Making Home Affordbale Counselor Training September Presentation

8/14/2019 Making Home Affordbale Counselor Training September Presentation

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September2009lMakingHomeAffordable 1

MakingHomeAffordable

InformationforHousingCounselors

September2009


2/27


TodaysTopics:

MHAProgramexplanation&features

Frequentlyaskedquestions

Optionstohelpborrowerswhoarenoteligiblefor

therefinanceormodificationprograms

Additionalresources


3/27


MortgageMarket

in

Crisis

Millionsofhomesareinforeclosureoratrisk

Homepricescontinuetofall

Trillionsof

dollars

in

real

estate

value

lost

Millionsoffamiliesareunderwater

Joblossescontinuetoincrease


4/27


MakingHome

Affordable

Homeowner

Affordability&

StabilityPlan

MakingHome

AffordableProgram

HomeAffordable

Refinance

HomeAffordable

Modification

Administration

Plan

ProgramforHomeowners

Programs

Available


5/27


GettingStarted

EasytoUseMainNavigationfor

HomeownerstoQuicklyFind

Information

OntheHomePage,consumerscan

access:

SpanishContent

1888995HOPE(4673)

BewareofScams

InformationVideo

HelpfulLinksinFooterSampleHomePage

AccessChecklisttoPrepare

BorrowerstoSpeakwiththeir

MortgageLenderorCounselor


6/27September2009lMakingHomeAffordable 6

EasytoUseMainNavigation

forServicerstoQuicklyLearn

AboutHAMP

FromtheHomePage,servicerscan

access:

RegistrationInformationandForms

WebTraining

FAQs

Newsand

Updates

Guidance

For

Servicers:

www.HMPadmin.com

SampleHomePage

AccessHardshipAffidavitand

OtherModification

Documents

EasyAccesstothe

SupplementalDirective

ProgramGuidelines



HomeAffordable

Refinance

Program

(HARP)

Purpose

Gives

borrowers

the

opportunity

to

refinance

intomoreaffordableloansattodayslowerrates

OnlyforborrowerswithFannieMaeorFreddie

Macloans

Scope

Estimated

millions

of

borrowers

are

eligible



HARPEligibility

Criteria

Borrower:

Owneroccupant

of

a

14unitproperty

Iscurrentonthe

mortgage

Hasreasonableabilitytopaythenew

mortgage

payment

Loan:

Mortgageis

owned

or

guaranteedbyFannieMaeorFreddieMac

Amountof

first mortgage

doesnotexceed125%ofpropertyscurrentmarketvalue

Refinancewillimprovelongtermaffordabilityorsustainabilityoftheloan



Noequityrequirement

Nocombined

loan

to

value

requirement

MIflexibilitiesforloanswithhigherLTVs

Fastertoqualifyandmaybelessexpensiveto

process

Limitedcashouttocoverclosingcostsonly;nodebt

consolidation

How

Does

HARP

Differ

from

other

Refinances?



HowDoes

aBorrower

Apply

for

HARP?

First,determinebasiceligibilityusingtoolson

www.MakingHomeAffordable.gov

Borrowersmaycontacttheircurrentserviceror

anylenderapprovedbytheinvestor subjectto

LTVlimitations

Keyfor

Counselors

make

sure

borrowers

understand:

Refinanceisthroughbanksmortgagelendingshop

Modificationisthroughbanksservicingshop



HomeAffordable

Modification

Program

(HAMP)

Purpose

Modifies

loans

of

qualifying

at

risk

borrowers

to

achieveaffordablepayments

Allowsborrowerstokeeptheirhomes

Reducesimpactofforeclosureoncommunities

Incentivesencourageparticipationfromallparties

Uses

clear

and

consistent

guidelines

Scope

Estimatedmillionsofborrowersareeligible



HAMP

Eligibility

CriteriaBorrower: Owneroccupantof14unit

property

Hassufficient,documentedincometosupportthemodifiedpayment

Hasfinancial

hardship

and

is

delinquentoratriskofimminentdefault

Loan: Amountowedonfirst

mortgageequaltoorlessthan

$729,750 Mortgageoriginatedonor

beforeJanuary1,2009

Firstmortgage

payment

(PITI

+homeownerassociation/

condofees)isgreaterthan31%ofborrowersgross

income

KeyForCounselors

EducateborrowersaboutMHAoptionstoavoidforeclosure

MakeinitialdeterminationofeligibilityforHAMPorotheroptions



DeterminingImminent

Default

Borrowerswhoarecurrentontheirloansbutare

struggling

to

make

payments

may

also

be

eligible

forHAMPifthey:

Haveadocumentedhardship decreaseinincome,increaseinexpenses,facinginterestrateincreasewithinthenextfourmonths,etc.

Do

not

have

sufficient

savings

or

other

liquid

assets

to

makefuturepayments



Restrictionson

HAMP

Eligibility

Originatedafter January1,2009

PreviouslymodifiedunderHAMP

Securedby

investment

properties

or

secondary

residences

Securedby

vacant

or

condemned

properties

HAMPexpiresDecember31,2012



ModificationProcess:

Determine

Eligibility

Determineifborrowermeetsminimumeligibilitycriteria

Obtainborrowersincomeanddebtinformation

Mayrelyonverbalinformationfortrialperiodbutservicerwillneedtoverifyanddocumentbeforemodification isfinal

Calculateborrowerstargetmodifiedpaymenttoreachdebttoincome

ratio

of

31%

KeyforCounselors

Assemble

documentation

and

stress

importance

of

submittingdocumentationbeforetrialperiodisover

Prepareborrowertoworkeffectivelywithservicer

Facilitateborrower/servicerinteraction

Providemandatory

counseling

for

borrowers

with

DTI

>55%



Modification

Process:

Calculate

Modified

PaymentServicerperformsthefollowingsteps,inorder,necessarytoreachtargetmodificationpayment

Step1:Capitalizesoutstandingdebt,escrowadvancesand

outofpocketservicingexpenses(nolatefees

allowed)

Step2:

Reduces

the

interest

rate

to

as

low

as

2%

Reducedrateremainsfixedfor5yearsandincreases1%peryear

thereaftertomarketinterestrateattimeofmodification

Step3:

Extends

loan

term

up

to

40

years

Step4:Defersaportionoftheprincipal,interestfree,until

loanispaidoff



ModificationProcess:

Perform

NPV

Test

NPVtestdeterminesifmodificationbenefitsinvestor

If NPVtestispositive,servicermustmodifyloan

If NPV

test

is

negative,

servicer

may

modify

loan,

but

is

notrequiredto

PositiveNPVtestisnotrequiredforGSEloans

NPVtest

factors

include:

Homevaluerelativetomortgageamount

Likelihoodofforeclosure

Homepricetrends

Costofforeclosureandcostofmodification

Default

rate

and

discount

rate



When

Does

HAMP

Take

Effect? Aftereligibility,modifiedpaymentcalculation,andNPVtest,serviceroffersborrower3monthtrialmodificationplan

Borrowersignsandreturnstrialmodificationplanwithfirsttrialpayment

Modificationis

final

after

borrower

successfully

completes

all

3trial

period

paymentsandreturnsallrequireddocumentationincludingsigned

modificationagreement

Ifborrower

does

not

complete

trial

period

or

defaults

(90+

days

past

due)

after modificationtakeseffect

Servicerwillevaluateborrowerforotherlossmitigationoptionsbefore

resumingforeclosureproceedings

Servicer

cannot offer

anew

Home

Affordable

Modification

KeyforCounselors

Helpborrowersunderstandmoddocsandimportanceofreturning

themto

servicer

Coachborrowersforlongtermsuccess



SecondMortgage

Lien

Modification

Program

(2MP)

Purpose

Modifies

2

nd

mortgagesof

qualifying

at

risk

borrowerstoachieveaffordablepaymentsonboth

mortgages

Incentives

encourage

participation

from

all

parties

Scope

Estimated

that

up

to

50%

of

at

risk

borrowers

with

1st mortgageshave2nd mortgages



2MPcontinued

A2nd mortgagelienmaybeeligiblewhen

The

mortgage

lender

is

a

participant

in

the

SecondMortgageLienModificationProgramunderHAMP

Borrowerscorresponding

1

st

mortgageis

modifiedthroughHAMP

MortgageoriginatedonorbeforeJanuary1,

2009 3rd and/or4th mortgageliensarenoteligible



2MPContinued

Mayonlybemodifiedonce

Nofeechargedtomodify

Borrowermustprovideconsenttosharetheir1st

mortgagelienmodificationdatawiththe2nd

mortgagelender

ifthe

lenders

are

two

different

parties



AreLenders

Required

to

Participate?

ServicersofFannieMaeandFreddieMacloans YES

Forother

loans,

participation

is

optional.

However,

significantfinancialincentivesencourageparticipation

byborrowers,mortgagelendersandinvestors

ListofparticipatingservicersofnonGSEloansis

available

at


Participatingservicersmaynotproceedwith

foreclosure

sale

until

borrower

has

been

evaluated

for

MHA


23/27



IncentivesRewardSuccess

Borrowers

Nocostformodification

Increaseequityon1st mortgagefrommodified1st and2nd mortgages

MustmaketimelypaymentsforServicer/Borrowertoreceiveincentives

Servicers

Incentive

for

interest

rate

reduction

for

first

and

second

mortgages Additional$500ifborrowerfacedimminentdefault

Incentivetoreducemonthlypaymentby6%ormore

Investors Incentiveforinterestratereductionforfirstandsecondmortgages

Additional$1,500tomodifyloansinimminentdefault

Home

Price

Decline

Protection

incentive

accrues

over

2

year

period

for

loansinmarketswherepropertyvaluescontinuetodecline


25/27


ComingAttractions

Consumeroutreachtohardesthitforeclosureareas

Foreclosurealternatives

when

modification

is

not

the

answer

Integrationof

FHA/VA/USDA

Loans

NPVmodelviawebportal


26/27


AdditionalResources Programdetailsforborrowers,servicersandcounselors


www.FinancialStability.gov

www.HMPadmin.com

ForImmediateBorrowerAssistance:

Call1888

995

HOPE (4673)

FannieMae

www.fanniemae.com or

1800

7Fannie

or

www.efanniemae.com

Freddie

Mac www.freddiemac.com or1800Freddie


27/27

MakingHomeAffordable


1888995HOPE(4673)

QuestionsandAnswers