Safeguard Properties

Freddie Mac: Flood Insurance Requirements Remain Unchanged During a Lapse in the National Flood Insurance Program

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Investor Update
December 21, 2018

Source: Freddie Mac

If the National Flood Insurance Program’s (NFIP) authority to issue new and renewal policies and increase coverage on existing policies expires on December 21, 2018, our policies on flood insurance remain unchanged.

During a lapse in the NFIP’s authority, Freddie Mac’s policies on flood insurance in Chapters 3401 and 8202 of the Single-Family Seller/Servicer Guide (Guide) remain unchanged, including:

  • Seller/Servicers originating mortgages for sale to Freddie Mac must continue to perform flood zone determinations.
  • Properties located in Special Flood Hazard Areas securing mortgages owned by and delivered to Freddie Mac must have flood insurance coverage.
  • For Servicers, payments to renew expiring policies must be made as scheduled.

If a borrower applies for NFIP flood insurance, acceptable evidence pending issuance of a final NFIP policy may include one of the following:

  • A completed and executed NFIP Flood Insurance Application plus a copy of the borrower’s premium check or agent’s paid receipt.
  • A completed and executed NFIP Flood Insurance Application plus the final Settlement/Closing Disclosure Statement reflecting the flood insurance premium collected at closing.
  • A completed and executed NFIP General Change Endorsement Form showing the assignment of the current flood insurance policy by the property seller to the borrower.

Seller/Servicers that accept interim evidence of NFIP coverage as described above during a lapse in the NFIP’s authority must follow up once the NFIP’s authority has been reinstated to ensure that they have final evidence of coverage meeting the requirements of Guide Section 8202.7.

If a borrower applies for private flood insurance, the insurer’s binder or equivalent of the applicable NFIP form is acceptable. Private flood insurance is not affected by a lapse in the NFIP’s authority.

MHA: HAMP Update: Christmas and New Year’s Day Holiday Support and System Availability

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Investor Update
December 19, 2018

Source: MHA

Christmas Day Holiday Support and System Availability

Due to the observance of Christmas Day, the HAMP Reporting System response files will not be available between 4:00 p.m. ET on Monday, December 24, 2018 and 9:00 a.m. ET on Wednesday, December 26, 2018; they will be sent as soon as the system is available.

During this timeframe, the HAMP Reporting Tool will be available for servicers to submit and upload HAMP loan data files, and the corresponding Black Knight response files will be provided as usual.

The HAMP Solution Center (HSC) will close at 4:00 p.m. ET on Friday, December 21, 2018 and will resume operations at 9:00 a.m. ET on Wednesday, December 26, 2018. Servicers may contact the HSC by phone or email at any time; however, phone messages and emails will be held in queue until the center reopens on Wednesday.

New Year’s Day Holiday Support and System Availability

Due to the observance of New Year’s Day, the HAMP Reporting System response files will not be available between 4:00 p.m. ET on Monday, December 31, 2018 and 9:00 a.m. ET on Wednesday, January 2, 2019; they will be sent as soon as the system is available.

During this timeframe, the HAMP Reporting Tool will be available for servicers to submit and upload HAMP loan data files, and the corresponding Black Knight response files will be provided as usual.

The HAMP Solution Center (HSC) will close at 4:00 p.m. ET on Friday, December 28, 2018 and will resume operations at 9:00 a.m. ET on Wednesday, January 2, 2019. Servicers may contact the HSC by phone or email at any time; however, phone messages and emails will be held in queue until the center reopens on Wednesday.

HUD: FHA INFO #18-51: Training Opportunities

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Investor Update
December 19, 2018

Source: HUD (FHA INFO #18-51 full version)

—There is no charge for training courses and webinars offered by the Federal Housing Administration —

Webinar Title: NEW Webinar I: Overview HUD Early Delinquency Activities and Loss Mitigation Programs

Date/Time:
Wednesday, January 9, 2019, 2:00 PM – 4:00 PM (Eastern)

Event Location:
On-line Webinar — No Fee

Jurisdictional Host:
National Servicing Center

Registration Link:
https://attendee.gotowebinar.com/register/2346242760202769675

Description:
Representatives from the Federal Housing Administration (FHA) will provide an overview of FHA-approved servicer requirements to include: early delinquency activity; timelines; general loss mitigation; evaluation of the borrower’s financial condition; and collections best practices.

Audience:
This webinar is open to FHA servicing industry participants.

Special Instructions:
A valid company email address is required at the time of registration. For additional information, please email: stacey.a.brown@hud.gov

FHFA: Foreclosure Preventions Surpass 4.2 Million in Third Quarter 2018 Report

Posted on by Ashley Shepherd

Investor Update
December 20, 2018

Source: FHFA

Washington, D.C. – The Federal Housing Finance Agency (FHFA) today released its third quarter 2018 Foreclosure Prevention Report, which shows that Fannie Mae and Freddie Mac (the Enterprises) completed 63,193 foreclosure prevention actions in the third quarter of 2018, bringing the total number of foreclosure prevention actions to 4,242,774 since September 2008.  The report also shows that nearly 25 percent of loan modifications in the third quarter reduced borrowers’ monthly payments by more than 20 percent.  Additionally, the Enterprises’ serious delinquency rate dropped to 0.79 percent at the end of the third quarter.

FHFA’s report also includes data on the Enterprises’ mortgage performance, delinquency data by state, and real estate owned (REO) inventory.  FHFA publishes the report data in an online, interactive Borrower Assistance Map on FHFA.gov.

Link to Report

Contacts:
Media: Stefanie Johnson (202) 649-3030 / Corinne Russell (202) 649-3032
Consumers: Consumer Communications or (202) 649-3811

FHFA: Statement of Melvin L. Watt

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Investor Update
December 21, 2018

Source: FHFA

“I congratulate Comptroller of the Currency Joseph Otting on being named Acting Director of the Federal Housing Finance Agency as my successor, effective Jan. 7, 2019.  I have served with Comptroller Otting as a member of the Financial Stability Oversight Council and both the OCC and FHFA have offices in the same building.  The highly professional staff at FHFA and I look forward to working with him to ensure a seamless transition.”

Contacts:
Media: Stefanie Johnson (202) 649-3030 / Corinne Russell (202) 649-3032
Consumers: Consumer Communications or (202) 649-3811

VA: Circular 26-18-30: Revisions to VA-Guaranteed Cash-Out Refinancing Home Loans (RIN 2900-AQ42)

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Updated 12/21/18: The U.S. Department of Veterans Affairs (VA) issued a revised version of Circular 26-18-30. The circular clarifies loan seasoning requirements for TYPE II cash-out refinancing loans.

Link to circular

Investor Update
December 19, 2018

Source: VA

1. Purpose. This purpose of this Circular is to announce the Department Veterans Affairs’ (VA) new policies regarding VA-guaranteed cash-out refinancing loans, including refinancing of construction loans (construction-to-permanent).

2. Background. On December 17, 2018, VA published an interim final rule addressing VA guaranty requirements for cash-out refinance loans (83 FR 64459). This rule implements section 309 of Public Law 115-174, The Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act). Section 309 of the Act provides new statutory criteria to determine when VA may guarantee a refinancing loan. The Act required VA to promulgate regulations for cash-out refinancing loans, specifically refinancing loans in which the loan amount will exceed the payoff amount of the loan being refinanced. This rule amends VA regulations pertaining to all cash-out refinancing loans (38 CFR 36.4306). This includes refinancing of construction loans (construction-to-permanent loans), regardless of whether there is a change in the principal loan amount. VA is accepting public comments on the interim final rule through February 15, 2019, and encourages lenders to submit official comments and/or suggestions through the Federal Register at https://www.regulations.gov.

3. Effective. The rule is effective on February 15, 2019, and will apply to VA cash-out refinance loan applications taken on, or after, this date.

4. Action.

a. VA-guaranteed cash-out refinancing loans must meet the requirements of the new law. VA has categorized refinancing loans as the following:

(1) Interest Rate Reduction Refinancing Loan (IRRRL): a refinancing loan made to refinance an existing VA-guaranteed home loan at a lower interest rate.

(2) TYPE I Cash-Out Refinance: a refinancing loan in which the loan amount (including VA funding fee) does not exceed the payoff amount of the loan being refinanced.

(3) TYPE II Cash-Out Refinance: a refinancing loan in which the loan amount (including VA funding fee) exceeds the payoff amount of the loan being refinanced.

b. This rule does not apply to VA regulations pertaining to IRRRLs. Updates to VA’s IRRRL regulations will be published separately from this Circular. Lenders and VA Regional Loan Center (RLC) personnel should continue to follow current IRRRL regulations and VA policy guidance shown in VA Circular 26-18-13.

c. All cash-out refinancing loan applications taken on or after February 15, 2019, as reflected by the application date, that do not meet the following requirements will not be eligible for guaranty by VA:

(1) Loan-to-Value (LTV). VA will no longer guaranty refinancing loans when the LTV exceeds 100 percent. If the Veteran chooses to close a loan in which the loan amount exceeds 100 percent of the reasonable value of the property, the Veteran must pay the amount which exceeds 100 percent of the property value at loan closing.

(a) LTV Calculation. Divide the total loan amount (including VA funding fee, if applicable) by the reasonable value on the Notice of Value of the property determined by the appraiser.

(2) Net Tangible Benefit Test (NTB). Lenders must ensure that all cash-out refinancing loans pass a NTB, which includes providing the Veteran with the following information no later than the third business day after receiving the Veteran’s loan application, and again at loan closing:

(a) The refinancing loan satisfies at least one of the following eight NTB:

(i) The new loan eliminates monthly mortgage insurance, whether public or private, or monthly guaranty insurance;
(ii) The term of the new loan is shorter than the term of the loan being refinanced;
(iii) The interest rate on the new loan is lower than the interest rate on the loan being refinanced;
(iv) The payment on the new loan is lower than the payment on the loan being refinanced;
(v) The new loan results in an increase in the borrower’s monthly residual income;
(vi) The new loan refinances an interim loan to construct, alter, or repair the home;
(vii) The new loan amount is equal to or less than 90 percent of the reasonable value of the home, or;
(viii) The new loan refinances an adjustable rate loan to a fixed rate loan.

(b) A comparison of key loan characteristics or terms for the existing and refinancing loan, including:

(i) Refinancing loan amount vs. the payoff amount of the loan being refinanced.
(ii) Loan type (i.e., fixed, adjustable) of the refinancing loan vs. the loan being refinanced.
(iii) Interest rate of the refinancing loan vs. the loan being refinanced.
(iv) Loan term of the refinancing loan vs. the loan being refinanced.
(v) The total the Veteran will have paid after making all payments (principal and interest), and mortgage insurance, as scheduled, for both the refinancing loan and the loan being refinanced.
(vi) LTV of the refinancing loan vs. the loan being refinanced

(c) An estimate of the home equity being removed from the home as a result of the refinance and explain how the removal of home equity may affect the Veteran.

(3) Loan Seasoning. VA will not guarantee a refinancing loan if the loan being refinanced has not been properly seasoned. This requirement applies to TYPE I refinancing loans made to refinance an existing VA-guaranteed home loan and all TYPE II refinancing loans. A loan is considered seasoned on the later of the date that is:

(a) 210 days after the first monthly payment is made, and

(b) Six monthly payments have been made on the loan.

(4) Fee Recoupment. The recoupment period of all fees, closing costs, expenses (other than taxes, escrow, insurance, and like assessments), and incurred costs must not exceed 36 months from the date of loan closing. The lender must certify the recoupment period to VA to obtain a Loan Guaranty Certificate. This requirement only applies to TYPE I cash-out refinancing loans made to refinance an existing VA-guaranteed home loan.

(a) Recoupment Calculation. Divide all fees, closing costs, expenses, and incurred costs (excluding taxes, escrow, insurance, and like assessments), by the reduction of the monthly principal and interest payment as a result of the refinance. If the loan being refinanced has been modified, the principal and interest reduction must be computed/compared to the modified principal and interest monthly payment.

5. Rescission: This Circular is rescinded January 1, 2020.

By Direction of the Under Secretary for Benefits

Jeffrey F. London Director Loan Guaranty Service

7.0 Magnitude Earthquake Affects Alaska

Posted on by Safeguard

Updated 12/1/18: The Weather Channel issued a report titled More than 500 Aftershocks Rattle Residents After Major Earthquake Strikes Anchorage, Alaska.

Link to report

Updated 11/30/18: FEMA issued an Emergency Declaration for areas in Alaska due to the emergency conditions resulting from an earthquake that took place on November 30, 2018.

Link to declaration

Link to associated ZIP Code list

NOTE: This has not yet been declared a FEMA Major Disaster.

Industry Alert
November 30, 2018

Source: ABC 7

ANCHORAGE, Alaska –Back-to-back earthquakes measuring 7.0 and 5.7 shattered highways and rocked buildings Friday in Anchorage, sending people running into the streets and briefly triggering a warning to residents in Kodiak to flee to higher ground for fear of a tsunami.

The warning was lifted without incident a short time later. There were no immediate reports of any deaths or serious injuries.

The U.S. Geological Survey said the first and more powerful quake was centered about 7 miles (12 kilometers) north of Anchorage, Alaska’s largest city, with a population of about 300,000. People ran from their offices or took cover under desks.

“We just hung onto each other. You couldn’t even stand,” said Sheila Bailey, who was working at a high school cafeteria in Palmer when the quake struck. “It sounded and felt like the school was breaking apart.”

A large section of an off-ramp near the Anchorage airport collapsed, marooning a car on a narrow island of pavement surrounded by deep chasms in the concrete. Several cars crashed at a major intersection in Wasilla, north of Anchorage, during the shaking.

Anchorage Police Chief Justin Doll said he had been told that parts of Glenn Highway, a scenic route that runs northeast out of the city past farms, mountains and glaciers, had “completely disappeared.”

The quake broke store windows, opened cracks in a two-story building downtown, disrupted electrical service and disabled traffic lights, snarling traffic. It also threw a full-grown man out of his bathtub.

All flights in and out of the airport were suspended for hours after the quake knocked out telephones and forced the evacuation of the control tower. And the 800-mile Alaska oil pipeline was shut down while crews were sent to inspect it for damage.

Anchorage’s school system canceled classes and asked parents to pick up their children while it examined buildings for gas leaks or other damage.

Fifteen-year-old Sadie Blake and other members of the Homer High School wrestling team were at an Anchorage school gymnasium waiting for a tournament to start when the bleachers started rocking “like crazy” and the lights went out. People started running down the bleachers in the dark, trying to get out.

“It was a gym full of screams,” said team chaperone Ginny Grimes.

When it was over, Sadie said, there was only one thing she could do: “I started crying.”

“It’s one of those things where in your head, you think, ‘OK, it’s going to stop,’ and you say that to yourself so many times in your head that finally you think, ‘OK, maybe this isn’t going to stop,'” he said.

Soon after the shaking stopped, the school bus pulled up and children boarded, but the driver stopped at a bridge and refused to go across because of deep cracks in the road, Lettow said.

Former Alaska Gov. Sarah Palin tweeted that her home was damaged: “Our family is intact – house is not. I imagine that’s the case for many, many others.” She posted a video of the inside of her parents’ home, with broken dishes littering the kitchen floor. A large set of antlers appeared to have fallen off a wall of the living room.

Officials opened an Anchorage convention center as an emergency shelter. Gov. Bill Walker issued a disaster declaration.

He said he was in an office building elevator when the earthquake hit. Lights on the control board were blinking and things were falling from the ceiling, but the elevator did not stop, he said.

Cereal boxes and packages of batteries littered the floor of a grocery store, and picture frames and mirrors were knocked from living room walls.

People went back inside after the first earthquake struck, but the 5.7 aftershock about five minutes later sent them running back into the streets. A series of smaller aftershocks followed.

A tsunami warning was issued along Alaska’s southern coast. Police in Kodiak, a city of 6,100 people on Kodiak Island, 250 miles (400 kilometers) south of Anchorage). People were told to evacuate to higher ground immediately because a wave could hit within about 10 minutes.

Michael Burgy, a senior technician with the National Tsunami Warning Center in Palmer, Alaska, said the warning was automatically generated based on the quake’s size and proximity to shore. Scientists monitored gauges to see if the quake generated big waves. Because there were none, they canceled the warning within about an hour and a half.

In Kenai, southwest of Anchorage, Brandon Slaton was alone at home and soaking in the bathtub when the earthquake struck. Slaton, who weighs 209 pounds, said it created a powerful back-and-forth sloshing that threw him out of the tub.

His 120-pound mastiff panicked and tried to run down the stairs, but the house was swaying so much that the dog was thrown off its feet and into a wall and tumbled to the base of the stairs, Slaton said.

Slaton ran into his son’s room after the shaking stopped and found his fish tank shattered and the fish on the floor, gasping. He grabbed it and put it in another bowl.

“It was anarchy,” he said. “There’s no pictures left on the walls, there’s no power, there’s no fish tank left. Everything that’s not tied down is broke.”

Alaska was the site of the most powerful earthquake ever recorded in the U.S. The 9.2-magnitude quake on March 27, 1964, was centered about 75 miles (120 kilometers) east of Anchorage. It and the tsunami it triggered claimed about 130 lives.

The state averages 40,000 earthquakes a year, with more large quakes than the 49 other states combined. Southern Alaska has a high risk of earthquakes because the Earth’s plates slide past each other under the region.

Alaska has been hit by a number of powerful quakes over 7.0 in recent decades, including a 7.9 last January southeast of Kodiak Island. But it is rare for a quake this big to strike so close to such a heavily populated area.

David Harper was getting some coffee at a store when the low rumble began and intensified into something that sounded “like the building was just going to fall apart.” He ran for the exit with other patrons.

“People who were outside were actively hugging each other,” he said. “You could tell that it was a bad one.”

Publication Service in Foreclosure

Posted on by Safeguard

Industry Update
December 17, 2018

Source: DS News

In litigation, “personal jurisdiction” is required against all named defendants. The crux of this power flows from the party filing an action (the plaintiff) properly making an individual (the defendant) aware of the litigation filed. Stated another way, if a plaintiff fails to properly make a defendant aware of an action, then personal jurisdiction is lacking, and any orders the court makes are subject to being canceled at any time—even long after litigation is thought to have been concluded. In mortgage foreclosure actions, this can cause additional delays and costs to an often lengthy and expensive process.

Publication service, which involves notifying a defendant via a local newspaper, requires an affidavit evidencing that a diligent inquiry has occurred to ascertain the defendant’s location. Additionally, in Cook County mortgage foreclosure actions, affidavits must be sworn by the individual who made the “due inquiry,” setting forth “with particularity” an “honest and well-directed effort” to ascertain the location of the defendant.

In early 2018, the Fourth Division of the First District Appellate Court held that only one attempt at personal service was sufficient, given the circumstances of the case. In Neighborhood Lending Services, Inc. v. Griffin, 2018 IL App (1st) 162855, the defendant’s wife stated that the defendant didn’t live at the residence and refused to provide any further information.

The defendant, appearing nearly a year later, alleged that Neighborhood Lending failed to exercise due inquiry or due diligence. The Court disagreed.

“This is a case in which the defendant’s spouse—a resident of the single-family home at issue—directly informed the process server that defendant did not reside at that address and no alternate address could be found… There is no reason to believe that subsequent visits would have yielded any different results…” Id. ¶ 21-22.

Towards the end of 2018, the First Division of the First District Appellate Court encountered a somewhat similar fact pattern, but with a very different result. In Deutsche Bank Nat’l Trust Co. v. Burrell, 2018 (Ill. App. Unpub. LEXIS 1563), the plaintiff filed an affidavit stating that a process server attempted to serve the defendant a total of 29 times at the subject property address, all without success.  However, the affidavit also evidenced searches conducted which resulted in the discovery of additional potential addresses for the defendant, one of which was in Merrillville, Indiana. In Merrillville, the process server spoke to an unknown woman getting into her car.  When asked if the defendant was at home, the woman replied that she didn’t know him.

The defendant filed a motion to quash service several months after the foreclosure sale, stating that he’d lived at the Merrillville location for approximately 14 years and arguing that Deutsche Bank failed to properly serve him. The Court agreed.

The Court ruled that the plaintiff failed to evidence an “honest and well directed effort” to ascertain the defendant’s whereabouts, emphasizing the fact that the plaintiff only made one attempt at the Merrillville location, which “consisted only of a conversation with some unnamed person in front of the house who said that she did not know [the defendant.] This was not ‘due inquiry’.”

It seems safe to say that the more precise and particular the details of a process server’s affidavit is, the stronger a plaintiff’s publication service may be. At a minimum, the name and relationship to a party should always be obtained if a witness’s statement is meant to be relied upon.

FHFA: Fannie Mae and Freddie Mac’s Modified Underserved Markets Plans for Duty to Serve Program Published

Posted on by Safeguard

Investor Update
December 19, 2018

Source: FHFA

Washington, D.C. – The Federal Housing Finance Agency (FHFA) today published Fannie Mae and Freddie Mac’s (the Enterprises) modified Underserved Markets Plans for 2018-2020 under the Duty to Serve program. The Plans, originally published Dec. 18, 2017 became effective Jan. 1, 2018.

FHFA requested public input in October 2018 on the Enterprises’ proposed Duty to Serve Plan modifications. FHFA specifically solicited input on four of Fannie Mae’s proposed 22 modifications, and did not seek input on Freddie Mac’s one proposed modification, which was deemed a correction. FHFA received 166 letters responding to the proposed Plan modifications. FHFA considered this feedback in issuing Non-Objections to the Enterprises’ proposed modified Plans.

FHFA published a final rule in 2016 to implement the Duty to Serve provisions mandated by the Housing and Economic Recovery Act of 2008. The statute requires the Enterprises to serve three specified underserved markets – manufactured housing, affordable housing preservation and rural housing – by increasing the liquidity of mortgage financing for very low-, low-, and moderate-income families.

Each Enterprise adopted a three-year Underserved Markets Plan. The activities proposed by the Enterprises are subject to FHFA review and approval to ensure compliance with the Enterprises’ Charter Acts, safety and soundness, and other conservatorship and regulatory requirements. Under the Duty to Serve rule and FHFA’s Evaluation Guidance, an Enterprise may propose to modify its Plan at any point if future events affect its ability to achieve the Plan’s original objectives.

The Enterprises’ modified Plans can be found on FHFA’s dedicated Duty to Serve program webpage, www.FHFA.gov/DTS.

Contacts:
Media: Stefanie Johnson (202) 649-3030 / Corinne Russell (202) 649-3032
Consumers: Consumer Communications or (202) 649-3811

FHFA: 2019 Scorecard for Fannie Mae, Freddie Mac and Common Securitization Solutions

Posted on by Safeguard

Investor Update
December 19, 2018

Source: FHFA

Washington, D.C. – The Federal Housing Finance Agency (FHFA) today released the 2019 Scorecard outlining specific conservatorship priorities for Fannie Mae, Freddie Mac (the Enterprises), and their joint venture, Common Securitization Solutions, LLC (CSS). The 2019 Scorecard furthers the goals outlined in FHFA’s Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac, published in May 2014. These goals include:

  • Maintain, in a safe and sound manner, credit availability and foreclosure prevention activities for new and refinanced mortgages to foster liquid, efficient, competitive and resilient national housing finance markets;
  • Reduce taxpayer risk through increasing the role of private capital in the mortgage market; and
  • Build a new single-family infrastructure for use by the Enterprises and adaptable for use by other participants in the secondary market in the future.

For all Scorecard items, the Enterprises and CSS will be assessed based on the following:

  • The extent to which each Enterprise conducts initiatives in a safe and sound manner consistent with FHFA’s expectations for all activities;
  • The extent to which the outcomes of each Enterprise’s activities support a competitive and resilient secondary mortgage market to support homeowners and renters;
  • The extent to which each Enterprise meets FHFA’s expectations under the Conservatorship Capital Framework (CCF), including FHFA’s expectations on meeting appropriate return on conservatorship capital targets;
  • The extent to which each Enterprise conducts initiatives with consideration for diversity and inclusion consistent with FHFA’s expectations for all activities;
  • Cooperation and collaboration with FHFA, each other, the industry, and other stakeholders; and
    The quality, thoroughness, creativity, effectiveness, and timeliness of their work products.

Link to 2019 Scorecard for Fannie Mae, Freddie Mac and Common Securitization Solutions

Contacts
Media: Corinne Russell (202) 649-3032 / Stefanie Johnson (202) 649-3030
Consumers: Consumer Communications or (202) 649-3811