Batting Order 1. Headquarters Batter Up! Office of Asset Management and Portfolio Oversight (OAMPO) Organizational Chart 2. Outfield Asset Management Servicing Contract Digitizing Our Records 3. Rookies LQMD → Enhanced Counterparty Analysis Civil Money Penalties (CMP) 4. Umpire Chief Underwriter Delegation Approval Pilot Financials in the hands of the lenders 5. Infield Rating Lenders Lender to Lender Transfers 6. Strike Zone Multifamily Delinquency and Default Reporting System (MDDR) 7. Team work makes the dream work! Liaison Model Overview 8. Pitch Out Increasing Lender Responsibilities 9. Three Strikes Limited Denial of Participation (LDP) 10. Spring Training Active Partners Performance System (APPS) Handbook 4350.1 Rewrite 11. Inside Baseball Questions and Answers 2
Field Asset Management and Program Administration Division Director Office of Asset Management and Portfolio Oversight (OAMPO) OAMPO Deputy Director Multifamily Asset and Counterparty Oversight Division Director Business Relationships and Support Contracts Division Director Property Disposition Division Director Headquarters: Batter Up! 3 Assisted Housing Oversight Division Director
Outfield 4 Asset Management Servicing Contractor Transformation Wave Support: We are working with Alpine to ease the logistical challenges of offices going through the Transformation and moving to the new Account Executive model. Timing: The distribution of assets to the Contractor will be handled by Headquarters. The Contractor is already servicing several hundred assets.
Outfield 5 Digitizing Our Records Standard Work: Combined effort to update our retention & disposition schedules for the 1st time in 30+ years Program Centers & Hubs will organize files based on defined lists and priorities. Scanning: The scanning contractor is wrapping up in Fort Worth. About 45% of the files in Fort Worth/Kansas City have been scanned and we will expand to other locations as quickly as possible. The timing is not directly linked to Transformation Waves We are sliding into home on this initiative! Impact: This effort will ease the transition of project information from one location to another.
Lender Quality and Monitoring Division (LQMD): – LQMD was officially brought over to the Office of Asset Management in January. – Weekly LQMD staff meetings are held with a Manager participating. – LQMD is an active participant in the Multifamily and Health Care Credit Risk Committee Meeting. Activities: – Revising Project/Loan Review Template – Revising Lender Review Template Initiatives: – Delegated Underwriter Approval 6 Rookies
7 Civil Money Penalties (CMP) Pilot for Owners/Properties with Failing REAC Scores: Owners of FHA Multifamily Properties will have CMPs assessed if they are found to provide substandard living conditions to their tenants. This is a joint collaboration between Multifamily Asset Management, DEC, and REAC. Owners who receive either under 30 REAC physical inspection scores or under 45 REAC physical inspection scores with other problems and are identified by the DEC are eligible candidates (threshold subject to change when Pilot becomes Program).
Umpire Chief Underwriter Delegation Approval Pilot: Multifamily Counterparty Oversight currently approves all new MAP underwriter requests as well as continuation of underwriter approval in the event an underwriter moves to a new lender. The concept is to delegate underwriter approval to chief underwriters that meet certain criteria, holding the lender and chief underwriter accountable and responsible for ensuring their underwriters meet requirements. Oversight will be provided through the annual review of the lender, the quality control plan and the certification by the lender and chief underwriter regarding compliance. 8
Umpire Financials in the hands of the lenders: Post 2011 Regulatory Agreements require owners to provide lenders audited financial statements Pre-2011 there is no requirement in the loan documents for owners to provide information To date HUD has taken the approach that sharing financial information is subject to privacy rules OGC is again reviewing the privacy issue On a parallel track, we are asking REAC the feasibility of sharing financial information via HUD systems. 9
Infield Rating Lenders: Compiled the ratings criteria and methodologies utilized by the three major rating agencies (Fitch, Moody’s and Standard and Poor’s) for banks and mortgage servicers Compiled the ratings definitions and elements used by the FDIC for the CAMELS rating Developing the template for the Lender Review process that will incorporate the following elements: o Organizational assessment Business model Key management personnel o Financial condition and performance of the lender o Portfolio performance Individual asset rating Delinquency and default o Servicing performance 10
Infield 11 Lender to Lender Transfers: When servicing of a troubled asset is transferred from one servicer to another, HUD would like the opportunity to consent to these transfers given the troubled nature of the asset. This will work concurrently with HUD’s efforts to compare watch lists and troubled assets with servicers and ensure the portfolio is managed to mitigate risk.
Strike Zone Multifamily Delinquency and Default Reporting System (MDDR) Servicers have had the ability to enter their watchlist loans into MDDR since February 28, 2014. So far no issues have been experienced in entering data. In fact few questions have been received on the process. Training sessions have been offered, but the system is very intuitive. Lenders have been concerned about how HUD will use this information. 12
Team Work Makes The Dream Work! Liaison Model Overview Background: Lengthy processing times, inconsistency, and missing information are often associated with Multifamily. During this time of change and improvement, it is vital that Multifamily address these concerns, to ensure continued growth. Advocacy organizations and owners often reach out to the DAS, Commissioner and Secretary to express their feedback directly regarding what is working/not working for them. With the DAS’/Commissioner's/Secretary’s schedule stretched tight, identifying alternate contacts for key stakeholders will streamline the Department’s ability to respond to concerns and resolve problems as they arise. 13
Proposal: Shift to a customer based approach for all aspects of Multifamily business (FHA Insurance, Assisted properties, Policy partners, etc.). Stakeholders with liaisons will be as follows: The top five FHA MF lenders (holding 82 percent of FHA MF’s Insured UPB). The top [thirteen] identified stakeholder groups that will include umbrella organizations, trade associations and advocacy groups. The top [three] [owners] in our assisted portfolio, which have the most assisted 202 and 811 properties under their management. The program has launched and you may be hearing from your liaison soon. 14 Liaison Model Overview
Increasing Lender Responsibilities: – Non-Critical Repair Escrows—Mortgagee Letter 2013-13 Continue to receive applications. – Reserve for Replacement Releases Mortgagee Letter and Housing Notice are in draft stages. Intend to have a similar structure to the Non-Critical Repair Escrows. OGC gave the green light to allow the lenders to voluntarily assume responsibility for releases on retroactive and prospective deals. – Considering other possible tasks the lenders might assume voluntarily: Partial Releases of Security Modified TPAs 15 Pitch Out
16 Limited Denial of Participation (LDP) Housing Notice 2014-5 was issued on March 25, providing guidance for extended use of Limited Denial of Participation for borrowers who have caused a claim against the FHA insurance fund Issued “based on the best interests of the Federal Government” to reduce risk LDP’s exclude individuals or entities from new business with the Department for a period of 12 months LDP’s can be issued by Hub or Program Center Directors as needed: Issue Show Cause letter outlining reasons for a possible LDP Recipient responds within 30 days HUB/PC Directors determine whether LDP should be issued Three Strikes!
Active Partners Performance System (APPS) OAMPO’s Team: – We are training hard—learning from our competition (Fannie and Freddie) and studying game tape (existing regulations and the APPS system) to completely revamp the APPS system and the 2530 Regulations. – We have lofty gold medal goals including: Revise CFR Part 200 Subpart H to require 2530 to mirror industry borrower vetting standards (looking at the “decisionmakers” only). Revise APPS to mirror the new single family Lender Electronic Assessment Portal (LEAP). – We need to identify the right teammates and make improvements all around to reach our goals and take home the gold. 17 Spring Training
HB 4350.1 Rewrite – Status and Next Steps Status – On February 1, 2013, the Office of Asset Management kicked off the Re-write of Handbook 4350.1. Drafts of 40 of the 42 chapters have been submitted and are in various stages of completion. – Drafters of each chapter are meeting in Summits to review comments received from reviewers and prepare the next draft of their chapters. Several Summits have been held. Additional summits will be held during February. – Comments from industry partners will be considered and next drafts prepared for the Departmental Clearance process. Next Steps – The Office is considering enlisting the service of a contractor to perform basic copyediting services and to assure consistency in voice, tone and readability throughout the chapters. 18 Spring Training
INSIDE BASEBALL Thank you for your time We are open to all questions. Please contact Mark B. Van Kirk, Director Phone: ( 202 ) 708-3730 Ext. 2855 Email: Mark.B.VanKirk@hud.gov We take great pride in our work, but not to proud to make changes for the better!