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Making Home Affordbale Counselor Training November Presentation

May 30, 2018

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    November2009lMakingHomeAffordable

    MakingHomeAffordable

    Information

    for

    Housing

    Counselors

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    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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    5November2009lMakingHomeAffordable

    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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    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