MPF Xtra PFI Advisory

Transcription

1 MPF Xtra PFI Advisory March 14, 2014 Special Attention: PFI MPF Program Management and Servicing Management Subject: Transfer of Servicing, Lender-Placed Insurance, Bankruptcy and Foreclosure Attorney Fees and Other Reimbursable Expenses, Modification Updates, and other Miscellaneous Servicing Updates 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 in Fannie Mae s servicing policies. The following servicing policies are discussed in this PFI Advisory: Transfer of Servicing Lender-Placed Insurance Requirements Bankruptcy and Foreclosure Attorney Fees and other Reimbursable Expenses Mortgage Loan Modification Payment Change Notification Miscellaneous Servicing Policy Changes 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. Transfers of Servicing Written Consent, Form 629 and Evaluation of Subservicers Servicers must obtain prior written consent from the MPF Bank for any transfer of Mortgage loan servicing, including servicing transfer involving a subservicer effective March 1, MPF and MPF Xtra are registered trademarks of the Federal Home Loan Bank of Chicago, and the MPF Mortgage Partnership Finance logo is a trademark of the Federal Home Loan Bank MPF Xtra PFI Advisory Page 1

2 Fannie Mae updated the Request for Approval of Servicing Transfer (Form 629) to require the transferee servicer to indicate if there will be a subservicer involved in the servicing transfer. The PFI is required to notify the Master Servicer when approval is obtained from the MPF Bank for completion of the Request for Approval of Servicing Transfer form by the Master Servicer. The updated form is available on Fannie Mae s website. As part of the transfer of servicing review an evaluation of the performance and capacity of any subservicer the transferee servicer elects to utilize is required. Part I, Section 205: Post-Delivery Transfer of Servicing Lender-Placed Insurance Requirements Servicers are encouraged to implement the requirements for lender-placed insurance, immediately. These changes are effective for new or renewed lender-placed insurance policies issued on a property secured by a Mortgage on or after June 1, Servicers must ensure that their master agreements and/or master policies with their lender-placed insurance provider comply with the requirements by June 1, Acceptable Lender-Placed Insurance Costs The lender-placed insurance premiums charged to the borrower or reimbursed by Fannie Mae must exclude any lender-placed insurance commission or payments earned or received by the servicer, or other entities or individuals affiliated with the servicer (employees, agents, brokers, etc.). Fannie Mae s definition of an affiliated entity is defined as: an entity owned or controlled, in whole or in part, by the servicer including, but not limited to, a subsidiary or joint venture of the servicer; an entity that owns or controls, in whole or in part, the servicer (for example, the parent company of the servicer); or an entity that is under common ownership or control with the servicer (for example, two subsidiaries of the same parent company). An affiliated entity does not include a publicly traded company where the servicer owns less than 5% of its stock. The prohibited lender-placed insurance commissions or payments include any incentive-based compensation regardless of its designation as commission, bonus, fees, or other types of payments from the servicer s lender-placed insurance carrier, for example, underwriting bonuses or other payments based on insurance loss ratios. MPF Xtra PFI Advisory Page 2

3 Part II, Chapter 6: Lender-Placed Property Insurance Acceptable Lender-Placed Insurance Carriers The servicer s lender-placed insurance carrier for a lender-placed insurance policy for a Mortgage must not be an affiliated entity of the servicer. This requirement includes any captive insurance or reinsurance arrangements with an affiliated entity. Part II, Chapter 6: Lender-Placed Property Insurance Lender-Placed Insurance Compliance Certification Upon request the servicer must provide copies of its lender-placed insurance policy, including any other contractual arrangements between the servicer and a lender-placed insurance carrier. The servicer will also be required to respond to requests for data for its lender-placed insurance activities from time to time. Requested documentation and/or data relating to lender-placed insurance coverage must be provided within 30 days of request. Part I, Section 305: Lender Record Information Bankruptcy and Foreclosure Attorney Fees and Other Reimbursable Expenses Allowable Bankruptcy Attorney Fees The allowable bankruptcy attorney fees that will be reimbursed to servicers have been updated. The Allowable Bankruptcy Attorney Fees exhibit on Fannie Mae s website has been updated to reflect the new allowable bankruptcy attorney fees and services. The fees highlighted in bold on the updated exhibit have been added or updated. Part VII, Section : Allowable Attorney Fees Allowable Foreclosure Attorney Fees The maximum allowable foreclosure attorney fees for all Mortgages secured by properties located in the States of New York and Washington are updated. The updated fees for New York and Washington include all steps required to complete judicial or non-judicial foreclosure, as the case may be, other than fees for mediations and settlement conferences. MPF Xtra PFI Advisory Page 3

4 The updated Allowable Attorney and Trustee Fees exhibit is available on Fannie Mae s website. The fees highlighted in bold on the updated exhibit have been added or updated. For purposes of this Advisory, per Fannie Mae the term active means that a foreclosure matter has not yet gone to foreclosure sale, and has not been concluded by some other event such as a Mortgage Release (deed-in-lieu of foreclosure), short sale, mortgage loan modification, payoff, or reinstatement. The updated fees for the State of New York apply to all matters referred to counsel for initiation of foreclosure on or after June 1, 2011, by the present or prior servicer, provided the matter is still active as of the date of this Advisory. The updated fees for the State of Washington apply to all matters referred to counsel for initiation of foreclosure on or after September 1, 2012, by the present or prior servicer, provided the matter is still active as of the date of this Advisory. Part VIII, Section : Attorney (or Trustee) Fees Reimbursement for Postage Costs The servicer will be reimbursed for postage incurred by law firms for first-class, certified, or registered mail when required, provided the postage costs are incurred by the law firm retained by the servicer to handle foreclosure and bankruptcy matters on mailings that are required by: state statute; court rule or court order; or the Fannie Mae Post Referral to Foreclosure Solicitation Letter. The servicer will not be reimbursed for postage costs incurred in connection with mailings by the servicer or law firm that are associated with servicer functions. Examples of mailings that are associated with servicer functions are: demand and acceleration letters; communications with borrowers or third parties related to general servicing matters that are not required by state stature, court rule or order, other than the Fannie Mae Post Referral to Foreclosure Solicitation Letter; correspondence addressing allegations of servicing or origination error; responses to Qualified Written Requests under the Real Estate Settlement Procedures Act (RESPA); and MPF Xtra PFI Advisory Page 4

5 responses to Fair Debt Collection Practices Act (FDCPA) letters. All postage costs must be actual, reasonable, and necessary. The servicer will not be reimbursed for the cost of mailing preparation services, overnight mail, stationery, envelopes, or postage meter rental. Part VIII, Section Attorney (or Trustee) Fees; and Part VIII, Section : Other Reimbursable Expenses. Mortgage Loan Modification Payment Change Notification Updates Requirements for borrower notification of the interest rate adjustment for a Mortgage that has been modified and is subject to step interest rate adjustments, including Fannie Mae Home Affordable Modification Program (HAMP) Modifications. Servicers are encouraged to implement the requirements immediately, however servicers are required to implement these payment changes notification requirements by April 1, Payment Change Notification For all Mortgage modifications with a step interest rate adjustment the servicer must send the borrower a notification of the mortgage loan interest rate adjustment based on the updated guidance provided in the Payment Change Notification Guidelines exhibit, available on Fannie Mae s website. All payment change notifications for Mortgage modifications with a step interest rate adjustment sent to the borrower must include the information outlined in the following table. Notice Requirements The amount and effective date of the interest rate increase. The amount and due date of the borrower s new monthly payment. An explanation pursuant to the terms of the modification agreement, that at the end of the initial fixed-rate term, the interest rate will increase according to the schedule in the modification agreement until it reaches the interest rate cap. Furthermore, the explanation should, as applicable include statements regarding the following: how the interest rate cap was set; and once the interest rate reaches the interest rate cap, it will be fixed for the remaining life of the Mortgage. A payment schedule table, similar to the one included in the modification agreement, that outlines the future interest rates and monthly payment amounts (identifying principal and MPF Xtra PFI Advisory Page 5

6 Notice Requirements interest, and estimated escrows) and the effective dates for such amount; or the servicer may explain these terms, dates, and amounts. An explanation that the monthly payment includes an escrow for property taxes, hazard insurance, and other escrowed expenses, which, if changed, will change the monthly payment. An explanation of how the new monthly payment was determined. Servicer contact information and instructions to the borrower to contact the servicer if the borrower has questions or concerns about the new monthly payment. The Homeowner s HOPE Hotline Number ( HOPE) with an explanation that the borrower can ask for Making Home Affordable (MHA) help. An explanation that the borrower can seek assistance with household budgeting at no charge from HUD-approved housing counseling agencies that can be found on HUD.gov. Information regarding the availability of additional educational resources at Fannie Mae s Know Your Options website ( Part VII, Section 207: Payment Change Notification; and Payment Change Notification Guidelines Exhibit. Inbound and Outbound Calls For all Mortgage modifications with a step interest rate adjustment the servicer must adhere to the requirements in the Payment Change Notification Guidelines exhibit. Part VII, Section 202: Inbound Call Coverage; Part VII, Section 203: Outbound Call Attempts; and Payment Change Notification Guidelines Exhibit. Miscellaneous Servicing Policy Changes Cap and Extend Modification for Disaster Relief Terms The modification terms for the Cap and Extend Modification for Disaster Relief are updated to require servicers to set the interest rate to a fixed interest rate. MPF Xtra PFI Advisory Page 6

7 The servicer must follow the steps shown in the following table to determine the borrower s new modified payment terms, regardless of the pre-modification Mark-to-Market Loan-to-Value ratio. Step The servicer must 1 capitalize arrearages (as described the Fannie Mae Servicing Guide Part, Part VII, Section : Conventional Mortgage Loan Modification Terms). 2 set the modification interest rate to a fixed rate based on the modified Mortgage interest rate to the borrower s current mortgage loan interest rate. 3 extend the term in monthly increments up to a maximum of 480 months from the Mortgage modification effective date and re-amortize the Mortgage over a term needed to achieve a new modified monthly principal and interest (P&I) payment that is as close to the current pre-modification P&I payment as possible without exceeding it. If the Mortgage has deferred principal (principal forbearance amount), that amount must not be capitalized into the interest-bearing unpaid principal balance as part of the Cap and Extend Modification for Disaster Relief. Deferred principal must continue to be deferred and be payable upon maturity of the Mortgage modification, sale or transfer of the property, refinance of the Mortgage, or payoff of the interest-bearing unpaid principal balance. Interest will not accrue on any deferred principal. Part VII, Section : Conventional Mortgage Loan Modification Terms o Also see Fannie Mae Servicing Announcement: SVC Bankruptcy Schedules of Assets and Liabilities When a borrower is in an active Chapter 7 or Chapter 13 bankruptcy, servicers are authorized to accept copies of the bankruptcy schedules in lieu of a Uniform Borrower Assistance Form (Form 710). The servicer is also authorized to accept tax returns (if returns are required to be filed) in lieu of IRS Form 4506T-EZ or IRS Form 4506-T. The servicer is authorized to use this information, along with any required income and hardship documentation as specified in Form 710, to determine borrower eligibility for foreclosure prevention alternatives. Bankruptcy schedule(s) must not be more than 90 days old on the date the schedule(s) are received by the servicer. Part VII, Section : Borrower Response Package Foreclosure Prevention Opportunities MPF Xtra PFI Advisory Page 7

8 Servicers are also reminded to follow all Fannie Mae Servicing Guide requirements when considering any foreclosure prevention alternative. When Fannie Mae s approval for a foreclosure prevention alternative is required, the PFI must submit the request to the Master Servicer for processing through the HomeSaver Solutions Network (HSSN). Trustee and Bankruptcy Court approval must also be obtained when required. Part VII, Section : Foreclosure Prevention Opportunities Third-Party Sales Proceeds The servicer s requirement to remit gross proceeds after completion of a third-party sale have been updated. Master Servicers will continue to use the Cash Disbursement Request (Form 571) for any reimbursable expenses. If state law requires that the sheriff deduct fees from the sale proceeds, the servicer must remit the proceeds less such deductions along with an itemization of the deducted fees. The servicer is reminded that it must forward a copy of the closing statement to the Master Servicer showing a breakdown of principal, interest, servicing fee, outstanding advances, and any other items leading up to the date of the sale on the same day that it remits the funds. Part VIII, Section 112: Third-party Sales Update to Servicing Guide Glossary Fannie Mae has added the following definition to the Servicing Guide. Seriously delinquent mortgage loan. A mortgage loan with three or more full consecutive monthly mortgage loan payments past due, including mortgage loans in the foreclosure process. Part XII, Glossary MPF Xtra PFI Advisory Page 8

9 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 9