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Freddie Mac 2009
Table of Contents
Topic Slide Number
Objectives and overview of the Making Home Affordable Program 4-5 Overview of HAMP benefits and process flow.. 6-8 Borrower Solicitation and Outreach. 9-10 Eligibility requirements including Determining Imminent Default... 11-14 Borrower documentation..... 15 Overview of Servicer Responsibilities..... 16 Determine Borrower Income, Hardship and other documentation.. 17-20 Determine Property Value 21 Underwrite the Borrower and NPV test 22-26 Modification Process. 27-31 Compensation and Incentives.... 32 Reporting and Compliance.. 33-34 Summary and Resources. 35-39
Freddie Mac 2009
Objectives
Identify the benefits of the Home Affordable Modification Program (HAMP) Understand Freddie Macs expectations for identifying workout opportunities and executing the HAMP Learn the key steps in the HAMP process flow and your servicer responsibilities Examine HAMP structure, solicitation, eligibility and documentation requirements
Freddie Mac 2009
Servicer Borrower
Increase in workout compensation Up to $3000 incentives can be earned
Mortgage Property
No REO stigma Stays occupied Expanded eligibility: 1-4 unit properties, primary residences First-lien mortgages dated on or before January 1, 2009 No payment delinquency required
Reinstatements
Home Affordable Modification Program
Identify Potential Candidates for Alternatives to Foreclosure Collect and Analyze Borrower Data Collect and Analyze Property and Mortgage Data Develop and Execute the Resolution Plan
Full Partial
Relief Options
Repayment Plan Forbearance
Process Reinstatements
Foreclosure Process
Yes
Yes
Yes
Servicer compensation: $1500 current loan modification $1000 delinquent loan modification
Determine Eligibility
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Documentation
Form 1119, Housing Counseling Letter Form 1120, HAMP Proactive Solicitation Letter Form 1121, HAMP Documentation Request Letter Form 1122, HAMP Hardship Affidavit HAMP Trial Period Cover Letter Form 1123, Stated Form 1124, Verified Form 1125, SIG / TARP Letter Form 3156, HAMP Trial Period Plan Form 3157, HAMP Modification Agreement Form 1118, HAMP Agreement Cover Letter Form 1126, Borrower Financial Statement IRS Form 4506-T
Forms available at: FreddieMac.com/singlefamily/service/mha modification.html
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Determine Eligibility
Be a one-four unit single-family dwelling, condominium, cooperative, or Guideeligible manufactured homes Be owner-occupied and the borrowers primary residence Not be abandoned, vacant, or condemned
Escrow required must institute or maintain monthly escrow for taxes and insurance, unless prohibited by applicable law
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13
http://www.freddiemac.com/sell/forms/pdf/1126.pdf
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payroll deductions monthly escrows monthly HOA fee monthly liabilities allocation reasonable monthly living expenses other net negative obligations
400 400
500
15
Borrower Information
Hardship Affidavit / Imminent Default Most recent signed income tax return Proof of residency (e.g., current utility bill) IRS Form 4506-T Borrowers monthly income documentation Credit report on each borrower Form 1126, Borrower Financial Statement Borrowers other indebtedness (e.g., alimony) Property Value (AVM / BPO)
16
A borrower cash contribution is not required (except to the extent the borrower chooses to fund the entire amount, or a portion, of any escrow deficiency in a lump sum) but also is not prohibited You are required to obtain a credit report Counseling with a HUD-approved counseling agency is required for any borrower if the backend DTI > 55%
If the existing mortgage does not have an escrow account, the Servicer must establish an escrow account at the time the Trial Period commences Principal write-downs and accrued interest write-offs are not permitted
Borrower Income
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base wages and salaries overtime commissions fees tips bonuses housing allowances annuities other compensation for personal services Social Security payments pensions
Underwrite the Borrower: Verifying Income / Target Payment Determine borrowers stable monthly income based on the following:
Pay stubs (wage earners / profit & loss (self-employed) Signed complete copy of most recent tax return All documented sources, including rental income and unemployment compensation Other documented income, if requested IRS Form 4506-T
MONTHLY INCOME
$1,364
retirement funds disability or death benefits unemployment benefits insurance policies other income
Freddie Mac 2009
th e
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Documentation
Form 1119, Housing Counseling Letter Form 1120, HAMP Proactive Solicitation Letter Form 1121, HAMP Documentation Request Letter Form 1122, HAMP Hardship Affidavit HAMP Trial Period Cover Letter Form 1123, Stated Form 1124, Verified Form 1125, SIG / TARP Letter Form 3156, HAMP Trial Period Plan Form 3157, HAMP Modification Agreement Form 1118, HAMP Agreement Cover Letter Form 1126, Borrower Financial Statement IRSForm 4506-T IRS Form 4506-T
Forms available at: FreddieMac.com/singlefamily/service/mha modification.html
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Documentation
Form 1119, Housing Counseling Letter Form 1120, HAMP Proactive Solicitation Letter Form 1121, HAMP Documentation Request Letter Form1122, HAMP Hardship Affidavit Form 1122, HAMP Hardship Affidavit HAMP Trial Period Cover Letter Form 1123, Stated Form 1124, Verified Form 1125, SIG / TARP Letter Form 3156, HAMP Trial Period Plan Form 3157, HAMP Modification Agreement Form 1118, HAMP Agreement Cover Letter Form 1126, Borrower Financial Statement IRS Form 4506-T
Forms available at: FreddieMac.com/singlefamily/service/mha modification.html
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Documentation
Form 1119, Housing Counseling Letter Housing Counseling Letter Form 1120, HAMP Proactive Solicitation Letter Form 1121, HAMP Documentation Request Letter Form 1122, HAMP Hardship Affidavit HAMP Trial Period Cover Letter Form 1123, Stated Form 1124, Verified Form 1125, SIG / TARP Letter TARP Letter Form 3156, HAMP Trial Period Plan Form 3157, HAMP Modification Agreement Form 1118, HAMP Agreement Cover Letter Form 1126, Borrower Financial Statement IRS Form 4506-T
Forms available at:
FreddieMac.com/singlefamily/service/mha modification.html
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Determine Eligibility
If Mortgage is 31 days or more delinquent Freddie Mac provides AVM values at: www.FreddieMac.com/singlefamily/service/mha modification.html If an automated value is not available or the Mortgage is less than 31 days delinquent, submit your request for a property valuation through our BPOdirect website at: www.bpodirect.net/ For any mortgage, you may also request an HVE value through one of Freddie Macs distributors The property value you use must not be older than 90 days from the date of the Servicer first determines the borrowers eligibility
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Underwrite Borrower
Borrower Contact 0-30 Days Delinquent Reactive No solicitation allowed 31 Days Delinquent Foreclosure Sale Date Proactive Mandatory solicitation General Eligibility Origination date on or before 1/1/09 Monthly housing expense-to-income ratio > 31% 0-30 Days Delinquent: Determine Imminent Default Occupied, Primary Residence Property Condition No Disqualified from HAMP Consider other loss-mitigation options No No
Yes
Yes
Yes
Servicer compensation: $1500 current loan modification $1000 delinquent loan modification
www.FreddieMac.com/singlefamily/service/mha_modification.html
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If NPV positive offer Trial Period Forbearance Plan / Modification Agreement, as applicable If NPV negative and
No forebearance was required offer Trail Period Forbearance Plan / Modification Agreement, as applicable Interest-bearing principal balance (after forbearance) is greater than current market value offer Trial Period Forbearance Plan / Modification Agreement, as applicable Interest bearing principal balance is less than current market value BORROWER DOES NOT QUALIFY FOR HAMP. Consider alternative workout options in accordance to the Guide. Use the NPV Calculator available on the Home Affordable Modification Servicer web portal at http://www.HMPAdmin.com Obtain instructions, User ID and password by submitting the HAMP Registration Form available at http://www.HMPAdmin.com
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Non-Qualified Borrowers
Review for other alternatives to foreclosure Fax to Freddie Mac for review:
Form 1126, Borrower Financial Statement Borrowers income documentation Borrowers Hardship Affidavit Automated value or BPO if obtained from a source other than Freddie Mac Copy of the Borrower Qualification Worksheet screen reflecting analysis results All other requirements listed in C65.6(b) Step 6
Note: Servicers may not forgive principal on Mortgages serviced for Freddie Mac
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Modification Process
Servicers must utilize a two-step documentation process for modifications under HAMP. The first step includes:
Sending the Borrower a Trial Period Plan that describes the terms of the Trial Period and the conditions upon which the Borrower's Mortgage may be modified. Performing this step once you have determined using the sequential process described in Section C65.6(b) that the Borrower qualifies for a modification under HAMP. During the Trial Period the Borrower will be required to make payments at the estimated modified payment amount.
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Documentation
Form 1119, Housing Counseling Letter Form 1120, HAMP Proactive Solicitation Letter Form 1121, HAMP Documentation Request Letter Form 1122, HAMP Hardship Affidavit HAMP Trial Period Cover Letter HAMP Trial Period Cover Letter Form 1123, Stated Form 1123, Stated Form 1124, Verified Form 1124, Verified Form 1125, SIG / TARP Letter Form 3156, HAMP Trial Period Plan Form 3156, HAMP Trial Period Plan Form 3157, HAMP Modification Agreement Form 1118, HAMP Agreement Cover Letter Form 1126, Borrower Financial Statement IRS Form 4506-T
Forms available at: FreddieMac.com/singlefamily/service/mha_modification.html
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Borrower Requirements
If the Borrower accepts the Trial Period Plan, the Borrower must then sign and return the following documentation, if not previously provided, by the Offer Deadline: Two original executed Trial Period Plan documents First payment due under the Trial Period terms Documentation to verify occupancy (See Section C65.4 (a)) Income documentation (See Section C65.6(b)) Signed Form 4506-T, Request for Transcript of Tax Return Fully executed Hardship Affidavit Completed and signed page two of Form 1126, Borrower Financial Information, if the Borrower is current or less than 31 days delinquent Executed disclosures, if any, to the extent applicable federal, State or local law requires executed disclosures to be retained by the provider
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Re-underwrite Borrower
Borrower Contact 0-30 Days Delinquent Reactive No solicitation allowed 31 Days Delinquent Foreclosure Sale Date Proactive Mandatory solicitation General Eligibility Origination date on or before 1/1/09 Monthly housing expense-to-income ratio > 31% 0-30 Days Delinquent: Determine Imminent Default Occupied, Primary Residence Property Condition No Disqualified from HAMP Consider other loss-mitigation options No No
Yes
Yes
Yes
Servicer compensation: $1500 current loan modification $1000 delinquent loan modification
Documentation
Form 1119, Housing Counseling Letter Form 1120, HAMP Proactive Solicitation Letter Form 1121, HAMP Documentation Request Letter Form 1122, HAMP Hardship Affidavit HAMP Trial Period Cover Letter Form 1123, Stated Form 1124, Verified Form 1125, SIG / TARP Letter Form 3156, HAMP Trial Period Plan Form 3157, HAMP Modification Agreement Form 3157, HAMP Modification Agreement Form 1118, HAMP Agreement Cover Letter Form 1118, HAMP Agreement Cover Letter Form 1126, Borrower Financial Statement IRS Form 4506-T
Forms available at: FreddieMac.com/singlefamily/service/mha modification.html
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Yes
Yes
Yes
Servicer compensation: $1500 current loan modification $1000 delinquent loan modification
Record Retention
Servicers must retain all documents and information:
Received during the process of determining borrower eligibility Related to the monthly payments during and after the Trial Period, as well as incentive payment calculations
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Complete and submit the HAMP Registration Form, available at http://www.HMPAdmin.com Data must be submitted through the data collection tool ("Data Collector") available on the Servicer web portal at www.HMPAdmin.com
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Effective October 1, 2009, Servicers must report specific loan level information, as applicable, to Freddie Mac using the new Electronic Default Reporting (EDR) codes. Servicers may begin reporting these new codes beginning June 1, 2009.
Refer to the EDR Quick Reference Guide available on FreddieMac.com for additional information on the reporting of these codes.
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Compliance
The United States Department of the Treasury ("Treasury") has selected Freddie Mac to serve as its compliance agent for HAMP ("Compliance Agent").
In its role as Compliance Agent, Freddie Mac will utilize Freddie Mac employees and contractors to conduct independent compliance assessments Loan level data will be reviewed for eligibility and fraud.
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Summary
Reviewed the HAMP benefits and process flow including:
Borrower solicitation and outreach Eligibility Requirements Verified information and related documentation Underwriting the borrower:
Sequential process Run NPV test Offer and Establish the Trial Period Plan
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Resources
www.FreddieMac.com/avoidforeclosure/ Learning Center Quick Reference and Webinars: www.FreddieMac.com/learn
www.FreddieMac.com/ontrack/html/LearningCenter/ClassDescription.jsp?crsNum=FMRelief www.FreddieMac.com/ontrack/html/LearningCenter/ClassDescription.jsp?crsNum=Make_Affordable
Single Family www.FreddieMac.com/singlefamily Bulletins: 3/11/09, 4/7/09, 4/21/09 Single Family Advisory e-mail: March 4, 2009 Single Family News Borrower Qualification Worksheet www.FreddieMac.com/singlefamily/service/mha_modification.html Weekly/Monthly HMP Reports PL_HMP@FreddieMac.com & HMPModificationTracking@freddiemac.com Uniform Instruments www.FreddieMac.com/uniform/ Customer Service: (800) FREDDIE (373-3343) http://www.MakingHomeAffordable.gov/ Servicer web page www.HMPAdmin.com
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