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Eligibility Rules First lien mortgage loan originated on or before January 1, 2009 The mortgage loan is secured by a one- to four-unit property, one unit.

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Presentation on theme: "Eligibility Rules First lien mortgage loan originated on or before January 1, 2009 The mortgage loan is secured by a one- to four-unit property, one unit."— Presentation transcript:

1 Eligibility Rules First lien mortgage loan originated on or before January 1, 2009 The mortgage loan is secured by a one- to four-unit property, one unit of which is the borrower’s principal residence – Co-ops, Condos, and Manufactured homes are eligible The property securing the loan must not be vacant or condemned The mortgage loan is delinquent or default is reasonably foreseeable; loans currently in foreclosure are eligible The borrower(s) complete the financial hardship affidavit and represents that there are not sufficient liquid assets to make the monthly mortgage payments The borrower has a monthly mortgage payment ratio greater than 31% Borrowers in active litigation regarding the mortgage loan or involved in a bankruptcy proceeding are eligible to participate Borrowers agree to set-up an escrow account for the payment of taxes, hazard/HOA, and flood insurance (if applicable) Borrowers with a total monthly debt ratio greater than 55% must consent to obtain HUD counseling to reduce their total monthly debt ratio to less than 55% Borrowers must satisfactorily complete a 3 month trial period plan before December 31, 2012

2 Hardship Affidavit Details A reduction or loss of income, e.g., unemployment, reduced job hours, reduced pay, or a decline in self-employed business earnings A change in household financial circumstances, e.g., death in family, serious or chronic illness, permanent or short-term disability, or increased family responsibilities (adoption or birth or a child, taking care of elderly relatives or other family members) A recent or upcoming increase in the monthly mortgage payment An increase in other expenses, e.g., monthly mortgage payment will rise or has risen, high medical and health-care costs, uninsured losses (such as those due to fires or natural disasters), unexpectedly high utility bills, or increased real property taxes A lack of sufficient cash reserves to maintain payment on the mortgage and cover basic living expenses at the same time Excessive monthly debts payments and overextension with creditors, e.g., the borrower was required to use credit cards, a home equity loan, or other credit to make the mortgage payment Other reasons for hardship detailed by the borrower

3 Reasonably Foreseeable (Imminent) Default Borrowers that are current or less than 30 days delinquent who contact the credit union for a modification, appears potentially eligible for a modification, and has suffered a hardship must be screened for imminent default: The borrowers debt coverage ratio is less than 1.20 [Disposable Income/Current P&I Payment] If the credit union determines that default is imminent, the credit union must apply the Net Present Value test Net Present Value (NPV) Test All loans that meet the eligibility criteria and are either deemed to be in imminent default or 60 days or more delinquent must be evaluated using a standardized NPV test that compares the NPV result for a modification to the NPV result for no modification If the NPV result for a modification fails, the credit union may still modify the mortgage at its discretion If the credit union elects not to modify a mortgage that fails the NPV result for a modification, it must consider the borrower for other alternate modification options, deeds-in-lieu, and pre-foreclosure sale programs The NPV test requires use of an automated valuation model (AVM)

4 A Credit Union must… Register for participation and execute the participation agreement prior to December 31, 2009 Have all borrowers complete a personal financial statement (not a 1003) [Fannie Form 1020 or Freddie Form 1126] Follow all program guidelines and reporting requirements; required documents, notifications, borrower communication and qualification Not directly solicit non-delinquent borrowers (31 days +) (General Notification Allowed) Waive all late charges, penalties, stop payment fees, or similar fees must be waived upon successful completion of the trial period Not charge the borrower to cover the administrative processing costs incurred in connection with a HMP modification. The credit union must pay any actual out-of-pocket expenses such as required notary fees, recordation fees, title costs, property valuation fees, credit report fees, or other allowable and documented expenses. Fannie/Freddie will reimburse for all but the credit report, for GSE loans that a credit union services Obtain a new title commitment if capitalizing more than $20,000.00 Obtain an AVM Property Value with a reliable confidence score

5 A Credit Union can… Modify non-GSE and/or GSE loans through the program end-date of December 31, 2012 if the borrowers have satisfactorily completed the Home Affordable Trial Period Plan Receive the Servicer incentives of $1,000 for every participating modification, plus an additional $500 if the mortgage was current at the time of entering into the modification plan, and up to $1,000 per year for each of the initial three (3) years completed successfully Receive the Investor incentives of $1,500 for every participating modification if the mortgage was current prior to the start of the trail period and one-half of the dollar difference between the lesser of (a) the borrower’s original monthly mortgage payment or (b) the mortgage payment at a debt ratio 38% of gross income, and 31% of gross income Receive the Borrower incentives (principal pay-down monies) of up to $1,000 per year for each of the five (5) years completed successfully

6 Initial borrower contact Month 1Month 2Month 4Month 3Month 5 Month 6 Establish & send trial plan to borrower Trial plan effective date Receive financial documents and first trial payment from borrower Receive second trial payment Receive third trial payment Modification effective date Modification first payment due date Send modification documents to borrower Receive signed modification documents from borrower Complete system updates Trial Period Timeline

7 Modification Example Concurrent 2 nd Mortgage Program = Rate to 1%; Match term/forbearance; Rate Match at 5 years

8 Modification Example DTI = 43.6%

9 Modification Example

10 Third-party pricing from LenderLive Network, Inc. Document Flow

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