Making Home Affordbale Counselor Training November Presentation

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

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November2009lMakingHomeAffordable

MakingHomeAffordable

Information

for

Housing

Counselors


2/33

2November2009lMakingHomeAffordable

TodaysTopics:

MHAandCounselorResources

MHARefinance(HARP)

MHALoanModifications(HAMP)

OtherProgramsforBorrowers


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WhatisMakingHomeAffordable?

PartofPresidentObamasHomeowner

Affordabilityand

Stability

Plan

to:

Supporteconomicrecovery

Stabilizecommunities

&

housing

markets

MakingHomeAffordableputseligibleborrowers

intomortgagestheycanaffordtorepay:

HomeAffordableRefinanceProgram(HARP)

HomeAffordableModificationProgram(HAMP)


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YourRoleasaCounselorinMHA

Counselorsplayacriticalrolehelpingclientsto:

UnderstandMaking

Home

Affordable:

Refinance(HARP)orModification(HAMP)Options

Eligibilityanddocumentationrequirements

Application

and

Trial

Period

processes

KeeptrackofMHAdeadlines,documentrequirements

PursuealternativesifineligibleforMHA

Stayfocusedontheirnext,best,practicalstep


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GettingStarted:

MakingHomeAffordable.gov

EasytoUseLoanLookup toolslet

clients

see

if

Fannie,

Freddie

owns

theirmortgage

Onthe

Home

Page,

consumers

can

access:

SpanishContent

1888995HOPE(4673)

BewareofScams

InformationVideo

HelpfulLinksinFooter

SampleHome

Page

ChecklisttoPrepareBorrowers to

speakwithmortgagelender,

counselor

UpdatedList ofParticipating

MortgageServicers


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Keyfor

Counselors:

MakingHomeAffordable.gov/ads

Consumerbrochures,factsheetsin

English,Spanish,Chinese,Korean,

others

CounselorSection:

Q&A,Presentations

WebreadybanneradsforMaking

HomeAffordableProgram


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EasytoUseMainNavigation

forServicerstoQuicklyLearn

AboutHAMP

FromtheHomePage,servicerscan

access:

RegistrationInformationandForms

WebTraining

FAQs

NewsandUpdates

GuidanceFor

Servicers:

www.HMPadmin.com

SampleHomePage

AccessHardshipAffidavitand

OtherModification

Documents

EasyAccesstothe

SupplementalDirective

ProgramGuidelines


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AdditionalResources:

Programdetailsforborrowers,servicersandcounselors

www.FinancialStability.gov

www.HMPadmin.com

www.hud.gov foralistofapprovedhousingcounselors(by

state).

ForImmediateBorrowerAssistance:

Call1888995HOPE (4673)

FannieMae

www.fanniemae.com or18007Fannie

FreddieMac

www.freddiemac.com or1800Freddie

NonGSEEscalations

[email protected]


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HOMEAFFORDABLEREFINANCEPROGRAM(HARP)


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HARPOverview

Helpcurrentborrowersunabletorefinancedueto

decliningproperty

values

Makepaymentsmoreaffordableand/orstable

Replace

ARM,

Option

ARM

etc.

with

fixed

rate

mortgage

Reduceamortizationterm

HARPendsinJune2010


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HARPEligibility

Criteria

Borrower:

Owneroccupant

of

a14unitproperty

Iscurrentonthe

mortgage Hasreasonable

abilitytopaythenewmortgagepayment

Loan:

Ownedor

guaranteed

by

FannieMaeorFreddieMac

First mortgagecannot

exceed125%ofpropertyscurrentmarketvalue

Refimust

improve

affordabilityorsustainability


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125%LTVopensdoorforborrowerswhosehome

values

declined Relaxedcreditscorerequirements

Nocombinedloantovaluerequirement

MIflexibilitiesforloanswithhigherLTVs

Limitedcashouttocoverclosingcostsonly;no

debtconsolidation

HowHARP

Differs

from

Standard

Refinance


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HowDo

IHelp

My

Client

Apply

for

HARP?

Determinebasiceligibilityusingloanlookuptools

onwww.MakingHomeAffordable.gov

Contactclientsserviceroranylenderoffering

FreddieMac

or

Fannie

Mae

loans

KeyforCounselors

ContactlendermortgageoriginationshopforHARPfirst

HARPalsoavailablethroughGSEservicingshops


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HOMEAFFORDABLEMODIFICATIONPROGRAM(HAMP)


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HAMPOverview

Modify1st and2nd loansofeligibleborrowersto

achieveaffordable

payments

Helpborrowerskeeptheirhomes

Reduce

impact

of

foreclosure

on

communities

Incentiveborrowerparticipation

HAMPends

December

2012


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HAMP:Eligibility

Criteria

Borrower:

Owneroccupantof14unitproperty

Has

sufficient,

documentedincome

to

supportthemodifiedpayment

Hasfinancial

hardship

andisdelinquentoratriskofimminentdefault

Loan:

Amountowedonfirstmortgageequaltoorlessthan$729,750

Mortgageoriginated

on

orbeforeJanuary1,2009

Firstmortgagepayment

(PITI+homeowner

association/ condofees)isgreaterthan31%ofborrowersgrossincome


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DeterminingImminent

Default

Borrowerswhoarecurrentontheirloansbutare

strugglingto

make

payments

may

also

be

eligible

forHAMPifthey:

Haveadocumentedhardship decreaseinincome,increaseinexpenses,facinginterestrateincreasewithinthenextfourmonths,etc.

Do

not

have

sufficient

savings

or

other

liquid

assets

tomakefuturepayments.


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BorrowersIneligible

for

HAMP

Borrowerswithmortgages:

PreviouslymodifiedunderHAMP

Secured

by

investment

properties,

secondary

residences,orvacantorcondemnedproperties.

Monthlypaymentisalreadylessthan31%debtto

incomeratio


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ServicersDetermine

Eligibility

Evaluateborrowerincomeanddebtinformation:

Mayrely

on

verbal

information

for

trial

period

but

servicerwillneedtoverifyanddocumentbefore

modification isfinal

Tip:Clients

should

keep

aduplicate

set

of

all

requesteddocumentsfortheirrecords.

Keyfor

Counselors

Prepareborrowertoworkeffectivelywithservicer

Facilitateborrower/servicerinteraction

MandatorycounselingforborrowerswithDTI>55%


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ServicersApply

Net

Present

Value

(NPV)

NPVisamathematicalmodelusedtoanalyzethecost/benefit

ofinvestmentdecisions

MHANPV

factors

include:

Homevaluerelativetomortgageamount

Likelihoodofforeclosure

Homeprice

trends

Costofforeclosureandcostofmodification

Defaultrateanddiscountrate

Fannie Mae and Freddie Mac Loans: Servicer must pursue modificationwhether the NPV calculation is positive or negative

Non-GSE Loans: NPV positive: Servicer must modify loan NPV negative: Servicer may modify loan but is not required to do so


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HAMP:The

Waterfall

Servicersmustapplythesequentialsteps(The

Waterfall)as

needed

to

cut

loan

payment

to

31%

of

eligibleborrowersmonthlypretaxincome.

1. Capitalizeoutstandinginterest,escrowadvances,

outof

pocket

servicing

expenses

(no

late

fees)

2. Cutinterestratetoaslowas2%

3. Extendloan

term

up

to

40

years

4. Deferportionofprincipal,interestfree,untilloan

ispaidoff


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HAMPModification

Example

NicksCurrentMonthlyPayment

Principal&

Interest $1,877

Taxes 300

Insurance 80

AssociationFee 50

MortgageInsurance 100

TotalMonthly

Payment$2,407

Client: NickfromNorthernVA

2005: Buys$330,000home

10%downpayment

$297,000mortgage

([email protected]%)

2008: Incomedropsto

$47,000duetosudden

illness

Target Monthly PITIA paymentfor HAMP is $1,214.


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HAMPModification

Example:

Steps

14

HAMP

Waterfall

Current AfterHAMP

Step1 Add$18,722inunpaidinterestandadvances

$286,359

UnpaidPrincipalBalance$305,131UPB

Step

2Cutinterestrateto2% $2,307

monthlypayment

(Principal,interest,

taxes,insurance,

associationfees)

$1,650PITIA

Step3 Extendtermto40years $1,644PITIA

Step4 Forbear

$46,000inprincipal

$1,214PITIA


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HAMPModification

Example:

Interest

Rate

IncreasesYear Interest

Rate

PITIA

(minusMI)

1 5 2% $1,214

6 3% $1,342

7 4% $1,476

8 40 4.85% $1,594

NicksHAMP

payment

is

set

at

$1,214

for

5yrs.Marketrateattimeofpermanent

modificationwas4.85%.

Nicksaves$65,580inthefirstfiveyears

Startinginyear6,Nicksinterestrate

risesup

to

1%

per

year

until

market

rate

attimeofpermanentmodificationis

reached.

Inyear8,interestrateof4.85%isfixed

forlife

of

Nicks

loan.


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ThreeMonth

Trial

Period

Serviceroffers3monthtrialmodificationaftereligibility,NPVtest,

modifiedpaymentcalculationcompleted

Modification

final

after

borrower

makes

all

3

trial

period

payments,

sendsinalldocuments,signedmodificationagreement

Keydocumentsinclude:

4506Tor4506TEZ

Mostrecent

paystubs

for

all

borrowers

HardshipAffidavit

Documentwaivers,extensionspossibleunderrevisedguidance

KeyforCounselors

Helpclientsunderstanddocsandimportanceofreturningthemto

servicer

Coach

borrowers

for

long

term

success


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OTHERPROGRAMS


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SecondLien

Mortgage

Modification

Program

(2MP)

Eligibility:

First

mortgage

is

modified

through

HAMP

2nd lienlenderisparticipatingin

2MP

2nd

lien

originated

on

or

before

January1,2009

Borrowermustconsenttoshare1st

mortgagemodificationdatawith2nd

lienlender(ifthelendersare

different)

0%

1%

2%

3%

4%

5%

6%

1 2 3 4 5 6 7 8

Year

MortgageRate

1st Lien

2nd Lien


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Programsfor

Clients

Who

Dont

Qualify

for

HAMP

PotentialoptionsforclientswhodontqualifyforHAMP

dependonwhoownstheirloan:

IfGSE

owns

mortgage:

GSEmayrequireasecondlook

GSEservicersmustalsoevaluateforforbearance,

repaymentplans,

loan

modifications

Borrowerlacksfundstocontinueowninghome:

Shortsale

Deed

in

lieu

KeyforCounselors

Helpclientunderstandalternativesthatmaybeavailable

Coachclientforlongtermsuccess


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29November2009lMakingHomeAffordableNovember2009lMakingHomeAffordable

FederalHousing

Administration:

FHA

HAMP

FHAdefersprincipalwithaPartialClaim

Norequirement

to

modify

rate

to

below

market

Noincentivepaid

NoNPVrequired

Conditionalimminentdefault

Cannotexceed55%DTI

Modifiesmortgage

to

30

year

fixed

rate

term

FormoreinformationvisittheNationalServicingCenters

websiteatwww.hud.gov/offices/hsg/sfh/nsc/nschome.cfm ,

orcalltheNationalServicingCenterat18882978685.


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FederalHousing

Administration:

FHA

HAMP

PartialClaimisavailableupto30%oftheFHAloanprincipal

balance;including

arrearages

(up

to

12

months),

legal

fees

andapplicableforeclosurecosts

PartialClaimisnoninterestbearingandnopaymentisdue

until

the

earlier

of

(a)

maturity

of

the

original

FHA

loan;

(b)

saleoftheproperty;(c)payofforrefinanceoftheFHAloan

PartialClaimisusedtoreducetheprincipalbalanceonthe

FHAloan,whichisthenmodifiedtolowerthemonthly

paymentto

adebt

ratio

as

close

as

possible,

but

not

less

than,31%


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FederalHousing

Administration:

FHA

HAMP

Subjectpropertymustbeborrowers primaryandonly

residence HardshipAffidavitrequired

Noappraisalrequired

Nominimum

credit

score

required

12monthseasoningoforiginalFHAloan;minimum4full

paymentsmade

Trialmodification for

three

months

Allexistingsecondaryfinancingmustbesubordinatedto

maintainthefirstlienpriorityoftheFHAloan


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CounselorRole

in

Making

Home

Affordable

EducateclientaboutMakingHomeAffordable

programs

and

processes

Resourcesforclient,suchasMHA.gov,loanlookup

toolsatfreddiemac.com,fanniemae.com

Helpclients

submit,

track

HAMP

applications

and

take

nextsteps:

SignHAMP

documents,

submit

payments

Ifineligible,findothermodificationsorforeclosure

alternatives


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www.MakingHomeAffordable.gov

1888

995

HOPE

(4673)

MakingHomeAffordable