStep 3 Inform the borrowerStep 4 Trial Period Plan StartStep 5 Conversion from Trial to Permanent Loan Modification

Now, well walk through each step, in turn.

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Step 1: Request that borrower provide Initial

Package documents

Effective for all trial period plans with effective dates onor after June 1, 2010, you may evaluate a borrower for

HAMP only after you receive the following documents,referred to as the Initial Package

Request for Modification and Affidavit (RMA) Form

IRS Form 4506-T or 4506T-EZ

Evidence of Income and Dodd-Frank Certification

Effective for all trial period plans with effective dates on or after June 1, 2010, you may evaluate a

borrower for HAMP only after you receive the following documents, referred to as the initial packageRequest for Modification and Affidavit (RMA) FormIRS Form 4506-T or 4506T-EZEvidence of Income

The RMA Form provides the servicer with borrower and co-borrower financial information including thecause of the borrowers hardship. The financial and hardship sections of the RMA must be completedand executed by the borrower and, if applicable, the co-borrower. It also solicits data related to therace, ethnicity and gender of the borrower and co-borrower, referred to as Government Monitoring Data(GMD); however, you may not refuse to accept an RMA if this sections is not completed. The RMAForm is available on www.HMPadmin.com.

You may use other proprietary financial information forms that are similar in content to the RMA.However, if you do use other forms then you must obtain an executed MHA Hardship Affidavit. Astandalone version of which is available on www.HMPadmin.com.

All borrowers must provide a signed and completed IRS 4506-T or 4506T-EZ. The 4506T-EZ isencouraged because of its relative simplicity. Both forms are available, in English or Spanish, onwww.HMPadmin.com. The borrower must print, sign and send the form to his/her servicer.

The borrower must provide income verification documentation. Allowable documents aredescribed in the Borrower Income/Asset Documentation and Verification of Eligibility section ofSupplemental Directive 10-01. The income evidence and financial information must not be more than90 days old as of the date the Initial Package is received by the servicer.

Lastly, the Dodd-Frank Certification must be received from the borrower. The Dodd-Frank Wall Street Refoand Consumer Protection Act (Dodd-Frank Act) provides that no person is eligible to begin receiving assistaunder the MHA Program if such person, in connection with a mortgage or real estate transaction, has beenconvicted within the last 10 years of any of the following: Felony larceny, theft, fraud, forgery Money laundering; or Tax evasionA servicer must obtain a completed Dodd-Frank Certification from each borrower. The form is available onwww.HMPadmin.com.

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Step 1: and acknowledge receipt

Within 10 business days following receipt of an InitialPackage, you must acknowledge in writing the

borrower s request for HAMP participation and includethe following details: Confirmation that the Initial Package was received

A description of the servicers evaluation process

A timeline of the servicers evaluation process

Within 10 business days following receipt of an Initial Package, you must acknowledge in writing the

borrowers request for HAMP participation and include the following details:Confirmation that the Initial Package was receivedA description of the servicers evaluation processA timeline of the servicers evaluation process

You may email the acknowledgement if the borrower sent the documents via email.

Ensure that you maintain evidence of the date of receipt of the borrowers initial package in yourrecords.

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Step 1: and verify completeness

Within 30 calendar days following receipt of an InitialPackage, you must review the documentation provided

by the borrower for completeness If the documentation is incomplete, you must send the

borrower an Incomplete Information Notice:

Lists the additional required verification documentation

Include a specific date by which the documentation must bereceived (no less than 30 calendar days from the date of thenotice)

Within 30 calendar days following receipt of an Initial Package, you must review the documentation

provided by the borrower for completeness.

If the documentation is incomplete, you must send the borrower an Incomplete Information Notice that:Lists the additional required verification documentationIncludes a specific date by which the documentation must be received (no less than 30 calendar daysfrom the date of the notice)

If the documents are not received by the date specified in the notice, you must make one additionalattempt to contact the borrower in writing regarding the incomplete documents. This additional noticemust include the specific date by which the documentation must be received which must be no lessthan 15 calendar days from the date of the second notice. If the borrower is still unresponsive, you maydiscontinue document collection efforts and determine the borrower ineligible for HAMP. If this is the

case, you must inform the borrower and consider other loss mitigation options.

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Step 2: Verify eligibility

Borrowers are owner occupants of a one- to four-unitproperty

Unpaid principal balance of loan is equal to or less than $729,750 for one-unit properties

$934,200 for two-unit properties

$1,129,250 for three-unit properties

$1,403,400 for four-unit properties

Borrowers loan is a first lien originated on or beforeJanuary 1, 2009

Borrowers total mortgage payment exceeds 31% of theirgross monthly income

Loan was not previously modified under HAMP

The next step in processing a modification under HAMP is to verify the borrowers eligibility.

Potential candidates may not necessarily be behind in their payments, but will have experienced afinancial hardship resulting in a significant change in their income or expenses that has made itincreasingly difficult for them to make their payments.

To be considered for HAMP, borrowers must meet all of the following requirements.- The property securing the loan must be their primary residence. If it is a two- to four-unit property, theymust occupy one of the units.- The property cannot be vacant or condemned.- The unpaid principal balance of the loan must not exceed $729,750 if it is a one-unit property.Higher limits apply to properties with two- to four-units.- The loan must be a first lien that was originated on or before January 1, 2009.

- The borrowers total mortgage payment including principal, interest, taxes, insurance, andhomeowner association dues must exceed 31% of their verified gross monthly income.- And finally, the loan must not have previously been modified under HAMP as loans can only bemodified under the program once.

Note that while borrowers are being considered for HAMP, any foreclosure proceedings shouldtemporarily be suspended.

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Step 2: verify eligibility (cont.)

Determine legitimate financial hardship, including oneor more of the following causes Reduction or loss of income

Change in household financial circumstances

Increase in expenses

Lack of sufficient cash reserves

Excessive monthly debt payments

Other reasons for hardship

Next, you must determine financial hardship and review the borrowers financial information.

You will need to determine they have experienced a legitimate financial hardship. Legitimate causes offinancial hardship include one or more of the followingA reduction or loss of income,A change in household financial circumstances,An increase in expenses,A lack of sufficient cash reserves excluding retirement accounts and emergency funds,Excessive monthly debt payments and overextension with creditors, orOther reasons for hardship.

Borrowers who inform you about a hardship while they are current or less than 60 days delinquent mustbe screened for imminent default. In making this determination, you will need to evaluate the

borrowers financial condition in light of the hardship and inquire about the condition of the propertysecuring the loan. Once you make the determination of imminent default, you must document the basisfor your decision in your servicing system and retain any documentation that was used to reach it,including information on the borrowers financial condition and circumstances of the property securingthe loan.

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Review borrowers financial condition, including

Monthly gross income Borrowers income before any payroll deductions

If only net income available, multiply it by 1.25 to estimatemonthly gross income

Monthly mortgage payment Borrowers monthly housing payments

Do not include mortgage insurance premium payments orpayments to holders of subordinate liens

Monthly mortgage payment ratio Borrowers monthly mortgage payment divided by monthly

gross income

Must exceed 31 percent to be eligible for modification

Next, you perform a review of the borrowers financial condition.

You must first determine whether the borrowers monthly mortgage payment ratio exceeds 31% - oneof the eligibility requirements for HAMP. To do so, you must first determine the borrowers monthlygross income.

The borrowers monthly gross income is the amount of total income before any payroll deductions.Income includes wages, salary, overtime fees, commissions, tips, social security, pensions, and allother income. Monthly net income may be used to estimate monthly gross income at this early stage,although borrowers will be required to provide income documentation later in the process. To do so,multiply monthly net income by 1.25 for an estimated monthly gross income.

Next, determine the borrowers monthly mortgage payment. Include in this calculation the total of

principal, interest, taxes, hazard and flood insurance, homeowners association and/or condominiumfees but do not include mortgage insurance premium or payment to subordinate lien holders.

Finally, calculate the monthly mortgage payment ratio to determine whether it is greater than 31percent. The monthly mortgage payment ratio is the ratio of the borrowers monthly mortgage paymentto monthly gross income.

If you find that a borrower is not eligible for HAMP at this stage, you should inform the borrower andconsider other foreclosure prevention alternatives.

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Monthly gross expenses

Borrowers total housing payments plus all recurring monthlydebt payments

Obtain credit report to validate Monthly debt ratio

Borrowers monthly gross expenses divided by monthly grossincome

If exceeds 55 percent, must send Home AffordableModification Program Counseling Letter to borrower

In addition, you will need to verify the borrowers monthly gross expenses and monthly debt ratio.

The monthly gross expenses are the borrowers total housing payments plus all recurring monthly debtpayments, including installment loans, revolving credit accounts, monthly payments on all subordinateliens and more. For a detailed list, refer to Treasurys Supplemental Directive 09-01, which can beaccessed from the Web site, www.HMPadmin.com.

To validate the borrowers installment debt and other liens, you must obtain a credit report for eachborrower or co-borrower.

The monthly debt ratio is the borrowers monthly gross expenses divided by monthly gross income. Ifthe monthly debt ratio exceeds 55 percent, you must send the Home Affordable Modification ProgramCounseling Letterto the borrowers requiring that they work with a HUD-approved counselor to reduce

their monthly debt to less than 55 percent of monthly gross expenses. The letter includes a list of localHUD-approved housing counseling agencies and directs the borrower to the appropriate HUD website.Note that face-to-face counseling is preferred, although telephone counseling is acceptable, provided itcovers the same topics as face-to-face sessions.

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Step 2: and calculate proposed payment

amount

Follow these stepsin this orderuntil target of 31%monthly mortgage payment ratio is reached:1. Capitalize accrued interest, escrow advances, and

servicing advances by adding to loan balance (ifallowed by applicable law)

2. Reduce interest rate in .125% increments, to not lessthan 2%

3. Extend mortgage term up to 480 months

4. Provide principal forbearance only if needed to reach31% target

Lastly, add monthly mortgage insurance payment (ifapplicable) and monthly escrow payment to be collected

The next step in the process is to calculate the proposed monthly mortgage payment amountand

perform the NPV test.

To calculate the proposed monthly payment amount, complete each step listed here and proceed tothe next one only if needed, to reach the target of 31 percent monthly mortgage payment ratio.First, capitalize any amounts due from the borrower to cover accrued interest, plus to reimburse you forescrow advances you incurred to cover taxes and insurance premiums, or servicing-related expenses.Note that late fees may not be capitalized and must be waived if the borrowers satisfy all terms of thetrial period plan. In the case of escrow advances, you will need to perform an escrow analysis todetermine whether there are sufficient funds in the borrowers escrow account, taking into account anytax and insurance premiums that may come due during the trial period. Any shortage that is identifiedwould be included in the capitalized balance as permitted by applicable laws

Next, reduce the interest rate. If the loan is a fixed-rate mortgage or an adjustable-rate mortgage, usethe current interest rate as the starting interest rate. In the case of an ARM loan that is scheduled toreset in the next 120 days, the starting interest rate is the greater of the current rate or the reset rateusing the index value as of the date of the evaluation. Now, reduce the starting interest rate inincrements of 1/8 percent to get as close as possible to a 31% target for the monthly mortgagepayment ratio. In all cases, the interest rate floor is 2 percent. Note that if the resulting interest rate isbelow the market rate as of the date the trial period plan is prepared, after 5 years, the interest rate willneed to be stepped up in annual one percent increments or less, if needed to reach the applicablemarket rate of interest that was in effect when the modification documents were prepared. From thatpoint on, the interest rate will remain fixed for the remaining life of the loan. Also note that, while youmay choose to reduce the borrowers monthly mortgage payment ratio to below 31 percent, allincentive payments will be calculated and paid based on the target ratio of 31 percent

Next, extend the mortgage term to up to 480 months from the modification date, re-amortizing thepayments over the extended term.

Finally, if you still have not reached a 31% monthly mortgage payment ratio, provide for principalforbearance, which will result in a balloon payment fully due and payable upon the earlier of theborrowers transfer of the property, payoff of the interest bearing balance, or loan maturity. Theprincipal forbearance amount is non-interest bearing and non-amortizing. You may also opt for principalforgiveness.

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Once you have calculated the proposed payment amount, add the amounts to be collected monthl

cover mortgage insurance payments if applicable and escrow collections. In the case of a

nonescrowed loan that is being considered for HAMP, you must establish an escrow deposit accou

and advise the borrower of this requirement before the start of the trial payment period.

Beginning on October 1, 2010, servicers must evaluate any mortgage loan that is being considered

HAMP with a mark-to-market LTV ratio greater than 115% using both the standard modification wa(described previously) and the alternative modification waterfall, which includes principal reduction

the required second step of the waterfall.

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Step 2: and perform NPV test

Compares the net present value (NPV) of cash flowswith modification and without modification

If NPV test is positive Indicates NPV is greater with modification

In this case, HAMP must be offered (exceptions apply)

If NPV test is negative

Indicates NPV is greater without a modification

In this case, the servicer may decidesubject to the investorsapproval, if applicablewhether or not to offer HAMP(exceptions apply)

The Net Present Value or NPV test is used to determine whether a Home Affordable Modification is

required.

It provides a comparison of the net present value of the economic results that would be expected with amodificationversus without a modification.

If the NPV test result is positive this indicates that the net present value is greaterwitha modification.In this case, you are required to pursue with the borrowers a modification under HAMP although someexceptions apply.

Conversely, if the NPV test result is negative this indicates that the net present value is greaterwithnomodification. In this case, it is up to yousubject to the investors approvalwhether or not topursue a modification under HAMP although some exceptions apply. If you decide against it, you will

need to explore other foreclosure prevention options, including alternative modification programs,deeds-in-lieu, preforeclosure sale programs, and the Hope for Homeowners refinance option.

To perform the NPV test, you will enter a property valuation into an NPV model. For the propertyvaluation, you may use an automated valuation model, provided it offers a reliable confidence score or a brokers price opinion.

The NPV Model and instructions for submitting proposed modification data and retrieving andinterpreting the results can be found on the website, www.HMPadmin.com. The instructions alsodescribe the exceptions that may apply.

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Step 3: Inform the borrower

Within 30 calendar days following receipt of an InitialPackage, you must complete verification of the

borrowers eligibility, calculate the proposed paymentamount and perform NPV test. If the borrower is deemed eligible, then send the borrower a Trial

Period Plan Notice

If the borrower is deemed ineligible, you must communicate thisdetermination to the borrower and consider other loss mitigationoptions

Within 30 calendar days following receipt of an Initial Package, you must complete verification of the

borrowers eligibility, calculate the proposed payment amount and perform NPV test.If the borrower is deemed eligible, then send the borrower a Trial Period Plan NoticeIf the borrower is deemed ineligible, you must communicate this determination to the borrower andconsider other loss mitigation options

The Trial Period Plan Notice describes the terms of the trial modification and the payment due dates.

Borrowers are not required to sign the TPP Notice but a servicer must retain a copy of the TPP Noticein the borrower file and note the date it was sent.

Note that beginning December 1, 2009, when a mortgage loan has been evaluated for HAMP, thencertain data including identifying information, government monitoring data, NPV model input data and

reason codes must be collected and reported to Fannie Mae, as program administrator. Prior to June 1, 20a mortgageloan has been evaluated for HAMP using stated information, if one of the following has occurr

- A borrower has submitted a written request (either hardcopy or electronic submission) for considerationfor a HAMP modification which includes, at a minimum, current borrower income and a reason fordefault or explanation of hardship, as applicable; or- A borrower has verbally provided sufficient financial and other data to allow the servicer to complete aNet Present Value (NPV) analysis; or- A borrower has been offered a Trial Period Plan

A borrower has been evaluated for HAMP using verified information on or after June 1, 2010 if the borrowsubmitted an initial package to the servicer.

The data must be provided as per the Schedules outlined in Supplemental Directive 09-06 which isavailable on www.HMPadmin.com and reported via the HAMP Reporting Tool which is also available atwww.HMPadmin.com.

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Step 4: Trial Period Plan Start

To start the trial period, the borrower must return thefirst trial payment

Borrowers first trial period payment must be receivedno later than the end of the month in which it is due orTrial Period Plan offer expires

The effective date of the trial period will be set forth inthe Trial Period Plan Notice and is the first day of themonth in which the first trial period plan payment isdue

To start the trial period, the borrower must return the first trial payment.

Borrowers first trial period payment must be received no later than the end of the month in which it isdue or Trial Period Plan offer expires.

The effective date of the trial period will be set forth in the Trial Period Plan Notice and is the first day ofthe month in which the first trial period plan payment is due.

As the expiration date of an offer approaches, you are encouraged to contact borrowers who have notresponded.

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Step 4: Trial Period Plan Start (cont)

About trial period Borrower must successfully complete

Generally, three months in duration May last longer, if required by applicable contract terms

During trial period

Must report loan-level data through www.HMPadmin.com

Apply trial payments to loan balance once total at least fullcontractual monthly payment

The trial payment period lasts for three months - although it may be longer, if necessary, to comply with

the terms of any applicable contracts with an investor, for example.

During the trial period, you must report your collections through www.HMPadmin.com. For detailedinstructions for establishing loans in the HAMP reporting system and reporting collection activity,including specific data elements, refer to the job aids that are accessible on www.HMPadmin.com.

As trial period payments are collected, they should be held as unapplied funds, provided this ispermitted by the applicable loan documents and applicable law. Once the amount of trial periodpayments collected total at least a full monthly contractual payment amount, it must be applied as apayment to the loan balance. Any funds remaining as unapplied at the end of the trial period should beapplied to the loan balance.

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Step 5: Conversion from Trial to Permanent

Modification

After receipt of second trial payment Send Home Affordable Modification Agreement and Cover

Letter to borrowers

At the end of the trial period Borrowers must have submitted all the trial payments to

receive a permanent loan modification (borrower must becurrent where current is defined as the borrower havingmade each trial period payment by the last day of the month inwhich it is due)

After receipt of the second trial period payment, prepare and send the Home Affordable Modification

Agreement and Cover Letter to borrowers. These documents, and instructions for preparing them, canbe found at www.HMPadmin.com.

At the end of the trial period, borrowers must be current for their loan modification to be madepermanent. For this purpose, current is defined as all required trial payments having been received bythe last day of the month in which it is due

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Step 5: execute modification

Modification takes effect On first day of calendar month immediately following final trial

period payment monthwith one exception

Exception: If receive borrowers final trial period payment afterdue date, but by end of trial period, you may opt to acceptmodification with an effective date of first day of second monthfollowing final trial period month

Report modified loans through www.HMPadmin.com Loan setup must be established on day after final trial payment

applied

Loan activity must be reported monthly, beginning the monthfollowing loan setup

Once the borrowers successfully complete the trial period and returns the signed Modification

Agreement the modification takes effect on the first day of the calendar month immediately followingthe final trial period payment month with one exception.

If the borrowers do not pay the final trial period payment on or before its due date as specified in theTrial Period Plan Notice you may at your option, accept the modification with an effective date of thefirst day of the second month following the final trial period payment month.

One day after the final trial payment is applied, the loan setup process must be completed to establishthe modified loan in the HAMP reporting system.

The month after the loan setup process is completed, you must begin to report monthly loan activitythrough www.HMPadmin.com.

Detailed instructions and specific data elements for the loan setup process and loan-level reporting areprovided on www.HMPadmin.com.

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Once modification is executed

Receive incentive payments $1,000 for each completed modification

Additional incentive payments, as applicable

Continue to report through www.HMPadmin.com Monthly loan activity for all modified loans

For as long as each modified loan is eligible for incentivepayments

Protect first lien position Take any steps necessary to ensure fully enforceable

Once a modification is executed, there are a few things you need to know and do.

First, you will receive the one-time incentive payment of $1,000 once the borrowers successfullycomplete the trial period. Additional incentive payments that apply will be paid, as they are accrued. Itwill be your responsibility, then, as the servicer, to distribute incentive payments due your organizationor the investor, or to apply them to reduce the borrowers loan balance, as applicable.

After a modification is complete, continue to report monthly loan activity to Fannie Mae for as long asthe loan is eligible for incentive payments.

In addition, take any steps that are necessary to protect a loans first lien position to ensure it is fullyenforceable.

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Once modification is executed (cont.)

Additional reporting requirements Monthly full-file status reports to major credit repositories

Compliance with all reporting required by mortgage insurer

Transfers of servicing If transfer servicing of modified loans to another servicer, must

provide special notification to receiving servicer

If modified loan becomes 90 or more days delinquent No longer eligible for borrower, servicer, or investor incentives

Will not be eligible for another modification under HAMP

Evaluate borrower for other loss mitigation options

Once a loan is modified, you will need to continue to report a full-file status report to the four major

credit repositories. Full-file means that you must describe the exact status of each mortgage as of thelast day of each month. In the case of borrowers who are current when they enter the trial period, youmust report them as current but on a modified payment.

In addition, you will need to comply with all reporting required by mortgage insurers. Consult with themortgage insurer for their specific requirements related to the reporting of modified terms, payment ofpremiums, and payment of claims for mortgages modified under HAMP.

If at some point, you transfer the servicing of loans that have been modified under this program toanother servicer, you will need to provide special notification to the receiving servicer to advise thatloans modified under HAMP are part of the portfolio being transferred. Additionally, you must confirmthat the receiving servicer has entered into a Servicer Participation Agreement, is aware of the special

requirements for these loans, and agrees to assume the additional responsibilities associated withservicing them. Note that the Servicer Participation Agreement includes an assumption and agreementform that must be used for transfers of servicing.

If a modified loan subsequently becomes 90 or more days delinquentthat is, three payments are dueand unpaid as of the last day of the third monththe loan will no longer be considered in goodstandingwhich means that it will no longer be eligible for incentive payments. Once lost, goodstanding cannot be restored even if the borrower subsequently cures the default. If a borrower is unableto cure the default, you will need to evaluate the borrower for any other available foreclosure preventionalternatives.

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Next steps

Learn more about HAMP

For servicer information, including step-by-step job aids, visitwww.HMPadmin.com

For consumer information, visit www.makinghomeaffordable.gov Review Servicer Participation Agreement

For details on terms and conditions of program

To access, visit www.HMPadmin.com

Complete and send HAMP Registration form To access form and instructions, visit www.HMPadmin.com

Contact HAMP Solution Center E-mail: [email protected]

Call: (866) 939-4469

As we stated earlier, the purpose of this tutorial is to provide you and other servicers of non-GSE loans

an overview of the Home Affordable Modification Program. Hopefully, we have succeeded in doing so.Please give us your feedback by completing a brief evaluation survey that follows.

To learn more about the Home Affordable Modification Program for non-GSE loans, visit the website,www.HMPadmin.com.To learn about Home Affordable Modifications for GSE loans, visit Fannie Maes website,www.efanniemae.com or Freddie Macs website, www.freddiemac.com.

To view consumer information on the Home Affordable Modification, visit Treasurys website forconsumers, www.makinghomeaffordable.gov.

For details on the terms and conditions of the program, review the Servicer Participation Agreement,

which you can access from the website, www.HMPadmin.com.

To initiate the process of becoming a participating servicer, complete and send the HAMP Registrationform, which also can be accessed from the website, www.HMPadmin.com, along with instructions forcompleting it.

Finally, if you have questions about HAMP, contact the HAMP Solution Center by sending an e-mail [email protected] or by calling 866.939.4469.

Thank you for your interest in the Home Affordable Modification Program. As a mortgage servicer atthis difficult time, you play a key role in helping borrowers avoid foreclosure and being part of thesolution to the nations housing crisis.

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HAMP Updated 5.23.11