unique borrowers, unique solutions federal agencies working to help homeowners june 2012 | making...
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Unique Borrowers, Unique SolutionsFederal Agencies Working to Help Homeowners
June 2012 | Making Home Affordable
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2012 Integrated Response
MHA and related programs work together to help homeowners avoid foreclosure
MHA
Extension and Expansion
HARP 2.0FHA Refinance
FHA Distressed Loan Sales
REO to Rental DOJ SETTLEMENT
HAFAShort Sales
June 2012 | Making Home Affordable
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MHA Extension – Addition of HAMP Tier 2
Enhancements designed to provide relief to more homeowners and to accelerate housing market recovery
• Extended MHA through December 31, 2013
• Expanded eligibility through HAMP Tier 2• Borrowers previously ineligible • Owners of Rental Properties
• Tripled investor incentives for principal reduction and offered incentives for GSE principal reduction
June 2012 | Making Home Affordable
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HARP 2.0
GSE Refinance Opportunity Expanded
•Eliminates certain up-front fees
•Removes the 125% LTV ceiling
•Eliminates many reps and warranties
•Extended through December 31, 2013
June 2012 | Making Home Affordable
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FHA Refinance Options
Changes could kick-start underused FHA short refinance option
Streamlined Refi – Good Credit and Equity• Reduced up-front MIP from 1.15% to .55% on
streamlined refinance• Expected to save borrowers $1,000
Short Refi - “Challenged” Credit and Underwater• FHA 1st must be 97.75% but total LTV can be 115%• Requires at least 10% debt forgiveness by original 1st
lien holder• New 1st lien servicer may pay off subordinate liens to
achieve LTV• A borrower is “current” if they have made 3 timely
payments on a trial modification
June 2012 | Making Home Affordable
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DOJ Settlement
5 major Servicers have agreed to a package of $25 billion which could be worth much more to borrowers over 3 years
• New foreclosure disclosures
• Comprehensive servicing standards
• $1.5 Billion to foreclosed borrowers
• $3.5 Billion penalty to State and Feds
• $3 Billion to refinance underwater borrowers
• $17 Billion for principal reduction – expected to provide up to $32 Billion in borrower relief
June 2012 | Making Home Affordable
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DOJ Settlement and HAMP PRA Incentives
No servicer can receive HAMP principal reduction incentives and also get credit under the settlement
$210,000 UPB loan with a property value of $140,000 (150% LTV) is 5 months delinquent. Servicer forgives a total of $70,000 over three years via HAMP and receives $27,510 in PRA
incentives from Treasury
• Servicer Owned – Net claim against settlement is $36,116. ($70,000-$27,510 = $42,490 x $.85)
• Serviced for Others –– Net claim against settlement is $16,996. ($70,000-$27,510 = $42,490 x $.40)
June 2012 | Making Home Affordable
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HAFA / GSE Short Sales HAFA – Treasury Program
• Pre-Approved short sale transactions• Release of borrower liability• Prohibition on borrower contributions• Cap on subordinate lien payouts• No occupancy requirement • Borrower must have hardship
GSE Short Sale Program• New performance timelines – Acknowledge in 5 days,
decision in 30 days• New streamlined short sale requirements coming
soon
June 2012 | Making Home Affordable
Short sales are a critical but still underused foreclosure prevention option
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REO To Rental
Four to five million REO are expected to hit the market in the next 5 years – further depressing home values
• Pilot program by GSEs to increase single family rental stock and reduce REO on the retail market
• Initial offering of 2,495 properties
• Atlanta, Phoenix, Los Angeles, Riverside, cities in Florida
• Expect up to 5 year hold – Realty Trac projections that returns could be as high as 12% in some markets
June 2012 | Making Home Affordable
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FHA Distressed Asset Sales
Selling delinquent loans before foreclosure may provide new workout opportunities for borrowers and preserve communities
• Beginning September 2012 FHA will sell up to 10,000 delinquent loans to support community reinvestment objectives
• Targeted at hardest hit states
• Buyers may not foreclose for a minimum of 6 months. At least 50% of pool may not become REO
• Buyer to use other workout strategies – modification, short sales, deed for rent, etc.
June 2012 | Making Home Affordable
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Trusted Advisors Escalate Tough MHA Cases
HMPAdmin.com provides servicers, counselors, and trusted advisors with easy access to MHA information and tools Resources for Counselors
and Trusted Advisors• Presentations• Escalation process details• Webinar schedule• Brochures, fact sheets, etc.
June 2012 | Making Home Affordable
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Resources for MHA Escalations
Resources are in place to help homeowners resolve issues with servicers
Really tough cases get escalated to Treasury staff
• 888-995-HOPE ask for MHA-Help
• HAMP Solution Center: 1-866-939-4469
• Escalate cases to [email protected]
• FannieMae.com, (800)7Fannie, KnowYourOptions.com
• FreddieMac.com, (800)Freddie and select option 2, [email protected].
June 2011 | Making Home Affordable