September 2009 | Making Home Affordable Making Home Affordable

September 2009 | Making Home Affordable

Making Home Affordable

2September 2009 | Making Home Affordable

Home Affordable Modification Program (HAMP)Administration• Fannie Mae

• Office of Home Ownership Preservation – Policy and Operations

• Interagency Involvement• Federal Reserve Board• Federal Housing Administration• Comptroller of the Currency• Office of Thrift Supervision• Federal Housing Finance Agency• Federal Deposit Insurance Corp.

Compliance and Oversight• Freddie Mac

• Office of Financial Stability – Compliance Office

• Special Inspector General - TARP

• OMB / GAO / Congressional Committees


HAMP Servicer Participation

• Servicers of loans owned or securitized by Fannie Mae or Freddie Mac must participate in HAMP and 2MP

• 62 Servicers have signed SPAs for non-GSE book

85%

15%Participating Servicers

Non Participating Servicers

~

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Compliance

• Validation of information reported through the MHA Data Reporting system (IR2)

• Public performance reports by Servicer published at www.financialstability.gov

• On site and desk audits of all participating Servicers by Freddie Mac

• Second Look – new compliance process sampling– Loans evaluated but not approved for HAMP– 60+ delinquent loans not evaluated for HAMP



Information and Escalation

• WWW.MakingHomeAffordable.gov

• Servicer / Counselor web www.hmpadmin.com

• Borrower Call Center 1-888-995-HOPE (4673)• General inquires / MHA Escalation Team

• Counselor/Government Escalation • 866-939-4469• [email protected]


Borrower Web Site

Easy-to-Use Main Navigation for Homeowners to Quickly Find

Information

On the Home Page, consumers can access: Spanish Content 1-888-995-HOPE (4673) Beware of Scams Information Video Helpful Links in FooterSample Home Page

Access Checklist to Prepare Borrowers to Speak with their Mortgage Lender or Counselor

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Second Lien Modifications - 2MP • Separate Servicer Participation Agreement –

servicers may opt in for HAMP/2MP or both• 2nd lien automatically modified if corresponding first

lien is modified through HAMP• 2nd lien interest reduced to:

- 1% (amortizing) - 2% (I/0) for five years - Year 6 rate steps up to match rate on 1st

• Loan term extended to match first mortgage• If HAMP included principal deferment, 2nd lien

modification must include pro-rata deferment September 2009 | Making Home Affordable

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2MP Payoff Option• Investor may choose to accept a cash payment

from Treasury in exchange for writing off the debt- Payoff amounts range from 4% to 12% of the unpaid

principal balance based on CLTV and the borrower’s back end DTI

- If loan is more than 6 months delinquent the maximum payoff is 3%

- Borrower must be released from all liability for repayment

- Borrowers cannot be charged a fee for 2nd lien modification or payoff


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Home Price Decline Protection• Additional investor incentive to modify loans in markets

where property values continue to decline

• HPDP incentive– Fixed amount per property calculated based average price

decline in prior quarters– Payments accrue monthly for 24 months, paid annually

• Automatic – No action required by borrower or servicer

• Results in greater number of positive NPV outcomes especially in areas with greatest price depreciation


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Incentives Balance Interests Of All Parties • Borrowers:

- Pay for success - accrues monthly, paid annually to reduce principal

- Up to $1,000 for HAMP* and fixed at $250 for 2MP

• Investors:- Incentive for interest rate reduction for HAMP* and 2MP

- $1,500 up front payment to modify first liens in imminent default

- Home Price Decline Protection incentive* – varies by geography

• Servicers:- Up front incentives - $1,000 for HAMP* and $500 for 2MP

- Additional $500 if HAMP* borrower is in imminent default

- Pay for performance incentive up to $1,000 – accrues monthly paid annually

* Borrowers monthly payment must be reduced by at least 6%


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Foreclosure Alternatives – Short Sale / DIL

• Alternative to legal FC when HAMP fails• Borrower must be evaluated for HAMP first and

must be meet basic eligibility (owner occupied, <729,000, etc.)

• Standard forms and procedures streamline complex process

• Incentives: Servicers - $1,000 / Borrowers - $1,500 • Up to $3,000 to pay off jr. liens - $1,000 from

Treasury• Borrower must be relieved of debt – no deficiency


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Streamlined Documents (early Oct)• A concern of both servicers and counselors is the amount of

documents required and the lack of standardization– Servicers report that many trial modifications are lacking

complete documentation– Advocates often complain of lost or missing documentation

• In October, unveiling a more streamlined approach– Standardized intake and combined hardship affidavit– Simpler, more informative trial plan notice that does not have to

be signed and returned– Reducing document requirements to bare minimum

• For Wage borrower: 2 pay stubs, signed 4506-T and signed intake/hardship affidavit

• No documentation required for small amounts of declared passive income


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Questions?

Contact Information:Mark McArdle

Homeownership Preservation Office202-622-5739

[email protected]
