MPF Xtra PFI Advisory

Transcription

1 MPF Xtra PFI Advisory June 23, 2014 Special Attention: PFI MPF Program Management and Servicing Management If you need assistance or guidance on a particular MPF Xtra mortgage affected by the circumstances or policies addressed in this MPF Xtra PFI Advisory please contact the Master Servicer, Wells Fargo Bank, N.A., at WFMPFP@WellsFargo.com. This MPF Xtra PFI Advisory informs servicers of updates to the following Fannie Mae servicing policies: Standard Modification and Streamlined Modification Updates Evaluation Notice, Solicitation Letter, and Trial Period Trial Period Plan Payment Standard Modification Rate Adjustment Frequency Miscellaneous Servicing Policy Late or Inaccurate Reporting City of Chicago Vacant Property Ordinance Update Effective Date: The updated policies in this MPF Xtra PFI Advisory are effective immediately for eligible borrowers and mortgaged property unless otherwise indicated. PFIs are reminded to document all attempts to contact the borrower(s) by maintaining call logs and copies of any communication mailed to all borrowers as well as thoroughly documenting any face-to-face meetings or call conversations. Each step in this process is critical to effectively manage the loss mitigation process. Every step must be fulfilled within the defined time constraints and each event properly documented. Standard Modification and Streamlined Modification Updates The Standard Modification and Streamlined Modification programs are revised to include mortgages with a pre-modified mark-to-market loan-to-value (MTMLTV) ratio less than 80%. Except as stated in the MPF Xtra PFI Advisory for mortgages with a pre-modified MTMLTV ratio less than 80%, servicers must comply with the specific requirements for a Standard Modification or Streamlined Modification as described in Fannie Mae Servicing Guide. MPF Xtra PFI Advisory Page 1

2 Servicers are encouraged to implement this policy immediately, however, servicers are required to implement this policy no later than July 1, For a mortgage with a pre-modified MTMLTV ratio less than 80%, the servicer must ensure that the borrower satisfies all eligibility requirements for a Standard Modification or Streamlined Modification and must take the following steps in the order provided below to calculate the terms of the Trial Period Plan. STEP Servicer Action 1 Capitalize arrearages (as described in Fannie Mae Servicing Guide, Part VII, Section : Conventional Mortgage Loan Modification Terms). 2 Set the modified mortgage interest rate to the borrower s current mortgage interest rate. 3 Calculate the monthly principal and interest (P&I) payment using a 480-month, a 360- month, and a 240-month amortization term. If the calculated monthly P&I payment using the 480-month amortization term is less than or equal to the current monthly P&I payment, using the 360-month amortization term provides a current monthly P&I payment reduction of at least 20%, using the 240-month amortization terms provides a current monthly P&I payment reduction of at least 20%, Then the borrower is eligible for a 480-month amortization term. 360-month amortization. 240-month amortization term. (See Fannie Mae Evaluation Notice, Fannie Mae Solicitation Letter, and Fannie Mae Trial Period Plan section for requirements relating to offering a 480-month, a 360- month, and a 240-month amortization term.) To determine the final terms of the modified mortgage, the servicer is to use the first two steps above and then the amortization term selected by the borrower during the Trial Period Plan. As required by the Fannie Mae Servicing Guide, all mortgage modifications must comply with all Applicable Laws. For a mortgage that meets the pre-modified MTMLTV ratio less than 80% requirements in this MPF Xtra PFI Advisory, the servicer should continue to submit the case to the master servicer (Wells Fargo Bank, N.A.). For a mortgage modification meeting these requirements, the master servicer will enter the mortgage modification in the HomeSaver Solutions Network (HSSN) on behalf of the servicer. Only a mortgage not meeting these eligibility and term requirements must be submitted to Fannie Mae for review and approval. MPF Xtra PFI Advisory Page 2

3 Part VII, Section : Conventional Mortgage Loan Modification Terms Evaluation Notice, Solicitation Letter, and Trial Period Plan For an eligible mortgage, the servicer must follow the guidance provided in the following table for a mortgage eligible of a modification plan to determine the appropriate information to include in the Fannie Mae Evaluation Notice and solicitation letter, as applicable. If mortgage is eligible for the 480-month amortization term, 480-month and 360-month amortization terms, 480-month, 360-month and 240- month amortization terms, Then the servicer must send the borrower an offer based on the the 480-month amortization term only. 480-month and 360-month amortization terms. 480-month, 360-month, and 240-month amortization terms. If the borrower is eligible for a Trial Period Plan with more than one amortization term, the borrower may choose an amortization term, as provided in the above table. The Trial Period Plan notice must inform the borrower that he or she will not be able to change the amortization term after the first Trial Period Plan payment is receive by the servicer, regardless of which amortization term the borrower has selected. If the mortgage becomes sixty (60) or more days delinquent within twelve (12) months of the modification effective date, the servicer must not approve another Streamlined Modification or Standard Modification. The servicer must revise the Fannie Mae Evaluation Notice for a mortgage modification that is eligible pursuant to this MPF Xtra PFI Advisory, to include the information outlined below. Additional Trial Period Plan Information For Trial Period Plans that include multiple amortization terms, a statement informing the borrower that: o he or she must make the first Trial Period Plan payment that corresponds to the amortization term the borrower has selected by the first payment due date; o once he or she selects an amortization term and corresponding monthly P&I payment by making this first Trial Period Plan Payment, that amortization term will be fixed for both the Trial Period Plan and the permanent Mortgage modification; and o there is no ability to change the amortization term once the borrower has submitted the first Trial Period Plan payment. A statement that informs the borrower that he or she must remain in compliance with the requirements of the Trial Period Plan in order to receive a permanent Mortgage modification MPF Xtra PFI Advisory Page 3

4 regardless of which amortization term the borrower has selected, and that failure to comply with the Trial Period Plan may also impact his or her ability to obtain another modification. A statement that informs the borrower that upon successful completion of the Trial Period Plan and conversion to permanent mortgage modification, the borrower has the ability to prepay the mortgage without restrictions or penalties. A statement that informs the borrower that if the mortgage becomes delinquent after the Mortgage is permanently modified, the borrower may not be eligible for another Mortgage modification. Part VII, Section : Evaluation Notices; and Part VII, Section : Trial Period Plan Trial Period Plan Payments If the first Trial Period Plan payment submitted by the borrower does not correspond to an amortization term payment offered in the Trial Period Plan, the servicer must use the shortest amortization term provided in the Trial Period Plan that is covered by the borrower s actual payment to determine the amortization term and monthly payment obligation during the Trial Period Plan and the permanent mortgage modification. The borrower must remain in compliance with the requirements of the Trial Period Plan in order to receive a permanent mortgage modification. If a borrower fails to make the required Trial Period Plan payments, he or she is considered to have failed the Trial Period Plan and is not eligible for a permanent mortgage modification. Part VII, Section : Trial Period Plan Standard Modification Rate Adjustment Frequency Fannie Mae reviews the Fannie Mae Standard Modification Interest Rate periodically and may adjust it based on market conditions. Fannie Mae has clarified that: The Fannie Mae Standard Modification Interest Rate for a Fannie Mae Standard or Streamlined Modification (referred to as a Modification ) may be adjusted monthly, beginning on July 1, 2014; and The effective date of the new Fannie Mae Standard Modification Interest Rate will be five (5) Business Days after the servicer notification. Servicers are reminded that the Fannie Mae Standard Modification Interest Rate must be obtained from the master servicer and used for all mortgages evaluated for a Modification on or MPF Xtra PFI Advisory Page 4

5 after the effective date of the Fannie Mae Standard Modification Interest Rate posted on Fannie Mae s website ( Evaluations for a modification performed prior to the effective date must use the Fannie Mae Standard Modification Interest Rate obtained from the master servicer in effect at the time of the evaluation. Part VII, Section : Conventional Mortgage Loan Modification Terms City of Chicago Vacant Property Ordinance Update This MPF Xtra PFI Advisory updates the MPF Xtra Manual Servicing Guide Chapter regarding Mortgaged Properties located in the city of Chicago ( the City ). The City of Chicago Vacant Property Ordinance ( the Ordinance ) imposed registration fees, fines, penalties, and maintenance obligations associated with vacant properties located within the City. Effective May 12, 2014, the servicer must no longer remit vacant property registration fees, penalties, or fine payments to the City, or complete any maintenance pursuant to the Ordinance for any MPF Xtra Mortgage serviced on behalf of Fannie Mae prior to the liquidation of the mortgage; however, the servicer must continue to register vacant properties without payment of the fee and complete maintenance in accordance with the MPF Xtra Manual Servicing Guide. Claims for Reimbursement of Ordinance-Related Expenses Servicers that have registered vacant properties in connection with MPF Xtra product mortgages and paid any registration fees or completed any maintenance pursuant to the Ordinance prior to May 12, 2014 must submit an expense reimbursement request in accordance with MPF Xtra Servicing Guide Chapter by submitting a Cash Disbursement Request (Form 571) to the master servicer. Ordinance-related registration fees and maintenance expenses incurred prior to May 12, 2014, must be submitted for reimbursement no later than June 10, 2014; the servicer is required to use expense category Vacant Property and is required to include documentation to support the expense. Failure to adhere to these submission requirements may result in a denial of the reimbursement request or assessing a late submission compensatory fee. Fannie Mae will not reimburse the servicer for any fees, penalties, fines, expenses, or interest assessed by the City for failure to comply with the Ordinance paid after May 12, In the event that the servicer receives notice or becomes aware of attempts by the City to enforce the Ordinance in connection with properties where Fannie Mae is the mortgagee, the servicer must provide written notice within fourteen (14) calendar days to the City or the attorney handling the action on behalf of the City that the property is subject to the MOU. If the City continues to pursue enforcement following such notification, the servicer must contact the Master Servicer immediately. The servicer must retain documentation of all activities in MPF Xtra PFI Advisory Page 5

6 connection with the Ordinance and provide such documentation to the Master Servicer upon request. This advisory does not apply to MPF Xtra product mortgages that have liquidated, through the foreclosure process or otherwise, and are currently in Fannie Mae s REO Inventory. Claims for Reimbursement of Servicing Guide-Related Expenses As a reminder, the servicer is responsible for performing all property maintenance functions as required by the Fannie Mae Servicing Guide to ensure that the condition and appearance of the property are maintained satisfactorily. The servicer must also request reimbursement for its advances in accordance with the Fannie Mae Servicing Guide. See Fannie Mae Servicing Guide, Part VIII, Section 108: Property Maintenance and Management; and Section : Requests for Reimbursement Miscellaneous Servicing Policy Individual Mortgage Files The servicer must retain in the Mortgage Servicing File all supporting documentation for all expense reimbursement claims (for example, vendor invoices and third-party invoices from the vendor rendering services), in addition to other servicing and liquidation information such as property inspection reports, copies of delinquency repayment plans, copies of disclosures of interest rate and payment changes, documents related to insurance loss settlements, and foreclosure records. Servicers are reminded that after a mortgage is liquidated, the servicer must keep the Mortgage Servicing File for at least four (4) years (measured from the date of payoff or the date that any applicable claim proceeds are received), unless Applicable Law requires longer retention or the MPF Program specifies that the records must be retained for a longer period. In all instances, the servicer must document its compliance with all policies and procedures including, but not limited to, timelines that are required in the Fannie Mae Servicing Guide. The servicer must maintain in the individual Mortgage Servicing File all documents and system records that preserve Fannie Mae s ownership interest in the individual mortgage. When Fannie Mae requests a Mortgage Servicing File for a quality control review, the servicer must include supporting documents for all expense reimbursement claims it has submitted or intends to submit to the Master Servicer for submission to Fannie Mae (for example, vendor invoices). Part I, Section : Individual Mortgage Loan Files MPF Xtra PFI Advisory Page 6

7 Final Requests for Reimbursement As a reminder, servicers are authorized to submit outstanding expense reimbursement claims upon completion of a foreclosure sale. However, the PFI must submit to the Master Servicer for submission on behalf of the servicer the final Fannie Mae Cash Disbursement Request (Form 571) within twenty-five (25) days after: Completion of a loss mitigation alternative; Filing a Mortgage insurance claim for a property that will be conveyed to the insurer or guarantor; Acquisition of a property by a third party at a foreclosure sale; or Disposition of an acquired property. Fannie Mae may deny the request or assess a late submission compensatory fee for reimbursement requests received after these deadlines. Part I, Section : Late Filing of Final Request for Reimbursement Attorney Expenses Servicers are reminded that each expense reimbursement request must contain sufficient description and/or supporting documentation that is necessary and/or required by Fannie Mae to properly evaluate the request. Examples of sufficient supporting information include: a servicer s explanation on a Florida Mortgage that judgment for foreclosure was obtained as a result of an uncontested trial, along with an attorney invoice for the applicable foreclosure attorney fees; or an attorney invoice describing an expense as an attorney fee for a Chapter 13 bankruptcy court notification of default and stay termination. Maximum Allowable Foreclosure Attorney Fees There are specific maximum allowable foreclosure attorney fees for mortgages serviced under the special servicing option for properties located in the state of New York. The allowable attorney fees for judicial foreclosures where judgment is obtained as a result of an uncontested trial are updated as follows: State of New York: $3,650; and City of New York and Long Island (Nassau and Suffolk Counties): $4,250. These fees apply to foreclosure matters where judgment is obtained via an uncontested trial that takes place on or after January 1, MPF Xtra PFI Advisory Page 7

8 Part VII, Section : Allowable Attorney Fees; Part VIII, Section : Attorney (Trustee) Fees; Allowable Bankruptcy Attorney Fee Exhibit; and Allowable Foreclosure Attorney Fee Exhibit Late or Inaccurate Mortgage Reporting A servicer that fails to submit its Monthly Accounting Reports on a timely basis or fails to use the correct data and formats may be assessed a compensatory fee for these failures and may be subject to a remediation period. Each instance of late or inaccurate loan reporting by the servicer may result in fees being assessed. A servicer may be assessed these fees for reimbursement of losses and damages that result from such servicing breaches, including reimbursement for internal administrative costs in tracking, reporting, and correcting these errors. Greater of $250 or $50 per mortgage, up to a maximum of $5,000, for the first instance of late or inaccurate reporting; Greater of $500 or $50 per mortgage, up to a maximum of $10,000, for the second instance of late or inaccurate reporting (if it occurs within one year of the first instance); and Greater of $1000 or $50 per mortgage, up to a maximum of $15,000, for each subsequent instance of late or inaccurate reporting (if any subsequent instance occurs within one year of the most recent previous instance). We greatly appreciate your efforts to properly service loans sold under the MPF Xtra product and to provide optimum Delinquency Management of these loans. If you have any questions, please contact your MPF Bank Representative or call the MPF Customer Support Desk at 877-INFO-MPF ( ). MPF Xtra PFI Advisory Page 8