Back to Basics

1
Making Home Affordable
2
Home Affordable Modification Program (HAMP)

• Administration
• Fannie Mae
• Office of Home Ownership Preservation Policy
  and Operations
• Interagency Involvement
• Federal Reserve Board
• Federal Housing Administration
• Comptroller of the Currency
• Office of Thrift Supervision
• Federal Housing Finance Agency
• Federal Deposit Insurance Corp.

• Compliance and Oversight
• Freddie Mac
• Office of Financial Stability Compliance Office
• Special Inspector General - TARP
• OMB / GAO / Congressional Committees

3
HAMP Servicer Participation

• Servicers of loans owned or securitized by Fannie
  Mae or Freddie Mac must participate in HAMP and
  2MP
• 62 Servicers have signed SPAs for non-GSE book

4
Restrictions on HAMP Eligibility

• Originated after January 1, 2009
• Previously modified under HAMP
• Secured by investment properties or secondary
  residences
• Secured by vacant or condemned properties
• HAMP expires December 31, 2012

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HAMP Activity through August 2009
GSE Loans Entering Trial Period 202,189
Non GSE Loans Entering Trial Period 157,946
of All Loans Entering Trial Period 360,135
UPB of Non GSE Trial Period Loans 40.6 Billion
of Trial Period Plan Offers Extended to Borrowers 571,354
of Solicitations for Information Sent to Borrowers 1,883,108
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Compliance

• Validation of information reported through the
  MHA Data Reporting system (IR2)
• Public performance reports by Servicer published
  at www.financialstability.gov
• On site and desk audits of all participating
  Servicers by Freddie Mac
• Second Look new compliance process sampling
• Loans evaluated but not approved for HAMP
• 60 delinquent loans not evaluated for HAMP

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Information and Escalation

• WWW.MakingHomeAffordable.gov
• Servicer / Counselor web www.hmpadmin.com
• Borrower Call Center 1-888-995-HOPE (4673)
• General inquires / MHA Escalation Team
• Counselor/Government Escalation
• 866-939-4469
• support_at_hmpadmin.com

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Borrower Web Site
Easy-to-Use Main Navigation for Homeowners to
Quickly Find Information
Access Checklist to Prepare Borrowers to Speak
with their Mortgage Lender or Counselor

• On the Home Page, consumers can access
• Spanish Content
• 1-888-995-HOPE (4673)
• Beware of Scams
• Information Video
• Helpful Links in Footer

Sample Home Page
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Second Lien Modifications - 2MP

• Separate Servicer Participation Agreement
  servicers may opt in for HAMP/2MP or both
• 2nd lien automatically modified if corresponding
  first lien is modified through HAMP
• 2nd lien interest reduced to
• 1 (amortizing)
• 2 (I/0) for five years
• Year 6 rate steps up to match rate on 1st
• Loan term extended to match first mortgage
• If HAMP included principal deferment, 2nd lien
  modification must include pro-rata deferment

10
2MP Payoff Option

• Investor may choose to accept a cash payment from
  Treasury in exchange for writing off the debt
• Payoff amounts range from 4 to 12 of the unpaid
  principal balance based on CLTV and the
  borrowers back end DTI
• If loan is more than 6 months delinquent the
  maximum payoff is 3
• Borrower must be released from all liability for
  repayment
• Borrowers cannot be charged a fee for 2nd lien
  modification or payoff

11
Home Price Decline Protection

• Additional investor incentive to modify loans in
  markets where property values continue to decline
• HPDP incentive
• Fixed amount per property calculated based
  average price decline in prior quarters
• Payments accrue monthly for 24 months, paid
  annually
• Automatic No action required by borrower or
  servicer
• Results in greater number of positive NPV
  outcomes especially in areas with greatest price
  depreciation

12
Incentives Balance Interests Of All Parties

• Borrowers
• - Pay for success - accrues monthly, paid
  annually to reduce principal
• - Up to 1,000 for HAMP and fixed at 250 for
  2MP
• Investors
• - Incentive for interest rate reduction for HAMP
  and 2MP
• - 1,500 up front payment to modify first liens
  in imminent default
• - Home Price Decline Protection incentive
  varies by geography
• Servicers
• - Up front incentives - 1,000 for HAMP and
  500 for 2MP
• Additional 500 if HAMP borrower is in imminent
  default
• Pay for performance incentive up to 1,000
  accrues monthly paid annually
• Borrowers monthly payment must be reduced by at
  least 6

13
Foreclosure Alternatives Short Sale / DIL

• Alternative to legal FC when HAMP fails
• Borrower must be evaluated for HAMP first and
  must be meet basic eligibility (owner occupied,
  lt729,000, etc.)
• Standard forms and procedures streamline complex
  process
• Incentives Servicers - 1,000 / Borrowers -
  1,500
• Up to 3,000 to pay off jr. liens - 1,000 from
  Treasury
• Borrower must be relieved of debt no deficiency

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Streamlined Documents (early Oct)

• A concern of both servicers and counselors is the
  amount of documents required and the lack of
  standardization
• Servicers report that many trial modifications
  are lacking complete documentation
• Advocates often complain of lost or missing
  documentation
• In October, unveiling a more streamlined approach
• Standardized intake and combined hardship
  affidavit
• Simpler, more informative trial plan notice that
  does not have to be signed and returned
• Reducing document requirements to bare minimum
• For Wage borrower 2 pay stubs, signed 4506-T
  and signed intake/hardship affidavit
• No documentation required for small amounts of
  declared passive income

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Questions?

• Contact Information
• Mark McArdle
• Homeownership Preservation Office
• 202-622-5739
• Mark.Mcardle_at_do.treas.gov