P HILADELPHIA R ESIDENTIAL M ORTGAGE F ORECLOSURE D IVERSION P ROGRAM Mortgage Foreclosure Negotiation Training for Pro Bono Counsel Friday, November 30, 2012 Philadelphia VIP With many thanks to our host Pepper Hamilton, LLP

W ELCOME What is Philadelphia VIP? Services offered Mortgage Foreclosure Diversion Program

W AYS TO V OLUNTEER MAKE THE DIFFERENCE BETWEEN HOME AND HOMELESSNESS Ongoing Volunteer: VIP will refer mortgage foreclosure Diversion cases to volunteers on an ongoing basis until the matter is out of Diversion. VIP volunteers will obtain the client file in advance of the next conciliation conference, and that client will remain the volunteer’s client until the case is out of Diversion. Temporary Solution Volunteer: VIP will ask volunteers to help clients for a single conciliation conference until we can make a referral to a volunteer who is able to commit to the client until her case is out of Diversion. Emergency Volunteer: While we expect that most cases will be given a continuance to allow VIP to find an attorney -- as lawyers and courts do consistently for other civil cases that VIP handles -- we know that there will be cases that lenders will refuse to continue. In those cases, we hope to be able to utilize volunteer attorneys who work near City Hall and can be available for same day representation

F ORECLOSURE O VERVIEW One in eleven mortgages are delinquent and one in twenty-one are in active foreclosure In Pennsylvania, foreclosures are concentrated in middle and low-income areas Most defaults occur because of unemployment or underemployment and resulting complications

PA F ORECLOSURE P ROCESS Civil procedure Act 91 Act 6 Philadelphia’s Diversion Process

B ASICS OF F ORECLOSURE Originator Servicer Trustee Loan Insurers or Guarantors Loan Types – FHA – Conventional Prime – Conventional Subprime – Predatory

H OW D IVERSION W ORKS Notification of homeowner Housing counseling Conciliation conferences VIP Eligibility

V OLUNTEER R ESPONSIBILITIES Client communication is KEY! – Fear and distrust – Lack of education – Multiple complicating factors Do not wait for the client to call you Maintain regular contact with client AND housing counselor

A VAILABLE R ESOURCES VIP referral packet On-site legal services attorney Malpractice insurance Document’s from lender’s counsel

R EPRESENTATION T ASKS Initial tasks – Obtain client signature on representation agreement and borrower authorization – Discuss status with homeowner and housing counselor Case Analysis – Other debt? – How many conferences? – Savings? – Why delinquent? – How much is owed? – Taxes and homeowner’s insurance? – 2 nd or 3 rd mortgage?

R EPRESENTATION T ASKS Negotiation Tasks – Reach an agreement and review order – Ensure all parties understand next steps Troubleshooting – Discuss refusal of continuance with court administrator and, if necessary, request JPT – Status conferences Concluding Tasks – Obtain copies of order – Exchange contact information with all parties

O NGOING C OMMUNICATION Maintain regular contact with client and housing counselor Check docket regularly Follow up with lender’s counsel VIP status updates and supports

C LOSING A C ASE Notify VIP of details Send termination letter to client Request SD&E for successfully negotiated cases

H OUSING C OUNSELORS Most clients referred through Save Your Home Philly Hotline Face to face meeting Gather financial information Complete required forms Submit financial packets for workout options

T YPICAL D OCUMENTATION Authorization to speak with borrower Income verification Bank statements Utility bills Explanation of hardship List of documents required by specific lender Additional for HAMP: – Request for Modification and Affidavit (RMA) – Request for transcript of tax returns (IRS Form 4506-T) – Income verification – Residency verification

C HALLENGES Proposal cannot be submitted 10 days before 1 st or 14 days before 2 nd conference Missing or unavailable documents Communication challenges Postponement refusals Delays cause documents to become stale Programs are constantly changing

G ENERAL R ETENTION O PTIONS Refinance State assistance programs – HEMAP or PHRP Repayment Forbearance Partial claim Reverse mortgage Loan modification

HAMP Making Home Affordable program New Tier II program – Second bite at the apple – Default on TPP / permanent mod – Expanded eligibility for unemployment

FHA-S PECIFIC O PTIONS Lenders required to follow this waterfall of options: – Repayment – Forbearance – Special forbearance – Loan modification – Partial claim – FHA-HAMP

N ON -R ETENTION O PTIONS Straight sale Short sale Mortgage assumption Deed-in-lieu Sherriff’s sale “Cash for Keys”

P ROGRAM O UTCOMES Retention Outcomes 241 Loan Modifications 46 Reinstatements 19 Bankruptcies 16 Forbearance Plans 13 HEMAP loans TOTAL: 335 Non-Retention Outcomes 86 Sheriff Sales 31 Market sales, Short sales, or Deed-in-Lieu TOTAL: 117 For all VIP clients who had ongoing representation throughout the duration of the diversion process and whose outcomes are known, 74% of homeowners were able to save their homes!

N EXT S TEPS Sign up to volunteer today! Six months to earn CLEs – Provide ongoing representation to two clients – Attend three separate conferences as temporary solution or emergency volunteer For questions, concerns, or to request a case, please contact Homeownership Advocate Susan Wysor Nguema at or