Option #1 Option #1


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Option #1

  • Option #1

  • 30 yr fixed

  • 5.875% P/I:

  • $2,366



3.58 Index

  • 3.58 Index

  • +3.25 Margin

  • 6.83 Fully Indexed

  • Index Margin

  • Treasury + 3.25 = rate

  • LIBOR + 3.25 = rate

  • Prime Rate + Margin = rate

  • (Fed funds rate + 3%)



  • Full Documentation “Full Doc”

  • Limited Stated “SIVA”

  • Stated Income Stated Assets “SISA”

  • No Income No Assets “NINA”











Do you wan to stay & should you stay?

  • Do you wan to stay & should you stay?

  • Can you afford to stay? (DTI 31%)

  • Value of property v. encumberances-BPO

  • Notice of Default or sale

    • If same postponed lender does not give another notice
  • Current or late payments





Skip a few payments (re-capitalize)

  • Skip a few payments (re-capitalize)

  • Forbearance (increase payment to make up past due payments)



Still forbearance & missing payment

  • Still forbearance & missing payment

  • Rate reduction / step rate

  • Increasing amortization term

  • Reducing the principle balance

  • Real or window dressing?



Servicers should also be more aggressive about writing down principal amounts when necessary to make the loan affordable.”

  • Servicers should also be more aggressive about writing down principal amounts when necessary to make the loan affordable.”

  • Sheila Bair

  • FDIC Chairman 2/26/08



"Our goal is to get the greatest recovery possible on loans in default or in danger of default, while helping troubled borrowers remain in their homes.”

  • "Our goal is to get the greatest recovery possible on loans in default or in danger of default, while helping troubled borrowers remain in their homes.”

  • Sheila Bair

  • FDIC / IndyMac

  • 8/20/08



Probably not who you are making the payment to - they are the Servicing Co





If a servicer took TARPII funds from Treasury they are required to actively pursue modifications under the terms of HAMP/MHA in coordination with the investor who owned the loan.

  • If a servicer took TARPII funds from Treasury they are required to actively pursue modifications under the terms of HAMP/MHA in coordination with the investor who owned the loan.

  • If the loans are owned by Fannie/Freddie they automatically eligible.

  • If the homeowner does not qualify for HAMP/MHA the servicer must try to qualify the homeowner for the servicers own in-house modification programs.

  • (FHA/VA must be first turned down for in-house modification before they can be considered eligible for HAMP/MHA)



Gross Wages

  • Gross Wages

  • 31% - 38% Housing Ratio (PITIA)

  • Drop rate .125% to a floor of 2%

  • Extend Amortization (up to 480 mos)

  • Forebear Principle to end of loan @ 0%



Primary Residence

  • Primary Residence

  • No more than $729,750 Loan Amount

  • Have a Hardship

  • 1st TD PITIA More Than 31% of Gross Income

  • Loan was finalized before 01/01/2009











15 U.S.C. §1641(f)(2) request

  • 15 U.S.C. §1641(f)(2) request

  • Sup. Dir. 10-02, after June 1, 2010, servicers must provide Fannie Mae with a list of investors who are not participating

  • Fannie, Freddie, VA or FHA loan



1641 does not provide a timeline and no cases yet.

  • 1641 does not provide a timeline and no cases yet.

  • TILA 1641 g …notice to borrower if owner changes

  • Fannie may then know who owns the loan

  • Fannie freddie check on line FHA VA too



Ask servicer what reasonable efforts they’ve taken to get the investor to waive restrictions

  • Ask servicer what reasonable efforts they’ve taken to get the investor to waive restrictions

  • Reasonable efforts are required by Sup. Dir. 09-01, p.1

  • Under Sup. Dir. 10-02, effective 6/1/2010, server must write to investor requiring waiver at east once



Servicer’s in-house escalation team

  • Servicer’s in-house escalation team

  • E-mail escalations@hmpadmin.com

  • Ask for Ken Hannold if escalations are satisfactory





Wells, B of A, Chase and Citigroup have signed onto this program

  • Wells, B of A, Chase and Citigroup have signed onto this program

  • Just recently

  • We don’t know the specifics yet



  • Resolutions

  • Dismissal of foreclosure

  • NPV test not require

  • Required standard modification steps or extinguishment



09-05r revised directive

  • 09-05r revised directive

  • Requires resubordination by second

  • If first mods then second must dismiss foreclosure

  • No NPV on second

  • Standard mod steps-capitalization, Rate red (step increases), increase payback, forbear (if first forbear then second must in same amount)

  • Waive late fees and other fees



What is a short sale?

  • What is a short sale?

  • Why would someone want

  • to short sale their house?

  • Credit issues

    • Short Sale vs. Foreclosure?


$3K relocation

  • $3K relocation

  • $1.5K to servicer for admin costs

  • $6k (max.) to junior lienholder

  • Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.



Judicial

  • Judicial

    • Breach of Contract
      • File lawsuit
      • Wait for Trial
      • Trial
      • Sheriff’s Sale
  • Not very popular



Non judicial

  • Non judicial

    • Deed of Trust


Loans 1/03-12/31/08

  • Loans 1/03-12/31/08

  • Lender must contact borrower

  • Must wait 30 days to file NOD

  • HO has right to meeting within 14 days and HUD counselling

  • Statute has special methods of contact

  • NOD must state lender has complied

  • Also owner must maintain property



Appeared to create an obligation of servicers to offer modification

  • Appeared to create an obligation of servicers to offer modification

  • The terms basically mirrored the Obama plan.

  • Cases on appeal-only one case where Judge found a right to stay foreclosure



The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

  • The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

  •  If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable. The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.



Mortgage Forgiveness Debt Relief Extended - Updated 04/13/10

  • Mortgage Forgiveness Debt Relief Extended - Updated 04/13/10

  • On April 12, 2010, SB 401, the Conformity Act of 2010 was enacted. It allows taxpayers who had all or part of the loan balance on their principal residence forgiven by their lender to exclude the forgiven debt from California gross income. The new law applies to discharges of qualified principal residence indebtedness on or after January 1, 2009, and before January 1, 2013.





The following slides were intentionally provided. They include graphs that help show the dire circumstances of the current housing market.

  • The following slides were intentionally provided. They include graphs that help show the dire circumstances of the current housing market.




































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