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Martin O'Malley GOVERNOR Anthony G. Brown LT. GOVERNOR Raymond A. Skinner SECRETARY Clarence J. Snuggs DEPUTY SECRETARY HOPE QUARTERLY MEETING March 27,

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Presentation on theme: "Martin O'Malley GOVERNOR Anthony G. Brown LT. GOVERNOR Raymond A. Skinner SECRETARY Clarence J. Snuggs DEPUTY SECRETARY HOPE QUARTERLY MEETING March 27,"— Presentation transcript:

1 Martin O'Malley GOVERNOR Anthony G. Brown LT. GOVERNOR Raymond A. Skinner SECRETARY Clarence J. Snuggs DEPUTY SECRETARY HOPE QUARTERLY MEETING March 27, 2014

2 Foreclosure Prevention Team Reginald Stanfield Director, Community Programs 410-514-7209 Virginia Tepper Director, Data & Technology Resources 410-514-7359 Karen Ashby Assistant Director, Community Programs 410-514-7209

3 Foreclosure Prevention Team Emilie Drasher Program Manager (410) 514-7221 Josephine Selvakumar Program Manager (410) 514-7232

4 Statewide Foreclosure Data DHCD Marketing and Outreach Calculating Income and Underwriting Presentation by Ocwen NFMC Updates and Compliance Monthly and Quarterly Reporting Home Repurchasing Program, MHCF and Mediation Portal Updates Prefile Mediation Discussion Lunch Grantee “Showcase” New CFPB Regulations Maryland Mortgage Program Today’s Agenda

5 Statewide Foreclosure Data

6 Foreclosure Data 2012 - present

7 Foreclosure Data – Averages 2012, 2013 and 2014

8 Foreclosure Data by County

9 NOI Data Days Past Due Jan’14Dec’13Nov’13Oct’13Sept’13Aug’13Jul’13Jun’13 <6053%49%46%41%45%54%45%42% 61-18024% 19%26%28%22%19%23% 181-3606% 7%10%9%7% 9% >360*17%21%29%24%19%17%29%21% *Majority of NOIs <360 days are more than 720 days delinquent NOIs - Days Past Due

10 HOPE Hotline Calls Jan’13 – Feb’14 Average: 1,025

11 Housing Counseling Clients and Outcomes


13 DHCD Reporting for State Stat DHCD Reports Monthly to Governor’s Office (State Stat) “Reports” tab Department of Housing and Community Development Monthly report of all HOPE activity (foreclosure filings, housing counseling and legal partners clients, outreach, etc.) Pages 5-13 (approximately)

14 Questions ?

15 DHCD Outreach and Marketing

16 Ocwen Presentation

17 NFMC Updates

18 Compliance

19 Round 8 Funding Announcement NeighborWorks America announced that $63.1 million has been awarded for Round 8 of the NFMC program. Maryland Department of Housing and Community Development MD is awarded - $1,002,792. The performance period for Round 8 is Oct 1, 2013 to Dec 31, 2014.

20 Round 7 updates Round 7 amendments were sent out mid of February 2014. Can enter clients to the portal for NFMC Round 7 as of August 2013 Please be sure to increase your portal intake (Level I) by April 15,2014.

21 Neighbor Works NFMC Compliance NFMC Program – Counselor’s Website Sample Client Satisfaction Survey Form Sample NFMC Intake Form NFMC: Making Home Affordable - Outreach and Intake Project NFMC: Making Home Affordable - Outreach and Intake Project NFMC: Events of Default and Remedies Policy NFMC Action Plan Template NFMC Quality Control and Compliance Worksheet Sample Authorization Form & Privacy Statement National Industry Standards Code of Ethics MD DHCD NFMC Required Documentation MHA Checklist 10-2012

22 Special Notes About Round 8 Steps Taken on Action Plan: Counselors notes alone do not satisfy the requirements. Verification that action took place is required. A general handout with a variety of workout options or “Actions” is not acceptable.

23 Special Notes About Round 8 Steps Taken on Action Plan: Fax transmission sheets, e-mails, mail receipts, screenshots of portal communication or other signed verification that any action took place is required to be retained in the client file.

24 Special Notes About Round 8 Privacy Policy: Having access to the privacy policy on the organization’s website does not satisfy this requirement unless there is affirmative confirmation and documented proof that the client has reviewed the policy in the file.

25 Special Notes About Round 8 Privacy Policy: Clients who are given the choice to “opt-out” of the organization’s privacy policy provision allowing for the sharing of their information with affiliated third-parties and choose to do so cannot be uploaded into the DCS for payment by NFMC.

26 Special Notes About Round 8 Verification of Action Plan: Suggestions for documenting referrals to realtors- must include 3 realtors and client signature stating they received the list. “Referring” a client back to the servicer/lender is not considered a referral.

27 Neighbor Works Compliance Grantees must have signed the National Industry Standards Code of Ethics and Conduct and Minimum Standard Activities for Foreclosure Intervention and Default Counseling.

28 Neighbor Works Compliance Authorization Forms – NFMC Authorization not other Authorization Old Forms Key Provisions – remove dates!! Form must explicitly state that the client is authorizing (a). the agency to submit client-level information to the Data Collection System for the NFMC grant, (b). NFMC to open files to be reviewed for program monitoring and compliance purposes, and (c). NFMC to conduct follow-up with the client related to program evaluation.

29 Neighbor Works Compliance Disclosure Language I understand that (organization name) provides information and education on numerous loan products and housing programs and I further understand that the housing counseling I receive from (organization name) in no way obligates me to choose any of these particular loan products or housing programs.

30 NFMC Level 1 Counseling Defined Level 1 Counseling - All of these completed documents must be in client file: 1.Intake – DHCD Portal, CMS, or HOPE LOAN PORT® 2.Signed Authorization with NFMC language not credit authorization or mortgage authorization 3.Budget 4.Action Plan – NFMC Compliance Worksheet 5.Screen for Making Home Affordable. Documentation that a screening occurred for each type of available assistance should be included in the Action Plan and client file..

31 NFMC Level 2 Counseling Defined Level 2 Counseling - These completed documents must be in client file: 1.Signed Authorization with NFMC language, 2.Verified budget (income and debt,) 3.Documentation of Action Plan, 4.Close-out documentation. (No longer required)

32 Key Points to Remember Adherence to the Industry Standards Training for new counselors Stay current – HUD, MHA, etc. Reducing number of - open cases. Continue to do outstanding work Communicate with DHCD about what is going on in your agency.

33 Key Points to Remember Signed Ethics to Review NFMC requirements Increase your portal intake by April 15,2014. Compliance with Housing Counseling Standards Make links with Legal Service Providers

34 Compliance and Monitoring Program Time Frames Client File Requirements Reporting Dates Random Review Process NFMC Member Site NFMC Monthly WebExes

35 Questions ?


37 Dates to Remember Monthly Reports 5 th of the month Wait Time Survey 5 th and 20 th of the month AG/MHCF and NFMC Quarterly Reports (Jan-Mar) April 10 th Next Quarterly Meeting – June 11, 2014

38 Questions ?

39 MHCF, Foreclosure Relief Home Repurchase Program, and Mediation Portal Updates

40 Housing Counseling E-Newsletter o Wait Time Survey Link o Registration for meetings and trainings o Reminders for reporting o Upcoming events o Program and grant updates and announcements o Complaint submission forms o And more!

41 All agencies that sent all required documentation should have already received the first disbursement. Payment will be delayed if DHCD did not receive all documents including corporate resolutions, documentation for the Maryland Solicitations Act, witnessed signature pages and/or SDAT compliance. If DHCD has not received all documentation, your agency has already been notified by Karen Ashby. MHCF Updates

42 Foreclosure Relief Home Repurchase Program

43 Contracts with IndiSoft Issues with HLP or other software Lender participation Portal workgroup? Mediation Portal Updates

44 Prefile Mediation

45 Maryland Prefile Foreclosure Mediation by Owen Jarvis March 27, 2014 St. Ambrose Housing Aid Center Hope Quarterly Meeting

46 What is Prefile Mediation? ◦Foreclosure mediation that occurs prior to the filing of the Order to Docket. ◦Started in November 2012 as an alternative to postfile mediation. ◦Has not been widely participated in – only 57 prefile mediation requests for the life of the program.

47 Requesting Prefile Mediation ◦Borrower may only elect to participate if it is offered by the secured party. ◦Must be requested within 25 days of the date the Notice of Intent to Foreclose is sent. ◦Application is sent to the secured party, who sends it to the Office of Administrative Hearings within 5 days for scheduling.

48 Before Prefile Mediation ◦Office of Administrative Hearings schedules prefile mediation within 60 days of request and sends notice to borrower. ◦Borrower must submit list of required documents. ◦Borrower must participate in housing counseling services prior to attending prefile mediation.

49 At Prefile Mediation ◦Confidential discussion between the borrower, a representative of the secured party, and an Administrative Law Judge. ◦Review of documents submitted and status of loss mitigation. ◦Discussion of potential retention and liquidation options. ◦Written agreement may be entered into voluntarily.

50 Why participate in Prefile? ◦Presents an earlier opportunity for loss mitigation than postfile. ◦Foreclosure is placed on hold, delaying filing of Order to Docket. ◦Fee is paid by the lender, unlike in postfile.

51 Thoughts ◦Manage borrower’s expectations. ◦Request an agreement to preserve right to participate in postfile mediation. ◦Prefile vs. Postfile?

52 Veggie wrap Chicken salad wrap Tuna salad wrap Turkey wrap Honey baked ham wrap LUNCH

53 Grantee Showcase

54 Housing Initiative Partnership, Inc.

55 Counseling in the Post- Foreclosure World: Back to Work & Bounce Back 55

56 HIP’s Counseling Services Our Services: Home Buying counseling and education Foreclosure Prevention counseling and education Financial Capability counseling (Bounce Back Program) Our Offices: Hyattsville Gaithersburg Germantown 56

57 FHA Back to Work Loan Product The Federal Housing Administration’s Back to Work – Extenuating Circumstances mortgage loan program shortens the waiting period to buy a home to as little as one year after a purchaser had a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. 57 FHA will consider you for eligibility if you had a financial hardship in the past but can now document the following circumstances about yourself: You meet FHA loan requirements You can document the mortgage or credit problems resulted from a financial hardship You have re-established a responsible credit history You have completed HUD-approved housing counseling

58 BTW Pre-purchase Counseling Requirement HUD requires that homebuyers must first take a “Pre-Purchase Counseling” course with a HUD approved housing counseling agency 30 days before you starting the FHA application with a lender. The counseling certificate is valid for 6 months. Counseling topics include, but are not limited to: 58 assessing household debt level, completing a budget, assessing homeownership readiness, discussion of loan products, mortgage insurance and lending documents, steps in loan application, approval and closing process, selecting a home, understanding roles of real estate professionals, payment of real estate taxes, homeowners insurance, HOA/condo fees, refinancing, default and foreclosure; AND the cause of the economic hardship and actions taken to overcome the economic hardship and reduce the likelihood of reoccurrence.

59 HIP’s Fee for BTW Pre-purchase Counseling 59 HIP Charges $75 per household. Client gets: * Tri-merge credit pull * Thorough pre-purchase counseling * Letter certifying completion of counseling

60 Bounce Back Program: Purpose 60 PROBLEM Initial concern about 5-Year Reset on HAMP Mods Interest Rate Increases 1% per Year until it reaches the cap could mean homeowner must absorb an increase of $400/month! SOLUTION In 2011, HIP established the Bounce Back Program, an intensive program to help clients improve their credit, establish emergency savings, and improve their financial knowledge. New Development: In fact, even before these resets have hit, the Office of the Comptroller of Currency released evidence that home loans modified in 2009 re-defaulted at a rate of 40 percent. Homeowners who secured modifications clearly have significant personal finance challenges: damaged credit, exhausted savings, and increased debt.

61 Bounce Back Program Components 61 Bounce Back has two Financial Capability Coaches who create long term relationships with clients through regular peer-support and one-on-one financial coaching sessions. Monthly peer-group sessions: Guided by the Financial Capability Coach and often include guest speakers addressing topics such as Identity Theft Prevention, Tax Preparation, Home Maintenance and Healthy Eating on a Budget. One-on-one coaching session: Financial Capability Coach tracks improvements in the client’s Debt-to-income ratio, credit report and knowledge test score to measure the client’s progress toward strengthening their finances.

62 Bounce Back Program: Outcomes 62 HIP worked with 140 clients in the Bounce Back program in 2013. Of the clients who have attended both the intake and 6-month/year follow up visits, we have seen the following improvements: (1) An average 4-point reduction in the clients' Debt-to-Income ratio; (2) An average of 35-point increase in clients' credit score; (3) An average 4 point increase in the clients financial knowledge test score; and (4) None of the Bounce Back participants have re-defaulted on their modified mortgage. By entering into a long-term relationship with our Bounce Back clients, HIP has seen real improvement in participants’ financial behaviors over time.

63 Neighborhood Housing Services of Baltimore

64  Fast Track was designed to help individuals and families develop sound personal financial management skills.  An exploration of tools and resources to develop/enhance credit building.  Solve and dissolve debt  Add stability to the client credit file

65 NHS  Extensive financial coaching  Setting Goals  Budgeting to the clients goals  Cutting costs and finding ways to save  Planning, so that unexpected expenses are less of a threat  Understanding credit and protecting the client credit rating  Fixing credit problems CLIENT  Must be dedicated to move their financial situation forward in a positive manner  Complete each goal in a timely manner  Be committed to the program until completed  Make on time payments to creditors  Be willing to listen to counselor for the best advice to complete goals  Maintain monthly budget

66  Credit Scores of 580 or above  Recommendation of NHS Staff  Debt ratio of less than 40%  Timely rent payments for last 12 months  Work with NHS Staff to develop budget and shows progress in paying debt down Q: A:


68 Pro Bono Resource Center

69 Margaret K. Henn, Esq. Foreclosure Prevention Project Manager 443-703-3050 Louis Bracco Foreclosure Prevention Project Coordinator 443-703-3052

70 Civil Justice, Inc.

71 Foreclosure Recovery Program: On Track to Financial Health Hope Rubin Foreclosure Intake and Outreach Specialist

72 Funding The Foreclosure Recovery Program is funded by a grant from the Maryland Department of Housing and Community Development and the Maryland Attorney General, with money the state received from the National Mortgage Settlement

73 Why Foreclosure Recovery? Assist Maryland residents with the consequences that have resulted from their foreclosure event e.g. credit challenges, exhausted savings and resources, outstanding legal actions Provide a proactive, forward-thinking response to recovering one’s financial health Utilize a free opportunity to meet with an attorney to obtain legal advice Partner with housing counseling agencies, and complementary programs, to further support individuals post-foreclosure

74 Eligibility Requirements Foreclosure Recovery can help Maryland Consumers who have: have received a loan modification or positive outcome in a mediation, who are looking for credit advice sold or conveyed their homes after default (e.g. short sale, deed in lieu) lost homes to foreclosure AND Have a gross household income totaling under 100,000 annually

75 Program Overview CJ has trained a panel of attorneys to address issues faced by consumers following foreclosure Nuts & Bolts: Sessions last 90 minutes No cost to the client Review of outstanding financial and legal issues Limited legal advice provided by a qualified attorney

76 Potential Outcomes: What the Client May Expect The attorney will provide: a review of the client’s credit reports advice about steps to take for financial recovery limited legal services related to financial life e.g. drafting dispute letters to credit bureaus, helping resolve municipal liens A checklist, at the conclusion of the session, that identifies the client’s outstanding legal issues and the attorney’s recommendations

77 Areas of Focus Debt collection e.g. auto loans or credit cards Credit reports e.g. incorrect information on credit reports Deficiency Judgments Housing Bankruptcy Municipal Liens And more

78 Program Limitations The Foreclosure Recovery Program cannot assist: Non-Maryland residents Individuals and families currently undergoing foreclosure Individuals and families seeking extensive legal representation Individuals hoping to also address non-financial related legal concerns (e.g. custody, disability)

79 Steps 1.Potential clients complete a Foreclosure Intake through the Civil Justice Intake Line 2.A signed agreement is returned to Civil Justice via email, fax, or mail 3.An attorney will be assigned 4.Clients will meet at the location and time determined and arranged by the Civil Justice panel attorney 5.Before sessions, clients prepare their budget, obtain credit reports, and compile relevant documents (e.g. court notices, attorneys’ letters) WE WELCOME YOUR REFERRALS!

80 Contact Information Civil Justice, Inc. 520 W. Fayette Street Baltimore, MD 21201 Phone: 410-706-0174 cj@civiljusticenetwork.ortg Hope Rubin Foreclosure Intake and Outreach Specialist Phone: 410-706-3483

81 Q & A WE LOOK FORWARD TO HELPING! Thank you for your client referrals

82 New CFPB Regulations


84 CFPB – Consumer Finance Protection Bureau New regulations – took effect – Jan. 10, 2014 These regulations are federal law, not just guidelines (ex. HAMP handbook) Creates private right of action Real Estate Settlement Procedures Act (RESPA) Truth in Lending Act (TILA) Damages, costs & attorneys fees Keep Good Records!

85 H IGHLIGHTS Loss Mitigation Foreclosure Prohibitions Charges and Fees Error Resolution Requests for Information Requests for Payoff Statement

86 L OSS M ITIGATION What It Doesn’t Do A servicer has no duty to “provide any borrower with any specific loss mitigation options” Loss mitigation application rules do not apply to any applications submitted prior to Jan. 10 If more than 37 days prior to a scheduled sale, servicer’s receipt of a new complete loss mitigation application after Jan. 10 triggers an obligation to review the borrower under the new rules

87 N EW P ROTECTIONS Any borrower who is more than 37 days from a foreclosure sale and files a complete loss mitigation application before 37 days before a foreclosure sale is entitled to an evaluation of the complete loss mitigation application for all available loss mitigation options

88 What Does 37 Days Mean if No Sale Date is Scheduled If no foreclosure sale is set at the time the borrower submits a complete loss mitigation application, the loss mitigation application is treated as if it was received by the servicer more than 90 days before any foreclosure sale This treatment remains true even if a foreclosure sale is later actually scheduled or re-scheduled

89 L OSS M ITIGATION P ROCESS Step 1 – Live Contact Between default & 36 th day post-default, servicer must make a good faith effort to reach the borrower, by telephone (not just a message) or in-person Step 2 – General Information Must alert borrower to the availability of any loss mitigation options

90 S TEP 3 – C ONTINUITY OF C ONTACT Between default and 45 days post-default, servicer must assign staff to borrower and provide written notice Staff can be a team Stay assigned until 2 consecutive payments under permanent loss mitigation agreement Send written notice with contact info, and loss mitigation info & application

91 Service Requirements: Team must have access to all docs & info the borrower submits for loss mitigation options Facilitate sharing of accurate & current info about borrower’s loss mitigation application and the status of foreclosure proceeding between team and other staff, including those handling foreclosure

92 What Does That Mean? Accurate info about loss mitigation options Info to borrower on what they need to do to apply Deadlines for applying and processing application How to appeal Status of application Provide complete record of borrower’s payment history Procedures for error resolution and requesting info

93 S TEP F OUR – P ERIODIC S TATEMENTS 45 days after default, service must send: Delinquency date Risk of foreclosure Account history (shorter of 6 months or last current) Amount to bring current Whether servicer has made foreclosure notice or filing

94 S TEP F IVE – A PPLYING FOR L OSS M ITIGATION Application = providing any info that would be evaluated as part of a loss mitigation application Transfer to new servicer: docs & info from old servicer to new servicer may count as an application

95 S TEP 6 – A CKNOWLEDGING R ECEIPT OF A PPLICATION If received 45 days or more before scheduled sale* Servicer must review to determine if complete Must provide written acknowledgement of receipt within 5 days Must specify if application is complete If incomplete – servicer must: identify what docs & info are needed Provide a date for submitting addtl docs Date must be reasonable (more than 7 days) If received less than 45 days before sale No written requirement; servicer must “exercise reasonable diligence” in obtaining docs & info

96 Facially complete application Acknowledgement letter either denotes application as complete or incomplete If the servicer has everything they need to review the application and indicate it is complete in the acknowledgement, then it is complete If the servicer informs the homeowner that they have everything they need in the acknowledgement, but then later discover they need additional documents, then the application is facially complete In either scenario, the homeowner receives the protections of submitting a complete application Including the application is complete for foreclosure protections If incomplete, servicer must identify it as incomplete and what docs or info. is needed* Borrower must have reasonable time to provide info Date – from facially complete for appeal and acceptance timeline Date – from actually complete for 30 day evaluation timeline

97 S TEP 7 – C OMPLETE A PPLICATION If the servicer is waiting for info from a 3 rd party (ex. credit reporting agency), the application is complete once the borrower submits everything required from the borrower Not dependent on 3 rd parties outside of their control

98 S TEP 8 – E VALUATION OF A PPLICATION If application is received more than 37 days before scheduled sale, it must be reviewed for all loss mitigation options Must be conducted within 30 days of receipt of COMPLETE* application If application received 37 days or less before sale Servicer does not have to follow this loss mitigation process Servicer must have policies/procedures that comply with requirements set by investor Transfer during evaluation Date based from when complete application was submitted to old servicer. New servicer – “continue the evaluation to the extent practicable”

99 S TEP 9 – A PPLICATION D ECISION Within 30 days of complete application, servicer must provide written notice If offer is made – Identify what loss mitigation offers are being made Identify amount of time the borrower has to accept

100 If application is denied - Specific reasons for denial for any loan mod programs If denial is investor requirements, servicer must identify the specific owner and the requirement that is the basis of the denial Based on an investor requirement is insufficient If denied because of NPV, must provide inputs Right to appeal, requirements & timing

101 Appeal Only for loan modification (not other loss mitigation options) Application must be received 90 days prior to scheduled sale* Must be filed within 14 days from servicer’s written notice Servicer must respond to appeal within 30 days

102 S TEP 10 – A CCEPTANCE /R EJECTION Deadlines for responding to modification offer If submitted complete application 90 days or more before scheduled sale, servicer must provide at least 14 days to respond Between 37 and 90 days Servicer must provide at least 7 days to respond

103 L IMITATIONS Servicer is only required to comply with the requirements in the loss mitigation procedures for a single complete loss mitigation application Exception – if transferred to a new servicer, borrower can apply again and receive all protections

104 F ORECLOSURE P ROHIBITIONS Federal regulations – minimum requirements If federal law has stronger protections, then federal law controls Ex. servicer can’t file foreclosure process until 120 days delinquent (replaces MD’s 90 day protection) Filing = Order to Docket If state law has stronger protections, then state law applies Existing state structure – mediation, filing process, etc. stays in place, in addition to the federal protections

105 Servicer can’t file for foreclosure if borrower has filed a complete loss mitigation application until servicer has denied application, borrower has rejected, or borrower fails loss mitigation agreement (ex. short term payment forbearance)

106 Borrower submits complete application after foreclosure filed If more than 37 days before sale* Servicer can not move for a judgment or order of sale, or conduct sale until: Servicer has denied application (including appeal process) Borrower rejects all options Borrower fails loss mitigation agreement Once servicer receives complete application, they must “promptly” instruct their attorneys not to proceed with pursing foreclosure sale

107 If foreclosure has been filed, and complete application is received less than 37 days before scheduled sale, Servicer does not have to follow requirements Can use investor requirements, if any exist

108 Exemptions Small servicers – for most rules Services 5,000 or fewer mortgage loans and services only mortgage loans that they or an affiliate originated or own (most credit unions & community banks) Servicer that is a housing finance agency However, not exempt for waiting 120 days to file for foreclosure & can’t proceed to foreclosure if homeowner is in compliance with trial period payment plan Bankruptcy – notice requirements exempted

109 C HARGES AND F EES Payment Processing Full periodic mortgage payments must be credited by the servicer the day they are received Unless no harm to borrower (late fees, credit reporting) Full mortgage payment = principal, interest & escrow Partial periodic mortgage payments Servicer can decide what to do with payment Credit upon receipt Return to borrower Put in suspense account until borrower pays enough to equal a full payment

110 Servicer must identify in each billing cycle periodic statement: Fees Payments currently due and payments made Transaction activity. If in default: If more than 45 days, statement must include an account history for prior 6 months or since borrower was current Delinquency date, potential foreclosure consequences, whether foreclosure has been initiated, amount to cure, and housing counselor info. Servicer contact information Suspense account actions Total amount being held in suspense account Total of all payments received since last statement sent to suspense account Total of all payments received since beginning of year held in suspense account

111 No pyramiding late fees Servicers are not allowed to impose a late fee on a mortgage payment if the fee is only attributable to the borrower failing to make a previous late fee payment, when the payment otherwise is a full periodic payment received on time Payment change notice – ARM Notice between 210 & 240 days prior to 1 st payment due after rate first adjusts Notice between 60 & 120 days when rate adjustments causes payment change

112 Payments During Transfer of Servicers Previous - prior servicer’s responsibility to get to new servicer New – prior servicer can either transfer the payment to the new servicer or return payment to the borrower, with a notification of the new servicer

113 Force-Placed Insurance Servicer can purchase force-placed insurance for homeowner only if they have a reasonable belief that the borrower failed to secure coverage required under the loan contract Reasonable belief – Told by homeowner or insurance company that no coverage existed, or Borrower fails to respond to servicer inquiries (15 days of 2 nd notice) If borrower is 30 days in default, servicer can not purchase force-placed insurance, instead servicer must disburse funds from escrow to pay current hazard insurance premium Borrower proves coverage by providing a copy of insurance policy, declaration page, etc.

114 Purchasing Force-Placed Insurance Step 1 – At least 45 days before purchasing, servicer must provide written notice requiring proof of coverage Step 2 – 30 days after 1 st notice & 15 days before purchasing, service must provide 2 nd notice Must include annual cost or estimate Step 3 – 15 days after 2 nd notice, servicer can purchase if no response Charges must be “bona fide and reasonable”. Services actually performed & a reasonable relationship to cost

115 Renewing Force-Placed Insurance At least 45 days before renewal, servicer must notify borrower Must include annual cost or estimate Cancelling force-placed insurance Within 15 days of being notified that borrower has obtained hazard insurance, servicer must: Cancel the force-placed insurance Refund and remove any premiums and fees for the period covered by both borrower’s insurance & force-placed insurance

116 E RROR R ESOLUTION P ROCESS Replaces the QWR with Notice of Error & Request for Information Notice of Error – Written notice to servicer Assert an error Name of borrower Loan account information Describes error Is not substantially same as prior notice of error, unless servicer hasn’t promptly responded to previous notice, or if borrower is providing new information likely to change the outcome Not overbroad Sent within 1 year after the servicer transfers mortgage to new servicer

117 What is an Error? Failure to accept a payment according to the servicer’s written requirements Failure to properly apply a payment Failure to credit payment as of the day received if harm to borrower Failure to pay taxes or insurance premiums timely Failure to refund money in an escrow account within 20 days of borrower paying mortgage in full Fee where servicer didn’t have a “reasonable basis” for it

118 What is an Error? cont’d. Failure to provide accurate mortgage payoff amount within 7 days from request* Failure to provide accurate loss mitigation information Failure to accurately and timely transfer information about servicing the loan when transferring to new servicer Violations of the foreclosure prohibitions Any error relating to the servicing of a mortgage loan

119 Timing – investigation & response Failure to provide an accurate payoff balance Within 7 business days after notice of error is received Initiating improper foreclosure Before sale or within 30 business days after notice of error, whichever earlier If servicer can’t investigate and respond before deadline, servicer may cancel/postpone sale and respond prior to rescheduled sale or within 30 business days after notice of error All Others Within 30 business days of receiving notice of error Can extend an additional 15 days if servicer provides borrower written notice of extension and reason

120 Timing – Exceptions Servicer does not have to acknowledge notice of error or respond if: Servicer corrects error and notifies borrower in writing within 5 business days of receiving notice of error Notice of error pertains to violations against foreclosure prohibitions and the notice is received 7 or fewer days prior to sale. Servicer still required to make good faith effort to respond (orally or in writing), & correct error or tell borrower why there is no error

121 If servicer has specific address to use, then must include this address in any written communication to homeowner if include other contact information. Address must be in periodic statement or coupon booklet; and posted on website Borrower must use the identified address If servicer provides multiple addresses, borrower can use any If servicer doesn’t provide an address, borrower can send notice to any office of the servicer and servicer must respond Servicer must provide written notice within 5 business days that the notice of error has been received If servicer believes they do not have to respond, the written acknowledgement must state why they don’t think the notice of error doesn’t have to be reviewed

122 Servicer must correct error or conduct a reasonable investigation Servicer can request documentation from borrower to support the error allegation Servicer cannot provide negative info. to credit reporting agencies regarding any payment that is disputed in notice of error Servicer may initiate foreclosure proceedings while responding to notice of error, unless the notice is alleging violations of foreclosure prohibitions

123 If servicer concludes error was made, they must: Correct the error Provide written notice with the effective date of the correction, and servicer contact information If servicer concludes different error made, they must: Correct the error Provide written notice that describes error, identifies action, gives effective date of correction, & servicer contact info.

124 If servicer concludes no error, they must: Have conducted a reasonable investigation Provide written notice including: Determination of no error Reasons for no error Borrower has right to request documentation that servicer relied on in determining no error, and how to request that documentation Contact information

125 R EQUESTS FOR I NFORMATION Written request to include: Borrower’s name Mortgage loan account information Information that is requested Where – same rules as NOE Servicer doesn’t have to respond if: Substantially similar to previous request, unless info is type that changes over time & request covers different time period Proprietary info Requests irrelevant info Overly broad or unduly burdensome Sent more than 1 year after servicer transfers mortgage

126 Servicer response Within 5 business days, servicer must acknowledge receipt of request in writing, determination that it does not have to respond to request, or provide information If servicer concludes the requested info isn’t available, they must: Conduct a reasonable search for info. Provide written notice Info not available Reasons why it’s not available Servicer contact info

127 Timing – Request for Info. Identity of, and contact info for, the owner or assignee of mortgage Servicer must respond within 10 business days of receipt All other requests Within 30 business days from receipt Can extend 15 business days with notice & reason Servicer can’t require fees or delinquent payments in order to respond to info request Servicer can report negative info to credit reporting agencies during response period

128 R EQUESTS FOR P AYOFF S TATEMENTS Written request Servicer can designate specific email, address or fax, or other reasonable requirements for making the request Response – reasonable time, but no later than 7 business days from receiving request* Servicer must provide “accurate statement of the total outstanding balance that would be required to pay the consumer’s obligation in full as of a specified date”

129 G ENERAL S ERVICING R EQUIREMENTS Servicers must have policies and procedures in place to: Access and provide accurate & timely info. Properly evaluate loss mitigation applications Oversight & compliance by service providers Transfer of information during servicing transfer Informing borrowers of availability of NOE & RFIs Maintain documents so that servicer can create servicing file within 5 days (for regulators) No private right of action, but still important to document & file complaints

130 Resources: Help for Struggling Borrowers – A Guide to Mortgage Servicing Rules Effective on Jan. 10, 2014 Consumer Finance Protection Bureau _help-for-struggling-borrowers.pdf Filing Complaints – CFPB 855-411-2372 Legal Partners

131 Susan Francis, Esq. Foreclosure Prevention Project Manager Maryland Volunteer Lawyers Service; 443-451-4084 Sally Snowberger Foreclosure Prevention Counselor; 443-451-4067

132 Maryland Mortgage Program

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