Home Affordable Modification Program: Investor Accounting and Reporting Requirements. Elizabeth Fink December 2010

Transcription

1 Home Affordable Modification Program: Investor Accounting and Reporting Requirements Elizabeth Fink December 2010

2 Agenda Home Affordable Modification Program (HAMP) Trial Period Plan Effective Date and Modification Effective Date Investor accounting requirements HAMP Electronic Default Reporting (EDR) requirements Modified d mortgages with partial principal i forbearance Reporting to Fannie Mae as program administrator Freddie Mac

3 HAMP Process 0-30 Days Delinquent Reactive No solicitation allowed Borrower Contact 31 Days Delinquent Foreclosure Sale Date Proactive Mandatory solicitation Verified Borrower Information General Eligibility Origination date on or before 1/1/09 Monthly housing expense-to-income ratio > 31% 0-59 days delinquent: determine imminent default Occupied, primary residence Property condition No Ineligible for HAMP Consider other loss-mitigation options Verified Borrower Information Initial Package Request for Modification and Affidavit (RMA) IRS Form 4506-T (4506T-EZ) Evidence of Income Credit report on each borrower Property Value (AVM / BPO / HVE) Underwrite Borrower Target PITIAS: 31% Yes 1. Sequential Process Capitalize the arrearages and allowable fees and costs Reduce interest rate (2% floor) and obtain interest rate cap Extend term (480 months max.) Forbear principal (if allowable) 2. Assess forbearance limitations 3. Treasury NPV test / assess limitations 4. Prepare Trial Period Plan and initiate Trial Period (refer to counseling, if required) 5. Successfully complete Trial Period No Yes No Determine Modification Terms Target PITIAS: 31% Repeat Sequential Process Housing counseling requirement (total monthly debts to income ratio > 55%) Prepare Modification Agreement Close loan modification Yes Servicer compensation: $ days delinquent $ days or more delinquent Conditional Compensation/Incentives Annual payments to Servicer and borrower subject to de minimis test Freddie Mac

4 Trial Period Effective Date The Trial Period (TP) Plan Effective Date is determined by the date of Trial Period Plan offer.» If the TP Notice is sent to the borrower on or before the 15th calendar day of the month, the TP effective date is the first day of the next month.» If the TP Notice is sent to the borrower after the 15th calendar day of the month, the TP effective date is the first day of the second month. TP Notice Sent to Borrower TP Plan Effective Date July 10 August 1 July 27 September 1 Freddie Mac

5 Extension of Modification Effective Date If a borrower does not make the third TP payment on its due date, which is the first day of the third TP month, you may include an interim month following the third TP month and delay the date of the first modified payment by one month.» For example, if the third TP payment is due August 1 but received August 15, the modification effective date may be extended to October 1. You are required to have a written policy establishing the cutoff date that dictates when you will or won't insert an interim month following the TP Period. No incentive compensation for the interim month may be accrued if the borrower does not make a payment at least equivalent to the amount of a TP payment during the interim month. The Home Affordable Modification Agreement Cover Letter must be modified d to reflect the effects of the interim i month. Freddie Mac

6 Trial Period Investor Accounting Requirements Continue to report and remit to Freddie Mac under the original terms of the mortgage. Deposit the TP payments in the suspense account. Once a full payment equivalent to the original P&I is received, apply the TP payments against outstanding delinquencies in accordance with the original mortgage terms and advance the DDLPI accordingly. gy Excess funds at the end of the Trial Period must be applied towards the outstanding arrearages before they are capitalized. Note: Per Guide Chapter C65.7 (c) : For all Trial Period Plans with a Trial Period Plan Effective Date on or after June 1, 2010, each Trial Period payment must be received no later than the last day of the month in which h the Trial Period payment is due. Freddie Mac

7 Requirements After a Successful Trial Period Determine the final modification terms and finalize the Modification Agreement Set the Modification Effective Date and the Due Date of the first modified payment based on when the third TP payment was received.» You may extend the modification effective date if the third TP payment was received after the first of the month in which it is due. Report and remit using modified terms» If applicable, you will receive a credit for the capitalized amount on your Detailed Adjustment Report and Monthly Account Statement. Note: Do not report a Principal Balance Correction loan-level transaction to increase the ending Unpaid Principal Balance (UPB) of the loan. Freddie Mac

8 Example 1: Trial Period Payments DDLPI: 2/1/09 Delinquent Interest: Feb, Mar: $1,000 Loan is active Current UPB: $100,000 Current suspense balance: $0 Original P&I Payment: $1, ANY: 6% Modified P&I Payment: $800 TP notice sent: April 5 Borrower TP Payments Unapplied Funds TP Payments Applied Principal Report and Remit to Freddie Mac Interest Ending UPB DDLPI Custodial Account Delinquent Interest 1 st TP due: May 1 $0 P&I $500 $800 received st TP rec d: April 30 $800 - suspense $0 May cycle $100,000 2/1/09 $1,500 April s Interest 2 nd TP due: June 1 2 nd TP rec d: June 1 $800 received + $800 suspense = $1,600 $1,100 - P&I $500 - suspense $600 $500 June cycle May s interest t $99,400 3/1/09 $1,500 3 rd TP due: July 1 3 rd TP rec d: July 1 $800 received + $500 suspense = $1,300 $1,100 - P&I $200 - suspense $603 $497 July cycle June s interest $98,797 4/1/09 $1,500 Modified payment due: August 1 $200 remaining in suspense applied to outstanding arrearages before these amounts are capitalized. Report and remit using modified terms. Freddie Mac

9 Example 2: Trial Period Payments DDLPI: 2/1/09 Delinquent Interest: Feb, Mar, Apr: $1,500 Loan is active Current UPB: $100,000 Current suspense balance: $0 Original P&I Payment: $1,100 ANY: 6% Modified P&I Payment: $800 TP notice sent: April 22 Borrower TP Payments Unapplied dfunds TP Payments Applied Report and Remit to Freddie Mac Principal Interest Ending UPB DDLPI Custodial Account Delinquent Interest 1 st TP due: June 1 1 st TP rec d: June 4 2 nd TP due: July 1 2 nd TP rec d: July 1 3 rd TP due: Aug 1 3 rd TP rec d: Aug 26 $800 received $800 received + $800 suspense = $1,600 $800 received + $500 suspense = $1,300 $0 P&I $800 - suspense $0 $1,100 - P&I $500 - suspense $1,100 - P&I (Sept cycle) $200 - suspense $600 $0 $500 June cycle May s interest $500 July cycle June s interest $497 August cycle July s interest Delay of Mod Effective and First $0 received $0 P&I $497 Payment Due date to October 1. No payment due or funds + $200 suspense $200 remains in $603 Sept cycle received din Sept. = $200 suspense Aug s interest $100,000 2/1/09 $2,000 $99,400 3/1/09 $2,000 $99,400 3/1/09 $2,497 $98,797 4/1/09 $2,497 Modified payment due: October 1 $200 remaining in suspense applied to outstanding arrearages before these amounts are capitalized. Report and remit using modified terms. Freddie Mac

10 Example 3: Trial Period Payments DDLPI: 12/1/08 Inactivation cycle: March cycle 09 Current suspense balance: $0 ANY: 6% Delinquent interest before inactivation: Dec, Jan, Feb: $1,500 Current UPB: $100,000 Original P&I Payment: $1, Modified P&I Payment: $800 TP notice sent: April 5 Borrower TP Payments Unapplied Funds TP Payments Applied Principal Report and Remit to Freddie Mac Interest Ending UPB DDLPI Custodial Account Delinquent Interest 1 st TP due: May 1 1 st TP rec d: May 1 $800 received $0 P&I $800 - suspense $0 $0 May cycle $100,000 12/1/08 $1,500 2 nd TP due: June 1 2 nd TP rec d: June 1 $800 received + $800 suspense = $1,600 $1,100 - P&I $500 - suspense $600 3 months Reinstatement Interest: $1,500 (Mar, Apr, May) June cycle $99,400 1/1/09 $2,500 3 rd TP due: July 1 3 rd TP rec d: July 3 $800 received + $500 suspense = $1,300 $1,100 - P&I $200 - suspense $603 $497 July cycle June s Interest $98,797 2/1/09 $2,500 Modified payment due: August 1 $200 remaining in suspense applied to outstanding arrearages before these amounts are capitalized. Report and remit using modified terms. Freddie Mac

11 HAMP EDR Requirements During the HAMP Trial Period - report the mortgage as in forbearance via Electronic Default Reporting (EDR), action code 09 Forbearance Plan along with the default reason code, HMP. Default action codes» Report the following event code one time, the month following when the event took place, including the date the event occurred: H6 Eligible for HAMP H7 HAMP in Review H8 HAMP Modification Agreement Sent H9 HAMP Modification Agreement Received Freddie Mac

12 Additional EDR Codes for Alternatives to Foreclosure Default Action Codes» Report the following event code one time, the month following when the event took place, including the date the event occurred: HA Workout in Review HB Short Sale in Review 11 Repayment Plan in Review HD - Modification in Review (other than a modification under HAMP) H3 BPO Ordered H4 Solicitation Letter Sent H5 Positive Solicitation Response HC Ineligible for Short Sale HE Ineligible ibl for Modification Freddie Mac

13 Other Requirements During the HAMP Trial Period Do not refer the mortgage to foreclosure» If the mortgage is already in foreclosure, postpone the foreclosure sale Late charges may be accrued; however, any unpaid late charges must be waived if the borrower successfully completes the Trial Period Freddie Mac

14 Loan Level Reporting File Format Changes Effective December 14, 2009, we revised the loan-level investor reporting formats to incorporate additional data on:» Mortgages with a partial principal forbearance Interest-Bearing UPB Deferred UPB Deferred Principal Curtailment Amount The new loan-level reporting requirements replaces the monthly spreadsheet and Form 315 previously required for mortgages with partial principal forbearance.» Mortgages modified under HAMP Borrower Incentive Curtailment Amount Freddie Mac

15 Mortgages with Partial Principal Forbearance Application of Curtailments If the curtailment is less than the interest-bearing UPB:» Apply to the interest-bearing UPB. If the curtailment is greater than or equal to the interest-bearing est UPB:» First apply to the deferred UPB. Any remaining funds are then applied to the interest-bearing UPB. Freddie Mac

16 Mortgages with Partial Principal Forbearance New MIDANET screen» If the loan has partial principal forbearance (deferred principal), select Y Freddie Mac

17 Mortgages with Partial Principal Forbearance Enter the Interest Bearing and Deferred UPBs, along with any principal (curtailment) collected. In this example, the principal (curtailment) is applied to the interest-bearing UPB because it is less the interest-bearing UPB Freddie Mac

18 Mortgages with Partial Principal Forbearance MIDANET will total the interest-bearing and deferred UPB If applicable, enter the Borrower Incentive Curtailment Amount Collected Total Ending UPB = Interest Bearing UPB + Deferred UPB Enter, if applicable Note: For inquiries or disputes on incentive payments, contact the Program Administrator directly at MHA_Comp@fanniemae.com or complete the HAMP Incentive Inquiry Request form located on Copy Freddie Mac on any loan level inquiries via at WKOUT_HAMP_RECON@freddiemac.com. Freddie Mac

19 Mortgages with Partial Principal Forbearance Interest is calculated on the interest-bearing UPB Freddie Mac

20 Mortgages with Partial Principal Forbearance Mortgages with partial principal forbearance are paid off at the gross UPB Enter the Deferred Principal and Interest Bearing Principal Collected Freddie Mac

21 Mortgages with Partial Principal Forbearance MIDANET will total the interest-bearing and deferred principal collected Total Principal Collected = Deferred Principal + Interest- Bearing Principal Collected Freddie Mac

22 Mortgages with Partial Principal Forbearance Interest is calculated on the interest-bearing UPB Freddie Mac

23 Loan Level Detail The loan level detail reflects the 4 new fields Freddie Mac

24 MIDANET Edit codes for HAMP Mortgages Edit Code 709E Explanation You reported a Deferred UPB value that is greater than the original deferred unpaid principal balance for the modification. 710E 711E You reported a non-exception transaction for a loan with an Interest Bearing UPB equal to zero. When the Interest Bearing UPB is equal to zero, you are required to collect the non-interest bearing portion of the loan (Deferred UPB) and report a payoff transaction. The difference between the Deferred UPB value reported for the current cycle and the Deferred UPB value reported for the prior cycle is not equal to the Deferred Principal Curtailment Amount reported for the current cycle. Note: Refer to the Resolving Loan-Level Edits Quick Reference Guide for more information on the new edit codes. Freddie Mac

25 MIDANET Edit codes for HAMP Mortgages Edit Code 712E 713E 714E 811E 812E Explanation The Borrower Incentive Curtailment cannot be zero. You reported a value of zero for the Borrower Incentive Curtailment Amount. However, according to Freddie Mac and the Program Administrator a payment was issued. The Borrower Incentive Curtailment is calculated incorrectly. The value reported for the Borrower Incentive Curtailment Amount does not equal the amount Freddie Mac paid. The Borrower incentive Curtailment Amount must be zero. A value other than zero was reported for Borrower Incentive Curtailment Amount. However, Freddie Mac did not issue a payment or correction to the Bank of New York. The ending UPB, Interest Bearing UPB and Deferred UPB cannot be zero for an active loan. The Deferred UPB reported for the current cycle is greater than the Deferred UPB at the time of modification. Freddie Mac

26 MIDANET Edit codes for HAMP Mortgages Edit Code 813E 814E 815E 816E 817E 818E 819E Explanation The amount reported for Current UPB is not equal to the sum of the Interest Bearing UPB and Deferred UPB. The Interest Bearing UPB must not be zero for an inactivation, reinstatement, transfer to REO, or principal balance correction. The Deferred UPB must not be zero for an inactivation, reinstatement, transfer to REO, or principal balance correction. You reported a liquidation, but the ending Interest Bearing UPB is not equal to zero. The ending UPB for liquidations must be equal to zero. You reported a liquidation, but the ending Deferred UPB is not equal to zero. The ending UPB for liquidations must be equal to zero. The Interest Bearing UPB reported for the current cycle for a loan in an inactive status is not equal to the Interest Bearing UPB reported for the prior cycle. The Deferred UPB is not equal to previous cycle s ending Deferred UPB. You reported a change in the Deferred UPB for a loan that is inactive. Freddie Mac

27 MIDANET Edit codes for HAMP Mortgages Edit Code 820E 821E Description The Interest Bearing UPB reported for the current cycle for an inactive loan is not equal to the prior cycle Interest Bearing UPB. The Interest Bearing UPB cannot change while the loan is inactive. The Deferred UPB reported for the current cycle for an inactive loan is not equal to the prior cycle Deferred UPB. The Deferred UPB cannot change while the loan is inactive. 822E 823E 824E 825E The ending Interest Bearing UPB reported is less than zero and the loan does not allow negative amortization. The ending Deferred UPB reported is less than zero. The ending Interest Bearing UPB increased from the prior cycle, but negative amortization is not allowed. The ending Deferred UPB increased from the prior cycle, but negative amortization is not allowed. Freddie Mac

28 File Format Changes for Loan Level Reporting If you need more information on the file format changes for loan level reporting, refer to the following Investor Reporting Specification Bulletins:» Investor Reporting EDI Format (version 3050) FreddieMac.com/singlefamily/service/EDI_3050.pdf» Investor Reporting EDI Format (version 4030) FreddieMac.com/singlefamily/service/EDI_4030.pdf» MIDANET Loan-Level L Monthly Reporting Data Format FreddieMac.com/singlefamily/service/MIDANET_loanlevel.pdf Freddie Mac

29 Reminder for MIDANET Users It s important to ensure you are on the most current version of MIDANET.» To get the most current version, go to the Communications menu of MIDANET, hit receive, and Freddie Mac will be prompted to transmit the next version to you. If necessary, you will need to repeat this process until you receive the most current version.» Call FREDDIE if you need to request a software disk to update your system Freddie Mac

30 Reporting to the Program Administrator You are required to report the following HAMP loan-level data to Fannie Mae as the program administrator:» At the start of the TP, report the setup attributes, once you receive the borrower s first TP payment, no later than the fourth business day of the month following the TP effective date For example, if the TP effective date is July 1, report the TP setup attributes by the fourth business day in August» During the TP» Once the modification is approved, report the modified loan setup attributes no later than the fourth business day of the month in which the first modified payment is due For example, if the first modified payment is due October 1, report the loan setup attributes by the fourth business day in October Submission of the modified loan setup attributes is required before servicer workout compensation and incentive fees are paid» Monthly after the modification is set up For specific attributes, refer to the HAMP Servicer Reporting Requirements available on Freddie Mac

31 Resources Single-Family Seller/Servicer Guide, Chapter C65 Freddie Mac s HAMP Webpage» FreddieMac.com/singlefamily/service/mha_modification.html The Learning Center Servicing Home Page» FreddieMac.com/learn/service HAMP Servicer Reporting Requirements» FREDDIE ( ) Freddie Mac

32 Thank you for your participation! Freddie Mac